Technology and the internet have vastly improved access to information, products and services everywhere in the world, and this has created enormous opportunities for e-commerce. With the internet driving what is expected to be a $4 trillion e-commerce market, it’s useful to ask: How is technology influencing retail operations? How have the rules of retail changed? How have they stayed the same?
As the global population has grown wealthier and more connected, retail markets have become larger, more sophisticated and more competitive, but the underlying forces haven’t changed. What has changed is the new ways in which retailers create value.
In theory, success in retail is simple: Just offer products and services that your customers want and you’re good to go. As the saying goes, however, the devil is in the details. You can offer what customers need and want, but you still have to let them know how to find you and then convince them that what you have is what they need, and that’s where things can get tricky.
In the pre-internet days, the average retailer relied on a good location and maybe some targeted advertising. Today, the location aspect is no longer a factor — you just need to launch and maintain a great-looking, well-organized website and get the word out via various online advertising methods and SEO.
Online retailers can also achieve much greater scale than brick-and-mortar sellers because of three key improvements powered by technology: access to customers and suppliers anywhere in the world, access to specialized back-office support and availability of data across the entire value chain, from the factory floor to end customer and all points in between.
The internet is the Main Street of the world, accessible to anyone with a computer or smartphone, which means pretty much everybody. Moreover, availability of click data has made it possible to target customers anywhere in the world who will respond to online sellers’ value propositions.
Strong SEO and digital advertising skills have replaced a great brick-and-mortar location as the primary differentiators in attracting foot traffic. And a well-designed website is the digital equivalent of effective store signage and in-store merchandising.
Once you’ve drawn customers to your online storefront, a strong first impression will keep them from clicking over to someone else’s online store. Physical stores learned early on that relaxing music (Muzak), well-managed store layouts, attractive display aesthetics and friendly staff all help boost sales. Virtual stores can manage the shopping experience similarly, through intuitive site layout and easy navigation and checkout.
Customer acquisition costs are high, and so repeat business means stronger margins. Local shops generate repeat business by building rapport with customers, and it’s no different online. Get to know your virtual customers and build rapport to keep them coming back.
Many would-be online retailers think that it’s impossible to compete with Amazon — and that’s true if you think you have to offer everything to everyone. Luckily, there is an infinite variety of niches, any one of which can be served much more effectively by a “community native” provider than by Amazon. Just as a local specialty shop on Main Street did not have to compete directly with a generalist department store, on the Virtual Main Street, you must know your niche and give your customers what others can’t in order to win.
One of the biggest mistakes online retailers make is focusing too broadly, trying to acquire every advantage that Amazon has while setting up and maintaining their online stores. Independent brick-and-mortar shop owners generally don’t build their own buildings, and they outsource all kinds of operational tasks, from accounting to copywriting and everything in between.
Today’s successful independent online merchants focus on their core strengths of direct marketing and providing the right customer experiences while letting modern software tools and infrastructure do the rest. Virtual stores can outsource wide-ranging business functions such as web design and coding, inventory-management systems and supply-chain logistics, and smart entrepreneurs are taking advantage of comprehensive platforms to remain lean, nimble and profitable.
The manner in which customers buy things has changed dramatically, but buyer behavior is essentially unchanged. Offer them what they want at a fair price, make the whole process as easy as possible and they’ll keep coming back for more.
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