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Navigating Growth Challenges for Small Retailers

4 Mins read

Starting a retail business is a breeze–handling growth poses challenges. Entrepreneurs can tap into over 400 marketplaces to build a brand and reach global customers. Initially, managing stock in one location and manually fulfilling orders is sustainable. But that’s just the beginning. Successful expansion hinges on maintaining customer experience and brand value, regardless of the increasing number of customers, channels, or product lines. This is where even the savviest business and owner can start to hit roadblocks.

Recognizing the Right Time to Invest and Scale

Knowing when to invest and scale up is tough. Signs that the current model is straining may include spending evenings and weekends catching up with orders, making errors in order processing and inventory, leading to customer service problems, or feeling overwhelmed by escalating costs. This is the cue to invest in technology before growth derails the business.

It’s important for your e-commerce platform to seamlessly manage inventory and order fulfillment across multiple marketplaces, third-party logistics, and couriers. It should also offer a real-time view of business performance, safeguarding both customer and owner retail experiences.

Seizing Business Expansion Opportunities

The number of U.S. retail businesses is on the rise, with 2,926,859 retail trade businesses as of 2022, a 1.3% increase from 2021. Many of these businesses have harnessed online marketplaces to take an idea from the drawing board to a potentially global audience. Entrepreneurs have mastered product design, sourcing, and marketing, leveraging small start-up capital investments to build inventory, establish the right pricing model, and curate a brand, typically using basic tools like spreadsheets.

But what comes next? As customers love the product, sales surge, and feedback pours in, how does a business take the next step? Multi-channel retail is crucial, with 70% of customer searches originating on marketplaces and social media. However, each additional marketplace adds complexity and risk. How can the order process be effectively managed? Where should stock be stored? Are third-party logistics (3PL) providers the best option? Which courier’s price and service delivery model best fits customer expectations? And is it possible to give customers full visibility of order status throughout?

These decisions can be daunting, and the temptation to stay small to maintain control is strong. But realistically, is the business really under control? Or is the business owner working seven days a week to keep things afloat? Every growing small business reaches a point when change is inevitable. But what needs to change, and where should the investment be focused? Adding people is expensive, inflexible, and high-risk, especially when sales can be cyclical at best and volatile at worst. Expanding the number of marketplaces the business sells through is simple on paper. However, it can be a nightmare in practice, especially if a retailer is still trying to handle the entire process manually and risking losing hard-won customer loyalty.

Strategic Timing for Seamless Scaling

To scale without adding unnecessary risk or unacceptable cost, a retailer needs to connect and automate every aspect of the e-commerce process. With a flexible pricing model that aligns cost to value, dedicated Connected CommerceOps software provides cross-marketplace efficiency with inventory management and fulfillment excellence that multiple spreadsheets or home-grown databases cannot match.

By operationalizing the entire e-commerce process, a small retailer can seamlessly scale up while maintaining a high-quality customer experience. With a single, reconciled view of inventory across warehouses and third-party logistics providers, the risk associated with expanding across multiple marketplaces is mitigated by enabling efficient order fulfillment processes that truly meet each customer’s expectations.

Leveraging an ecosystem of integrated solutions, including pricing, listing capabilities, or shipping, to provide customers with complete visibility of order status and delivery, with access to marketplace channels, allows the entire e-commerce process to be executed holistically. The retailer’s reach is extended while safeguarding the quality of experience at the heart of successful, profitable growth.

Strategic Insights for Sustained Focus

Furthermore, Connected CommerceOps delivers new insight into every part of the retail process, allowing early intervention when inevitable problems arise and supporting further growth plans. Instead of spending 100% of the time operationally firefighting, a business owner or management team can use insight to understand trends in customer behaviors, optimize inventory models, and continually assess courier performance.

For example, evidence suggests that a five-or-more-marketplace model provides optimum performance for a small but growing retailer. It smooths out the volatility that can occur with a one or two-channel model and, with complete visibility and automation, provides a successful platform for growth. Once retailers become established at that level, insight into performance across each marketplace, product line, and customer profile can then support further marketplace expansion as required.

Importantly, this can be achieved without working seven days a week, without constantly juggling order fulfillment with finance and customer services with merchandising. Combining slick operational processes with accurate business insight allows a retailer to scale and sustain the customer experience and gives retail business owners their weekends back.

Strategic Tech Investment for Lasting Success

Many entrepreneurs wait too long to make the change, hitting the moment when the excitement of business success tips over into the dread of business overwhelm. While deciding when to invest in the technology required to support growth is tough, it’s far better to go early than wait too long, miss the boat, and watch hard-won success unravel.

Investing in the right technology at the right time safeguards business growth and an entrepreneur’s business commitment. No more problems associated with inconsistent stock information leading to missed opportunities and the untenable costs related to overstocking. No more nights spent second-guessing this season’s performance when planning what to buy for next season. And no more risk associated with unfocused multi-marketplace models that add complexity but fail to reflect the business concept truly.

By investing in automation at the right time and operationalizing the business, a retailer owner reduces the risks associated with growth while retaining the innovative spirit that was the original business inspiration.

Chris Timmer is the CEO of Linnworks and has more than two decades of experience and deep knowledge of the rapidly changing multichannel e-commerce environment, as well as a history of helping customers innovate to address the growing complexities in managing the sale and fulfillment of goods at scale.

Retailer stock image by Gorodenkoff/Shutterstock

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