The Fight For Digital Shelf Space
Remember the days when corporate rivals fought tooth and nail to out-compete each other, capture market share and put the other out of business?
That’s still happening, but one development on the retail front is pointing to a new trend: symbiotic partnerships, in which enterprise-sized giants team together to sell more. It could be the dawn of the “If you can’t beat ’em, join ’em” era of retail gamesmanship.
And if it catches on, this movement toward greater convergence — starting on the retail front, but one that could easily spread to other sectors — could spell trouble for small- and medium-size businesses.
Unlikely Bed-fellows
Last summer, Google and Wal-Mart announced a new partnership. Google Express — the search behemoth’s online shopping mall — would now sell Wal-Mart products, a first for the giant retailer. Google gets the power of the Wal-Mart brand behind its efforts to expand its retail footprint and Wal-Mart taps into Google’s search capabilities and enormous online reach. It all makes sense, at least in theory.
The target here is Amazon.com Inc. Neither Google nor Wal-Mart — despite their deep pockets and ubiquity in their respective industries — can come close to matching the more than 100 million products and extraordinary market share that Amazon has been able to gobble up.
Wal-Mart welcomed nearly 84 million visitors to its U.S. website in July, according to the New York Times. Amazon had more than double that number.
At first glance, the Wal-Mart/Google deal seems like just another example of two large companies who can’t quite dominate a market joining together to take on a more established rival. And make no mistake, that is exactly what the two organizations are doing. But the shockwaves from this agreement will be felt by much smaller retailers — including those in Canada — who will now face even greater pressure to improve their digital infrastructure or be left behind.
The Reality Of Showrooming
Forward-thinking digital strategies are the key to growth. That’s particularly true because customers will continue to take “showrooming” to a whole new level — it’s a phenomena where customers will visit a brick-and-mortar store to look at merchandise, then hop online to buy it cheaper from a competitor (or perhaps that very retailer if it happens to offer the item cheaper on its own website).
Convenience will also become increasingly important moving forward, a fact that Amazon long ago understood; it’s one of the many factors that has made it one of the world’s most valuable businesses. Retailers of all sizes will need to learn how to make shopping as easy as possible, with features such as smart re-orders for products that consumers need to buy on a regular basis, automatic (possibly same- or next-day) home delivery and easy returns.
As an entrepreneur, how will you replicate these service offerings in your business? Will you become the next Instagram, or go the way of Toys ‘R’ Us? Those are big questions, I admit, but they’re valid ones that owners and managers of small- to medium-size retail or service businesses need to consider if they hope to compete as the competitive sands shift.
10X Growth Strategies
That likely requires what might be termed exponential thinking — taking your business to the next level by employing tools that, when deployed effectively, amplify its reach and scale.
That could mean looking at automated artificial intelligence software to streamline inventory control or to interact with customers. Machine learning and chat bots have the potential to streamline customer relationship management, optimize processes such as product procurement, and relieve the challenges that come with addressing customer questions or concerns in a timely fashion. The same could be said for leveraging product information management systems to ensure that product descriptions are consistent across platforms, which is now a must for businesses selling on various online retail platforms.
It could mean embracing free delivery, if you don’t already. That could be a bitter pill to swallow if it eats into your bottom line, but with companies such as Google, Wal-Mart and Amazon are doing it, it should be considered a bare-minimum requirement simply to compete.
The Reality
Corporate partnerships could very well establish (or further entrench) real or virtual oligopolies that put even greater pressure on smaller retailers. The time to upgrade your digital infrastructure was probably two years ago — which means that if you haven’t made those investments, you’re likely far behind the curve.
Delaying digital spending and hoping developments such as the Google/Wal-Mart partnership are one-off events only puts your business at greater risk.
This trend is here to stay.
(This article originally appeared in Dave Burnett’s column in the National Post)
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