We talk a lot in this class about big companies (we know, we know, FAANG are cool), but what about the little guys?
When people think of quintessential America, they picture walking up a tree-lined Main Street, peeking into the little independently owned shops, and seeing good hard-working folks making an honest living. These businesses are community centers: a place to go and chat with neighbors and support your local economy through buying and selling locally.
Well, that vision has been fleeting for some time now – starting with large department stores like Walmart coming in and pushing small business owners out with lower prices, convenient service, and better quality. Next came Amazon, allowing customers access to any product they could ask for, right at their fingertips, available for delivery to their door within 2 days. They too pushed small American business owners out with lower prices, even taking it to the next level by copying successful products, manufacturing them abroad, and undercutting the original sellers, promoting them in searches above the independent products themselves.
And if you thought that was bad, in strolled COVID-19, wreaking havoc on any business relying on in-person shoppers, and favoring the explosion of other large e-commerce retailers – making the rich richer, and making the environment even harder for a small business to thrive.
These small & medium businesses (SMBs) are vital – According to AirCall, small businesses contributed 48% ($17 trillion U.S. currency) to the GDP of the U.K., the U.S., Germany, France, and Canada. Moreover, research says small businesses that digitize processes could increase GDP growth by an additional 5.6% ($2.3 trillion U.S. currency) by 2024. We need them to make our economy go.
So where do local small business owners turn? How can they still make a living in America?
Let’s follow a hypothetical small business that will demonstrate the steps, technologies, and culture changes needed to digitally transform, quickly, to support the new age of consumers.
Julie owns a small jewelry shop based in Ashville, North Carolina. She relies on a healthy mix of tourists and locals coming into the shop for their jewelry needs. When COVID came in the spring of 2020, her business was forced to close. Quickly, it became evident that Julie wouldn’t be able to re-open her shop for a long time, and that when she did, it wasn’t likely that many tourists would be around to buy. How can she reach her customers? She doesn’t know a thing about online selling.
- First, she has to move from in-person retail, to an e-commerce model. The #1 company I found in my research to help SMBs do this is Shopify. Shopify consolidates sales, shipping, payment processing, and more, all onto one centralized platform, making it easy for Julie to create and manage her ecommerce site. When she is able to reopen her shop in due time, she can continue with Shopify as the POS technology too, integrating everything seamlessly. Shopify can even help Julie create, execute and analyze digital marketing campaigns. BigCommerce and Adobe’s Magento are competitors here, and others like Salesforce do one piece of the pie very well, but Shopify seems to be the Tom Brady of the category. The best part is, they provide support for less tech-savvy owners, like Julie.
- Julie also asks around to customers she knows well, and finds that because she offers Shop Pay, folks are way more likely to go onto her site and actually follow through with completing their order, because it’s so easy (as a side-note, I personally was online shopping this past weekend, and with Shop Pay it’s literally one click and your credit card, address, delivery preference, etc. are autopopulated, so it allowed me to shop much faster). Google pay and others also do this, but having all the business systems with Shopify will help her integrate all of the information and keep track more easily, plus probably save her a few bucks for using more of their services.
- Pickup and Delivery service is another beast, and although she can track via Shopify, she may need to make an agreement with a carrier on her own. FedEx and UPS are fighting over SMB share right now, and have both recently increased prices a lucrative 5.9%. Luckily, companies like Reveel will help you negotiate against the big guys for lower rates.
- Next, she must begin to market on digital channels. Two Boston based tech companies are helping SMBs tackle this relatively new and urgent frontier: Hubspot and Klaviyo. Klaviyo helps small businesses with targeted, personalized email and SMS campaigns. It also integrates with Shopify seamlessly. Hubspot offers a wide suite of products, but it’s their Marketing Hub that is the bread & butter, helping small businesses grow traffic, convert visitors, and scale campaigns. Loyalty marketing is all the rage right now. Setting up subscription services or rewards programs is the best way to build a following and get repeat buyers, not to mention manage more predictable recurring income – and these companies can help. Perhaps the most effective digital marketing tool is simply social media marketing. Facebook, Instagram, and more can be cheap and effective places to reach targeted consumers, and with built-in shopping platforms now, users can buy right from the site. Instagram influencer partnerships, for example, are often the catalyst for small online businesses to skyrocket sales in a short period of time.
- Lastly, once Julie establishes her online presence, she can scale using these same cloud tools. By having her data and operations in Shopify, Google drive (for documentation), Quickbooks (for accounting), and others, SMBs can pay only for what they use, and gain serious value from accessing info when and where they need it.
Now, this is all much easier said than done. According to a study from Cisco, only 24% of SMBs are in the most advanced stages of digital transformation, and only 4% are born in the digital world (digitally native). Thus, when mom-and-pop shops try to pivot to e-commerce, there are many opportunities for failure. Harvard Business Review says that the most important needs are bringing business analytics expertise onto your leadership team, and changing how your organization makes decisions. In my opinion, it’s not possible to just upend your “leadership team” if your leadership team is simply yourself. I’d recommend instead that SMBs utilize platforms that offer strong consultative services as part of the package, to get access to people who understand this stuff well.
I hope this was a successful exercise in putting yourselves in the shoes of a small business owner, to understand the uphill battle they face, yet the opportunity that awaits if they can move to a digital model. I missed lots of stuff, feel free to chime in in the comments on things like cybersecurity, AI, and automation. I hope as you do your holiday shopping this year, that you keep local businesses in mind!
P.S. if you haven’t started, I recommend you get going on your holiday shopping (in case you live under a rock, the supply chain is a train wreck).