If you can’t beat ‘em, join ‘em – so goes the motto for pragmatic surrender. In retail, the corollary to that might be if you cannot survive on your own in a world dominated by the likes of Amazon, join its influential and often very lucrative third-party marketplace, and go from there.
But what if a particular smaller businesses wants to do more than that? In honor of National Small Business Week, PYMNTS takes a dive into what works for SMBs in the digital age of the early 21st century.
Innovation is always something to consider when it comes to retail, especially small- and medium-sized commerce operations – particularly, a relentless commitment to innovation. The link between SMBs and innovation, in fact, is part of the new PYMNTS Retail Innovation Readiness Index.
That report found that in today’s digital economy, with shopping as easy as tapping a finger on a smartphone screen, brick-and-mortar retail businesses have no choice but to innovate to keep and grow their clientele.
Sure, a large percentage of retail businesses recognize this reality. That said, in some quarters of the economy, the implementation of innovative technologies has been slow-going. This is the case for small and medium-sized, consumer services-oriented companies – specifically auto garages, contractors and tourism and entertainment-related venues. Only 14.2 percent of these businesses have implemented smart point-of-sale (POS) systems, a crucial tool that can streamline payments, boost customer loyalty and track business operations.
There’s no question that, compared to other sectors, consumer services businesses lag in their implementation of innovative technologies. According to the Index, firms in this sector earned an average of 25.5 points out of 100, significantly below health and beauty firms’ score of 35.1, and accommodation firms’ score of 34.1.
Those findings might stare many smaller businesses in the eye, but that doesn’t mean the effort to innovate — to stand out from the crowd and command a retail niche — is easy work. Indeed, SMBs prefer not to seek funding to finance their innovative endeavors, according to research from BMO Wealth Management, which suggests SMBs are missing out on opportunities to drive growth. Its report found that 60 percent of small businesses have never sought funding to support investment in innovation. More than a third said they chose not to seek financing for this purpose because they did not want to take on more debt.
But for those SMBs with the means and determination to innovate, there are ways to survive and thrive in a digital and offline world dominated by the big players – not the least of which, of course, is Amazon.
The first trick? Dive into the deep end of pool, so to speak.
“For independent retail organizations looking to remain competitive in today’s ‘Amazon era,’ it’s important to not shy away from online experiences,” reads one recent analysis of the topic. “This doesn’t mean rush out and build a professional-grade store website. There are plenty of ways to engage with consumers online without spending too much time or resources.”
That analysis goes on to describe perhaps the main advantage for many SMBs at this point: the advantage of geography, of being local. “Anyone can shop online at Amazon, but only a select group of people can visit an independent retailer,” it said. “Small businesses can use their relatively ‘small’ size to their advantage when it comes to attracting a certain type of customer.”
In fact, as PYMNTS has covered, while millions of tech-savvy consumers spend countless hours staring at their mobile devices or desktop computers to find the latest online sale for electronics or groceries, there are millions more who like to touch and feel goods at their neighborhood outlet, and often need to use them right away. That presents opportunities for smaller companies, including a startup retail technology firm called Pointy.
“The majority of local retailers have some web presence,” CEO Mark Cummins told PYMNTS. “They’re listing their local presence, they’re listing their contact details, but they’re not typically listing the inventory of their stores.”
With Pointy, a small box that looks a bit like a wireless access point connects a retailer’s barcode scanner to their cash register or point of sale system. Pointy automatically registers the correct product name and image and uploads it to the retailer’s online Pointy page. The Pointy technology optimizes that inventory so that products appear higher up in search results when customers are trying to find them online.
Role of Payments
Payments, too, are key for SMBs looking to translate the energy and ideals of National Small Business Week (which ends May 11) into lasting profit. “There are a lot of dollars left on the floor” by merchants who fail to provide enough local payment options, said James Booth, vice president and head of new business for PPRO, a global firm that focuses on local payment methods and related services, including the facilitation of cross-border digital transactions, in an interview with PYMNTS.
The numbers back that up. Booth said 50 percent of online shoppers have abandoned a transaction because the eCommerce operator failed to offer a preferred payment option.
Innovation takes many forms, and SMBs can hardly afford to not at least consider all of them in their pursuit of retail revenue.