Marketplaces Won’t Fix the Slump for Small Businesses. Now is the Time to Future-Proof Your E-Commerce Strategies
Small to midsize businesses (SMBs) were among the hardest hit during COVID-19. Since mid-March, one-third of U.S. small businesses have stopped operating, and an additional 11 percent don't believe they’ll survive if conditions persist for three more months. Small businesses that primarily sell on Amazon.com suffered when the online giant prioritized essential goods in response to the pandemic. In an effort to survive, SMBs set up independent online shops, expanded to new channels, and developed creative solutions to engage customers at home.
While marketplaces and their promise of convenience and global reach can be extremely appealing to SMBs, relying on one marketplace is risky.
The pandemic’s aftershocks will force small businesses to look beyond shiny offers or a quick discount to thrive in a post-quarantine world. Here are a few places you can start.
Diversify, Diversify, Diversify
The "new normal" that we’re living in is characterized by a constant state of flux. What might look like stability one day can turn to uncertainty the next. That’s hard for any SMB to navigate. To offset some of that uncertainty, it’s critical for SMBs to diversify their sales and marketing channels. It’s not new advice — omnichannel shopping experiences are critical. That said, many brands still rely on a single channel to reach customers. Like an investment portfolio, we can’t predict which stocks will win and which will lose, but those that don’t expand the number of channels they sell across tend to be the worst hit when a crisis occurs.
At the height of the pandemic, we saw hundreds of thousands of brands migrate online and set up digital storefronts as a way to continue to engage with their customers as brick-and-mortar doors closed. This is a great first step to boosting brand awareness and sales, but given this new economic uncertainty, it’s not enough. With individuals continuing to live, work and shop from their homes, online sales will further grow at an incredible pace, and SMBs need to invest in additional channels (e.g., marketplaces, social, company websites, comparison shopping sites) to increase their customer engagement and, ultimately, improve their long-term survival rates.
Control the Brand Experience for Deeper Customer Engagement
Another aspect that SMBs tend to overlook when they sell their goods through a marketplace is that they have little to no control over their brand image. While finding the time and resources to build up your own branding can be daunting and costly for some, putting it off represents a huge missed opportunity to generate brand awareness, strengthen your image and ultimately shape the conversation about your business. You’re also giving up the ability to build an experience that customers can relate to and remember.
In addition to setting up your own website, SMBs should invest in social media channels as a way to control the brand experience. Instagram is one that comes to mind for most, but there are a number of other social media sites, like Facebook and Google Shopping, that offer the ability to make purchases directly. Moreover, social channels allow merchants to engage in ongoing dialogue with customers and build brand loyalty. And not just around discount moments, like a flash sale, but throughout the year. Social channels are becoming the table stakes to effectively engage customers, improve their online experience and, ultimately, convert sales.
Get Creative on Fulfillment and Shipping
As the pandemic unfolded, merchants increasingly realized just how vulnerable supply chains are. Disruptions beginning in China impacted the availability of inventory and shifted delivery times for goods. Shelter-in-place orders halted fulfillment and distribution of nonessential products across marketplaces, further complicating the situation for many small businesses.
Yes, the built-in network and convenience of marketplaces are appealing, but during a time like COVID-19, those perks quickly fade away. When panic buying set in, companies that could quickly pivot to produce hand sanitizer, masks or disinfectant wipes saw sales skyrocket, but for everyone else selling "nonessential goods," the results were disastrous. SMBs learned the hard way that marketplaces ultimately make decisions based on what benefits their business over consumers or merchants.
Looking forward, there are a couple ways that SMBs can control their fulfilment and shipping destiny. For example, merchants with physical stores can turn part of their back rooms into mini fulfilment centers in order to have inventory on-hand when marketplace delivery times slow. Alternatively, SMBs can also turn to third-party logistics providers to help offset delays.
Given the current state of the economy, I recommend that small businesses take the time to closely look at what products are in demand and boost their inventory of those items to ease some of the tensions around shipping and fulfilment. Additionally, if you have the ability to lean on local delivery services to supplement shipping or offer curbside pickup to customers, this can be another way to make ends meet and stay engaged with customers.
SMBs should think long and hard about their long-term e-commerce strategies. We’re still navigating the effects of the pandemic and with a possible second wave in the fall, SMBs relying on a single marketplace strategy could be setting themselves up for another nosedive.
Erik Suhonen is vice president, operations and product partnerships at Ecwid, a leading global software-as-a-service (SaaS) e-commerce company.