Monday, April 22, 2024

What Big Brands Can Learn From Mom and Pop Stores to Connect With Their Customers

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For online retailers, the pandemic sales surge is officially ancient history.

Direct-to-consumer (DTC) brands are filing for bankruptcy. Luxury retailers that raced online, like Louis Vuitton and Chanel, are licking their wounds. Globally, digital retail’s share of total sales has flatlined at around 20%. If you’re a big brand, the prognosis can look pretty grim unless, that is, you start thinking small. Online brands that are surviving and thriving are increasingly taking a page out of the playbook of much smaller retailers — especially when it comes to tech.

As the founder of an agency that helps brands with ecommerce strategy, I’ve seen how smaller players are driven by the need to act fast and do more with less. That means adopting new and cost-effective tech before their larger peers. Resourceful and creative, retail small and medium-sized businesses (SMBs) are also intimately involved with their customers online. And unlike large companies, they don’t have internal silos blocking their digital progress.

All of those strengths hold valuable lessons for big and growing retailers. Here’s what they can learn from smaller brands when it comes to harnessing retail tech.

Related: 4 Ways to Understand the Rise and Fall of DTC Brands

For your ecommerce platform, think speed and convenience

Because they have to move fast, small retailers typically opt for an ecommerce platform that’s robust, nimble and adaptable. The quicker they can stand up a site, and the less technical expertise required to sustain it, the better.

Legacy enterprise platforms — costly, clunky and hard-to-customize — have long been the go-to for big brands. In the past, these were the only tools capable of reliably handling the volume of sales and SKUs of a major retailer. But that situation has changed.

When the clothing retailer Banana Republic launched its furniture and home decor wing late last year, it went with an ecommerce platform originally known for serving small creators and entrepreneurs, Shopify.

Why? At this point, every up-to-date platform has lots of bells and whistles. What actually matters isn’t individual features as much as usability and flexibility. Does the platform have low barriers to launching a retail site? Does it have a robust app ecosystem that’s integrated with its services? (Delivering on that front is Shopify, which has a marketplace of roughly 3,000 apps.) When it comes time to customize your site, does the platform have a host of agency and technology partners who can help get the job done?

Think of choosing a platform like buying a car. You want something reliable, safe and easy to service — even if you may not know exactly how everything works under the hood.

Outsource tech setup and customization

Unlike many other big retailers, Banana Republic also knew better than to build its own online platform. Major brands often fall into that trap, hiring huge engineering teams tasked with keeping ecommerce in-house.

News flash: Retailers aren’t technology companies. They wouldn’t rely on their in-house counsel to handle sensitive legal matters. So how is it any different for retail tech, a point of direct contact with customers?

Retail SMBs are big fans of brand-new technology, with two-thirds saying they’re open to embracing it. But startups know that the highest value comes from time spent on strategy, not getting in the weeds of implementation. That’s why it’s often better to outsource tech setup to an ecommerce agency.

Because such firms typically deal with many different businesses, they have no shortage of tips and tricks to offer clients. They can also select the right platform, find the smart people a brand needs to compete online and play a key role in site customization.

Related: 4 Ways Brands Can Educate Their Customers and Win Hearts

Invest in a direct line to customers

Smaller online retailers also understand the power of using tech to connect directly with customers. This, after all, was the original promise of DTC commerce. Instead of sending your customers to a big box store or other middleman, you could cultivate a direct, personal relationship — providing better service and building lifetime loyalty in the process.

To make the most of this pipeline, small retailers have long embraced tools that facilitate conversational commerce, i.e., one-on-one digital conversations with consumers. Way back in 2016, online clothing retailer Spring created its own live messaging and personal shopping service.

Today, this trend continues. Because video, generative AI and other newer technologies for connecting with shoppers are affordable and accessible, smaller retailers have been first out of the gate with them, too. For example, energy drink startup EBoost is using shopper data to create “digital twins” of customers, then harnessing generative AI to chat with them, gaining insights into shoppers’ future behavior.

Small brands also excel at personalizing customer experiences and using technology to take this to the next level. This can take the form of everything from virtual appointments with in-store salespeople to fully personalized product recommendations based on customer history and preferences.

Besides shrinking customer acquisition costs by as much as 50%, personalization can boost revenue by 5 to 15% and marketing ROI by 10 to 30%. Seven out of 10 consumers expect companies to offer personalized interactions, and three-quarters get frustrated when they don’t deliver.

Big brands are increasingly taking a page from this playbook. Through Nike By You, for instance, shoppers can create custom shoes by using a 3D model to choose colors and materials, plus their own ID.

Break down walls that hinder sales strategy

Besides knowing their customers, small retailers have a clear, detailed picture of their ecommerce business itself — another strength that bigger players should strive to emulate.

That’s because their IT, customer service, merchandising and other departments are all — by necessity — in constant communication. So it’s easier to see that the higher cost of drawing site traffic is hurting sales margins, for example, or that long shipping times are driving customers away. Smaller retailers can pounce on such problems and fix them.

Big brands? Not so much. All of those business functions tend to be siloed, creating roadblocks that frustrate growth. In a recent survey by customer relationship management company Zendesk, only about one in five business leaders said their teams share data well.

Here, too, choosing the right tools can help. Look for an ecommerce platform that gathers all of the crucial metrics — sales, conversion rate, visitor sessions — together in one place. It should also let retailers dig into and visualize that data with ease and then share it easily across the company.

For retail brands, technology is ultimately a means to an end: connecting with and serving customers. In a tough market, making smart tech choices can go a long way toward closing that gap.



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