Thriving as a small brick and mortar/e-commerce B2C retailer?
April 15, 2013 4:25 AM   Subscribe

How can a small (3-5 employees) brick and mortar/e-commerce B2C retailer survive and thrive in an increasingly competitive market (outdoors/sports products) when it cannot compete on price? Any good examples of small companies doing just that?

A group of us are planning to acquire a small retailer that sells outdoors/sports gear, apparel and similar products to end consumers. It's a very competitive industry and the company has seen quite a significant chunk of its revenues disappear in the past few years. We all have industry experience but doing the same old routine won't work anymore because everyone is doing e-commerce, e-marketing, etc. We are sure that the problems - more competition from both large and small companies, decrease in revenues, expansion - are fixable but how do we do it in the most efficient way possible?

I'm not just looking for suggestions along the line of, "Focus on customer service and the in-store experience" but also more strategic stuff like a set of principles that can guide a small yet ambitious retailer to stay profitable and grow despite facing heavy competition.

I'm currently researching quality management, and lean in particular, to find some inspirational ideas but I find them challenging to apply to a small brick and mortar/e-commerce retailer because they are rooted in manufacturing and aren't sensitive to the challenge a B2C retailer faces.

Ideally, there would be a resource that identifies challenges a retailer is facing, provides solutions to those challenges and describes a case study or two detailing how those solutions were implemented by actual small retailers.
posted by Foci for Analysis to Work & Money (5 answers total) 1 user marked this as a favorite
Best answer: I used to work for a camp in Northern California. I recall that many campers arrived massively unprepared for the challenge of a camp that was geared to roughing it, sleeping outside. I would suggest that you do what Boy Scouts of America has done for years, making links with camps to provide a catalog of useful equipment for their unique experience selling to their new campers, alumni and parents. You could help them create branded apparel and offer a referral bonus based on a target sales figure. This could also work with public and private recreational areas.
posted by parmanparman at 5:01 AM on April 15, 2013

Best answer: I thought this was a pretty good article about starting and running a boutique bike store in San Francisco:

Seems like focus on premium-feel retail space and customer experience were in fact key. Basically I think it fits into the "Apple Store for X" model, though that may require that you have access to a pretty wealthy market (like yuppie bike commuters) to work.
posted by annekate at 5:21 AM on April 15, 2013 [1 favorite]

Best answer: Will you sell clothing? Shoes? These are things people like me like to try on and make sure they're comfy. Particularly people who are odd sizes or between sizes. So it could be worth having a really broad range of sizes, and advertising that fact on your website. (I'm a larger woman, on the cusp of plus size depending on the brand, with wide feet. I never buy clothes or shoes without trying them on)

Bricks and mortar shops also have the advantage of immediacy. This can be taken advantage of by having really good information about what you stock on your website. I will often pay more to get something today, but only if it's easy to find out if you have it.
posted by kjs4 at 6:11 AM on April 15, 2013

Best answer: One good thing all this technology is doing for you - Facebook, Twitter, and Google local advertising makes it easier than ever to reach out to a local audience and build rapport, offer specials, etc. Mass media (including/especially local radio and TV) have always been pretty horribly expensive; this new wave of promotional/social tools have free and pay-per-click components that make it a lot more bang for your buck.

Your strategy is to compete on service and perception of quality, and the biggest thing you've got going for you is actual expertise. The good news is that people actually bond with your product (and can bond with you) in a way they don't with laser printers and toner. Get involved with the local club(s) for biking, hiking, or whatever your product line covers, offer classes, etc. Another thing you've got going for you is your target audience kinda hates big corporate as well, which is not to say they won't shop your prices or use you as a place to examine stuff before buying online, which leads to my last big piece of advice -

try to focus on merchandise that isn't as readily available online, or, has been said, is very fit-sensitive.
posted by randomkeystrike at 7:58 AM on April 15, 2013 [1 favorite]

Best answer: There are, basically three main rules:

- Find your niche and mine it
- Communicate with your customers authentically and uniquely
- Excel in customer service

Niche - there are lots of niches out there. Find yours. If you don't want to compete on price you need to give your customers a reason to come to you. The best reason is that you have differentiation on range, a particular specialism or area of expertise, exclusivity etc. If you aim to offer the same thing as the chain stores but, say, excel on customer service only, you will still probably struggle because customers that don't engage with you at all because of price never get to know about your amazing customer service.

Communication - if you have a niche, you probably also have a niche audience. Talk to them authentically because you are a small business with a small number of employees. Be open, warm and personal. Have names and personalities. Be active on social media. Give people a reason to interact with you, engage with you, want to meet you and buy from you. You don't need to be selling to them 24/7. Your strength as a small business is that you can have a conversation with your customers. You'll not just be marketing to them: you'll be learning from them.

Customer service - if I go to a small business over a big one I want personalisation. I want specialisation. I want customer service. If I get that, I'll still buy from you even if you are more expensive than someone else. This is even more important if I'm spending a lot of money, or buying something I really don't want to go wrong. The old adage that a happy customers tells x people and an unhappy one tells 10x people is true. You want to create advocates and you do that by knowing your stuff and treating your customers well.

OK, so far possibly so obvious. However, a really good example of where small companies screw up:

- Crap websites - If your website is poor, your UX is poor, your shopping cart software is poor, you'll lose customers at each stage of the buying process. Do not do this bit on the cheap at the expense of usability.
- Basic retail psychology and merchandising/store organisation: read up on this. Although your customers are unique snowflakes, there are commonalities in how they react to pricing brackets, or visual merchandising, or the store environment, or how you interact with them. In the same way that the vastly expensive thing on the menu is there to make everything else seem better value, there are whole toolboxes of [ethical] tricks you can and should apply.
- Stock - Out of stocks is a killer. Better to be more cautious on what you stock and make a virtue of it than too much in things that you don't know will sell and end up out of stock on popular items.
- Analytics - Analyse your business. I mean it. Every click your customers make is data. Every piece of information they give you is data. Use it to manage your business. Remember - your strength is finding your niche, knowing your customer better than someone who has to sell a broad range of stuff to a broad range of people.
- Break down the barriers to buy. Free returns is a good example. This UK retailer, for example, is based in the arse end of Scotland. But they arguably have the best stock of this country clothing in the UK. They offer free returns. Their customer service is epically good. Their website is a bit rubbish, but it is functional. This UK retailer emerged from a small bricks and mortar store in a rural area with a mail order operation in the 80s to being the UK's leading kitchenware retailer. They are renowned for not just their range, but for creating product demand and innovating. They also have built their business on customer service and word of mouth.
- Keep analysing your business - keep innovating, keep finding products that nobody else has that your customers should want, be sensitive to where your customers could be coming to you for more things (e.g. you sell them specialist outdoor equipment, but you could be also selling them 4x4 accessories or lifestyle clothing etc).
- Consider carefully if you need a physical presence. You have to pay for location, you have to staff it, heat it, clean it etc etc. It is natural to want to store but ask whether you really, really need one. Again, using UK examples I can think of two very successful sporting goods companies with no physical presence (1, 2) just off the top of my head. If you go down the no-store route, deliver as quickly as you can. Amazon has long set the benchmark. You will, simply, sell a lot more if you can attract impulse buyers by promising them they'll have the product the next day.
posted by MuffinMan at 9:06 AM on April 15, 2013 [2 favorites]

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