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For online retailers, the pandemic-related 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 remained stable 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 survive and thrive are increasingly taking a page out of the playbook of much smaller retailers, especially when it comes to technology.
As the founder of an agency that helps brands with e-commerce strategy, I’ve seen how smaller operators are driven by the need to move quickly and do more with less. This means adopting new, cost-effective technologies before their larger competitors. Enterprising and creative small and medium-sized enterprises (SMEs) in retail are also closely involved with their customers online. And unlike large companies, they don’t have internal silos blocking their digital progress.
All of these strengths contain valuable lessons for large and growing retailers. Here’s what smaller brands can learn when it comes to leveraging retail technology.
Related: 4 Ways to Understand the Rise and Fall of DTC Brands
For your e-commerce platform, think about speed and convenience
Because they need to move quickly, small retailers typically opt for a robust, agile, and adaptable e-commerce platform. The faster they can get a site up and running, and the less technical expertise needed to support it, the better.
Legacy enterprise platforms—expensive, clunky, and difficult to customize—have long been the preferred choice of big brands. In the past, these were the only tools that could reliably manage a major retailer’s sales volume and SKUs. But the situation has changed.
When clothing retailer Banana Republic launched its furniture and home decor wing late last year, it opted for an e-commerce platform originally known for serving small creators and entrepreneurs, Shopify.
Why? At this point, every updated platform has a lot of bells and whistles. What really matters is not individual features but rather usability and flexibility. Does the platform have few obstacles to launching a retail site? Does it have a robust app ecosystem integrated with its services? (On that front is Shopify, which has a marketplace of about 3,000 apps.) When it comes time to customize your site, does the platform have a number of agencies and technology partners that can help you get the job done?
Think of choosing a platform like buying a car. You want something reliable, safe, and easy to maintain, even though you may not know exactly how everything works under the hood.
Outsource technology configuration and customization
Unlike many other large retailers, Banana Republic also did well in not building its own online platform. Big brands often fall into this trap, hiring huge teams of engineers tasked with maintaining e-commerce in-house.
Newsflash: Retailers are not tech companies. They would not rely on their in-house legal counsel to handle sensitive legal matters. So how does a direct point of contact with customers differ for retail technology?
Retail SMEs are big fans of new technologies and two-thirds say they are open to embracing them. But startups know that the greatest value comes from spending time on strategy, without getting lost in the weeds of implementation. That’s why it’s often best to outsource the technical setup to an e-commerce agency.
Since such companies typically deal with many different businesses, there is no shortage of tips and tricks to offer customers. They can also select the right platform, find the smart people a brand needs to compete online, and play a key role in site personalization.
Related: 4 Ways Brands Can Educate Their Customers and Win Hearts
Invest in a direct line to customers
Even smaller online retailers understand the power of using technology to connect directly with customers. After all, this was the original promise of DTC commerce. Instead of sending your customers to a department store or another intermediary, 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 adopted tools that facilitate conversational commerce — 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 convenient and accessible, even smaller retailers have been early adopters. For example, energy drink startup EBoost is using shopper data to create “digital twins” of customers, then leveraging generative AI to chat with them, gaining insights into future shopper behavior.
Small brands also excel at personalizing the customer experience and using technology to take it to the next level. This can take the form of anything from virtual appointments with in-store salespeople to fully personalized product recommendations based on a customer’s history and preferences.
In addition to reducing customer acquisition costs by up to 50%, personalization can increase revenue by 5 to 15% and marketing ROI by 10 to 30%. Seven in 10 consumers expect companies to offer personalized interactions, and three-quarters feel frustrated when they fail to do so.
Big brands are increasingly taking cues from this playbook. Through Nike By You, for example, shoppers can create custom shoes using a 3D model to choose colors and materials, as well as their own ID.
Break down the walls that hinder your sales strategy
In addition to knowing their customers, small retailers have a clear and detailed picture of their e-commerce business, another strength that larger operators should strive to emulate.
That’s because IT, customer service, merchandising and other departments are all, by necessity, in constant communication. So it’s easier to understand that the higher cost of driving traffic to the site is hurting sales margins, for example, or that long shipping times are driving customers away. Smaller retailers can step in on such issues and resolve them.
Big brands? Not so much. All of these business functions tend to be siled, creating roadblocks that frustrate growth. In a recent survey conducted by customer relationship management company Zendesk, only one in five business leaders said their teams share data well.
Choosing the right tools can help in this case too. Look for an e-commerce platform that brings together all the crucial metrics (sales, conversion rate, visitor sessions) in one place. It should also allow retailers to easily analyze and visualize that data and easily share it across the company.
For retail brands, technology is ultimately a means to an end: connecting and serving customers. In a challenging market, making smart technology choices can go a long way towards bridging this gap.