As online retail giants transform the shopping experience and consumer expectations, small and medium-sized businesses are playing by a new set of rules. They're borrowing from the retail giant playbook to compete and win against their competitors. They're acclimating to the new business environment with technology and automation and by meeting customer demands for high-quality service, a wider product selection and near-immediate shipping.
If you want to follow their lead, consider these six ways your SMB can come out on top in the digital age.
1. Price every product with purpose.
Companies that are still using pricing strategies from five to 10 years ago may find it difficult to compete with competitors who have embraced modern technology. This is due in large part to the outdated techniques that many SMBs use to set prices—relying on, for example, historical data and gut feel. Science and data can deliver far superior results, particularly when you're dealing with several hundred thousand products.
One example of a modern pricing strategy big online retailers use is dynamic pricing, which allows businesses to adjust product prices based on demand. In high and low seasons, prices automatically rise and fall. The key to successful dynamic pricing is speed. Unlike peak versus off-peak pricing models, dynamic pricing occurs 365 days a year. To utilize this method, businesses rely on technology, science and data, creating a perfect harmony of data-driven decision making and automation.
Consider automating your pricing strategy, which can reduce the amount of time spent calculating pricing, make your pricing more accurate and empower your business to use data to make better-informed decisions. Modern automation tools can analyze a variety of data points, such as customer preferences and trends, overall product preferences and patterns and seasonality, which were often overlooked or too difficult to obtain before automation became easily accessible.
2. Offer a wider range of products.
Today's consumers expect options. Of those visiting a store with an intent to buy a product, some customers may leave without making a purchase because a particular size, style, color or model isn't available. SMBs can borrow a page from large online retailers to successfully anticipate customer wants by stocking additional, noncompeting or related products.
Retail giants have set the bar high by offering an endless quantity of products in each category they sell. To succeed in expanding product availability, SMBs need to select additional products based on the trends of their customers. This is where customer data can serve as a guide. Offering a wider selection also requires a mechanism to store, track and manage large lists of products and their descriptions. Depending on the industry, it may be more effective for SMBs to not stock new products at all. Business owners can instead work closely with a handful of drop-ship suppliers to provide a wider array of products from other suppliers with lower overhead. But managing multiple warehouses and vendors as well as the movement of data between them can easily become costly and error-prone if done manually.
Automating these processes can give your company the best of both worlds—a world-class selection of desirable products in all shapes, colors and sizes and a fulfillment process that works.
3. Don't overlook the return process.
Customer experience needs to be consistent across all channels: websites, social media, storefronts in online marketplaces and any other channel your company sells or markets through. Customers expect the same high-quality service in every interaction with your company, regardless of channel, including the return experience. According to The 2017 Holiday Shopping Behavior Survey by the National Retail Federation, which polled 2,040 consumers, 64 percent of shoppers who have issues with returns would be “hesitant to shop at that retailer ever again."
Digital retail empires have been built on free and automated returns. Most orders from major online retailers now include a prepaid return mailing slip. SMBs can implement this strategy by extending consistency of experience to their returns process and enact business systems, policies and procedures that allow for frictionless returns. This can help SMBs move from being a multichannel retailer to an omnichannel one, creating a uniform experience throughout the customer journey.
4. Anticipate customer needs.
For an SMB, agility means being able to move quickly and anticipate customer needs. But it also means being able to understand the factors driving customer satisfaction. Consider shipping, for example. Online retailers have taught consumers to expect free “express" delivery on many of their orders, but SMBs don't have to deliver that same shipping experience in order to satisfy customers. In fact, customers may be more interested in free shipping than fast shipping, and big businesses are already using this to their advantage.
Many large online retailers now offer “free two-day shipping" instead of “free two-day delivery." If the item is out of stock or back ordered, it can take up to four or five days for delivery. But because shipping is free, their customers are happy.
Post-sale communication is also important to creating happy customers. Delivery of communication is a part of predicting your customers' needs. Think about your post-sale customer communication process. Do customers receive a confirmation email? A “preparing shipment" email? A notification that the order has shipped with tracking information? An email when the order has been delivered or when it is delayed? The more agile you are with information and communication, the happier and more loyal your customers may be. If you quickly set the precedent that your business is one that anticipates needs and supports customers, you can achieve agility.
5. Reach customers globally.
Take a page from online retail giants' playbook: Global is the new local. In order to compete in today's digital era, SMBs must look beyond local and regional markets. Until recently, selling globally was only something large companies could do due to limited access to newer technology and the resources required to expand aboard. However, newly accessible global markets are opening up, and there are lower barriers to entry thanks to to advancements in technology. Every business should consider operating across multiple channels to have a global reach.
The first step in entering the global market should be an international business plan, one that involves thorough research to identify international markets worth pursuing. The Department of Commerce and the International Trade Administration are great places to discover market opportunity. With these resources, SMBs can identify locations where you can take advantage of cultural knowledge, local product interest, language capabilities and available infrastructure to support your business.
To capitalize on foreign markets, SMBs must also enable their operations to support multiple currencies, languages and tax regimes. Business systems and policies that worked for local or regional sales might not be up to the task. Before expanding abroad, business owners should examine their structure, IT systems and policies to prevent unforeseen issues.
6. Enable seamless operation with partner companies.
To act more like a retail giant, many SMBs are turning to a network of vendors, suppliers, manufacturers and distributors that combine forces to compete in the marketplace. This requires your network to be able to operate seamlessly. Automation can help make this a reality. Consider automating daily transactions and tasks, like verifying orders, processing, ordering and reordering, receiving and sending payments. If a process is repeated, it should be automated.
SMBs have many opportunities to utilize strategies that have made online retailers successful in order to evolve in the modern business environment and become more competitive. By adapting this advice in your own business, your company may surpass your competitors and win in the digital age.