Economy Growth Stages Marketing

How small retailers are reaching customers in more ways than ever before

The death of the small retailer has been greatly exaggerated. A new study shows that, contrary to popular belief by some economists and analysts, there is tremendous fluidity and plenty of options when it comes to how small businesses reach customers.

The extent that small retailers are using their options may surprise you.

The study found that small and medium brick and mortar retailers have been able to exploit technology to their benefit. The internet is effectively strengthening small brick and mortar retailers by allowing them to reach more customers with their existing infrastructure.

When a survey of 2,000 small to medium retailers asked how they reached their customers, the study recently published by the Data Catalyst Institute found that most of them readily use the internet to find and retain customers. What’s more, they found significant success, which has served to help small retailers continue to compete in a crowded marketplace. Nearly 80% of the survey’s respondents reported having a brick and mortar retail establishment, but an almost identical amount also said that they do some wholesale sales, too.

But those are far from the only methods by which small retailers reach customers. Almost 70% of respondents reported having their own web store, and 70% also said they participated in some third party online marketplace to get sales, like Amazon Marketplace, etsy, or Ebay.

The typical retailer surveyed uses all of these methods as well as social media. According to the survey, revenue from physical stores accounts for just under 1/4 of the average firm’s revenue while online marketplaces and web stores comprise 35% of all revenue. The survey also found that 72% of these small and medium retailers get almost half of their revenue online.

The survey found:

  • Small business sellers have many methods of reaching consumers to choose from: online and offline, wholesale and retail, online marketplaces, and direct-to-consumer sales. The evolution of traditional retail alongside the growth of digital selling has created an infinite variety of options and aggressive competition for sellers’ attention, investment, and allegiance.
  • The typical SMB Seller today uses five (5) different methods of selling products to consumers. The four most popular ones include both traditional and modern sales methods. They are: “brick and mortar” physical retail stores (79% of small businesses use), wholesaling (78%), 3rd-party online marketplaces (68%), and a seller’s owned and operated web store (68%). On average, 72% of small business revenue is driven by these four sales methods.
  • Within sales methods, small business retailers also frequently use more than one competitive vendor. Taking online marketplaces as an example, a whopping 87% of SMB sellers on Amazon’s online marketplace also sell on at least one other online marketplace, including 54% selling on Walmart’s marketplace and 50% selling on eBay.
  • The small retailers that use more methods are also far more optimistic about their businesses’ future. They project higher revenue this year vs. last year and are more likely to believe their industry and the U.S. economy are in good or excellent shape.

“Small business retail is not a competition between online and offline or between downtowns and suburbs; it is all of the above. Small businesses need to and are eager to do it all, as demonstrated by their average use of five sales methods and their embrace of multiple platforms and channels within each method,” said DCI Editor-in-Chief Dr. Mark Drapeau. View the report here.


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