A Grim Look at the Future of Small E-commerce Businesses - CPC Strategy

“We are made wise not by the recollection of our past, but by the responsibility for our future.”

  -George Bernard Shaw

As we approach the end of 2012, e-commerce businesses will be reading over projections for 2013 while sipping a cup of eggnog in attempt to feel prepared for the unknown that next year holds.  While we can’t predict the future, we can be certain of two things.

First, small e-commerce businesses need to be armed to the teeth to prepare for the challenges that new technologies and innovations will present.  It’s a tough world out there when you’re up against retail giants like Amazon, Walmart, and Target.

Second, there’s money to be made in 2013.  The key is knowing where to find it.  In domains like mobile shopping, social media, and paid comparison shopping, the big guys have the leg up with all their manpower and around-the-clock research and development.  But you knew this.  The last thing you want is to miss out and be left in the dark, so languish in apathy no more.

The Grim Reality

2013 is undoubtedly geared towards big business success.  As I’m sure you’ve heard, Google Shopping is now a paid product search engine, and that change meant a big blow to many small retailers who used to receive great, free traffic.  On top of it, Google adopted what is essentially a Cost per Click (CPC)-dominated model, meaning not only did small retailers not get free traffic anymore, but they had to dig deep to find the time and resources to manage a CPC bidding strategy.

The big retailers, with the manpower to manage a paid campaign or the money to have someone else take care of it, had no problem transitioning, and so they continue to reap the wealth from what is still a qualified traffic-heavy and lucrative comparison shopping engine.

Another discomforting reality is Amazon’s not-so-subtle interests as a retailer.  In spite of the thousands of smaller retailers that use Amazon’s marketplace as a place to sell goods, the retail giant has been known to cannibalize those some retailers by selling the same products to consumers directly from Amazon after identifying the hot products selling from their inventories.

Amazon recognizes which retailers are experiencing success on its marketplace then goes and contacts that retailer’s manufacturer and asks, rather convincingly, to have the same products supplied to them.  The manufacturer, generally in awe at the great business opportunity, easily complies and Amazon begins to sell the same products that those retailers successfully sold but at lower prices and under the corporate Amazon account.

Smaller retailers are greatly disadvantaged when poached because they have to compete with the likes of Amazon.  For more information on Amazon’s poaching, check out this article.

Another area where smaller to medium-sized retailers fall short to retail giants is personalization technology.  One pretty amusing and eye-opening example is Target’s highly effective data-mining technology that figured out a teen girl was pregnant before her father did.

Sure, this is one isolated incident, but the reality is that the Targets and Walmarts of the world have the technology to predict what customers want and need, sometimes even before they know it, and provide them with that product while the shopper is browsing.  Customer personalization on online stores is a facet of the consumer experience that many retailers simply can’t afford, giving the big guys a huge advantage.

Mobile E-commerce

Right on schedule, the future is quickly approaching, and while huge retailers have advantages where smaller retailers lack in resources or finances, there are points that the underdogs can and need to capitalize on to stay competitive.  All you need to do is walk around a busy public place and you’ll notice about half the people aptly maneuvering around obstacles while they have their eyes glued to a book-sized phone in their hand. The web has become mobile, and it’s estimated that 1 billion people will own smartphones by 2016.

The reality is that the number of mobile consumers is growing every day and e-commerce businesses, specifically online retailers, need to place optimizing their mobile site towards the top of their business priorities.  There are several key points to focus on when doing this.

  • Site Speed: Research indicates that the #1 asset a mobile site must have is a loading time of 5 seconds or less.  More so than online shoppers from a computer, mobile shoppers are all about getting results in a matter of seconds, and it’s within these 5 seconds that a consumer deems your site to be either mobile-friendly or mobile-unfriendly.  The latter sentiment will lead to the consumer labeling your site as illegitimate and thinking about what other, more mobile-friendly store they want to use instead.

 

  • Convenience:  Your mobile site should reek of convenience.  Never do you want a customer leaving your site because they couldn’t find your call to action.  This can be ameliorated with clean, big buttons that are among the first things a shopper sees.  Convenience also means staying updated on the newest, most efficient forms of payment processing you’re your consumers.  Google Wallet is here, and it’s most likely only going to grow in popularity.  Make sure your mobile site reads like the “x retailer’s store for dummies,” emphasizing speed of visit, cleanliness of design, and no-hassle purchases.

 

  • First Page Info: Since consumers will generally only be on your mobile site for about a minute, the key is to present all relevant information in half that time.  Your first-page should clearly display your contact info, which is the main thing people look for when browsing from a phone, and all of your product’s info, the main thing shoppers look for when researching from tablets.  The less finger taps a consumer has to make to find all the relevant information, the better.

 

Outsourcing

Other than mobile-ecommerce, there are more conventional ways for small to medium-sized retailers to compete with the big guys.  One solution is outsourcing, or hiring outside resources to take care of facets of your business where you lack the expertise, time, or resources.

Outsourcing should not be taken lightly, however.  It requires that you asses the strengths and weaknesses of your company as well as your ability to sustain those in the long run.   If you’re a small retailer, odds are that you have a million things to do and you’re lacking in the manpower or time to explore new business opportunities or optimize existing undertakings.

Customer Experience

The leverage that small retailers have in competing with the big guns is customer engagement.  The most important aspect to a small retailer’s marketing strategy needs to be creating an emotional relationship with their customers because the more that customers know about and communicate with a company, the more likely they’re going to return to that company for their next purchase. It’s the difference of having a complete stranger become an acquaintance.

Retailers grow not because they have thousands of people buy their product one time only to never visit that site again, but rather they grow because the customer experience was of such a high quality that they return to that site and company for years to come.  This is small town tactics.  This is what the giant retailers that dominate industries fail to do, for the most part, simply because it would be like watering a lawn with a spray bottle.

There are several ways to create an emotional context with customers and the central idea is this: build off any form of customer feedback that you can get a hold of.

  • Give Thanks:  When a customer buys your product, take the time to make a phone call and thank them for their business.  Don’t make that call an opportunity to advertise some offers you may have.  The gesture of taking the time to call with the sole intention of showing gratitude speaks volumes about your company.  Old-fashioned?  Yes.  Time-consuming?  Yes.  Worth it? Of course.

 

  • Really Use Your Social Media: Social media shouldn’t be used for the sole purpose of getting your company name out there.  That limited scope is really just scratching the surface of its potential use because it’s essentially an opportunity for you to start a conversation with your customers.  If they ask a question on your company page, respond humanly and humorously.

 

  • Learn More About Your Customers:  Simply put, the more you know about your customers, the more leverage you have to build a relationship with that customer.  Use what information you have to check out Twitter or Facebook pages.  If you see that a great customer is a big Chicago Bears Fan, send him/her an Urlacher jersey to show gratitude.  This is one-on-one marketing.  Again, this may sound like a tedious task, but the benefits you reap in the long-term will really pay off for your company in the form of customer retention.

 
What do you think about the future for small ecommerce business owners? How did your business do this year? We want to hear YOUR story. Post your comments below.

About the AuthorJon works as a Marketing Specialist at CPC Strategy. He loves to write, inspire, and make complicated stuff sound not-so-complicated. You can contact Jon directly at jon@cpcstrategy.com or follow him @Jon_Gregs. Also, the Chicago Bears are the best franchise in all of sports. See all posts by this author here.