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All the media attention paid to Amazon, Walmart and other retail giants might make smaller retailers think they don't stand much of a chance online. That may be part of the reason why roughly only 40 percent of all U.S. retailers report having websites, according to the U.S. Census Bureau.
While it's true that the top 500 e-retailers (most of them household names) capture the lion's share of the estimated $347 billion in 2015 online sales, there's plenty of evidence that smaller retailers can compete with the big guns.
UPS works with many small online retailers who have logged double-digit sales growth year over year. Among them: A Massachusetts outfit that sells specialty gourmet chocolate pizzas, a Florida company that provides kitchen cabinet hardware, and a Wisconsin jeweler that uses part of its profit to fund microloans for impoverished women in third-world countries.
The common thread is offering unique and hard-to-find products, a key finding in the 2015 UPS Pulse of the Online ShopperTM study conducted by our research partner comScore.
Among consumers surveyed, 61 percent say unique products are the primary reason they choose to shop with smaller retailers, rather than "household name" online stores.
Ranking second at 49 percent were shoppers who say, "I couldn't find what I needed" elsewhere. And 29 percent say they will shop with smaller businesses just because they like to try new retailers.
"The common thread is offering unique and hard-to-find products."
In all these examples, the data shows consumers are well aware of the tradeoffs involved, which can include more costly shipping, longer delivery times and higher prices.
The hunt for products doesn't stop at the U.S. border, either. According to our survey, nearly half of online shoppers say they shop internationally for better prices, and 43 percent say the brands or products they like are not available in the U.S. One in three say they wanted something unique not found in U.S. stores.
Clearly, the global reach available online offers excellent growth potential for large and small retailers alike.
Our research shows that online shoppers often use marketplaces like Amazon, eBay or Newegg to find new products and retailers. That can be an important marketing channel for smaller retailers, whether or not they have a standalone website.
Among shoppers surveyed, 47 percent say they use online marketplaces as a resource, and 65 percent say marketplace reviews are influential in purchase decisions.
One way for a retailer to stand out is to create or offer a unique product or brand. Consumers will then see you as the go-to source. Both approaches require insight into customer preferences but are proven ways to generate loyalty.
Providing unique content is yet another way retailers can stand apart.
How-to videos are now a staple of many DIY, outdoor retailer and culinary product websites.
Other retailers offer lifestyle-oriented material to drive engagement, reflecting the content marketing programs many use to promote themselves these days.
Another way retailers can stand out is by creating unique bundles. That's especially important if you are selling a commodity product.
It's a good idea to think of product bundling as combining related add-ons you might try to up-sell in a retail store.
If you are selling a cellphone case, you might bundle it with a pair of headphones, for example. A gardening store might offer a starter kit for an herb garden that includes seeds, fertilizer and a planting tray, all at a lower price than if the products were sold separately.
Subscription services are another way a smaller business can stand apart and meet online shoppers' demands for the unique and unusual. With subscription services, two business models seem to dominate.
The first is about convenience: Shoppers receive doorstep delivery of a specific product weekly or monthly (anything from wine to disposable diapers). The second is a curated approach that predicts what customers will want based on personal preferences.
According to our survey, one in three shoppers have elected to receive automatic deliveries, and these consumers use three services on average.
Millennials are the primary target for curated services; 34 percent have enrolled in such services, compared to 20 percent of all online shoppers.
Nearly half of shoppers surveyed say they would consider enrolling in a curated subscription service.
New crowdfunded products are launched online every week.
Kickstarter and Indiegogo are two well-known brands in a market estimated to reach $90 billion, according to a recent World Bank study. The sites raise small amounts of money to fund a new retail product.
"The same qualities that appear to give giants strength are often the sources of great weakness."
Recent successful examples range from a cooler that automatically makes daiquiris to a camera that recognizes sound, allowing you to answer the doorbell (or not) from anywhere in the house, using your smartphone.
In our survey, three of five shoppers are aware of crowdfunding and 16 percent have contributed to campaigns.
In his book David and Goliath: Underdogs, Misfits and the Art of Battling Giants, Malcolm Gladwell says the shepherd boy was actually a skilled hunter and that Goliath didn't stand a chance.
Gladwell says, "Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness."
David took an unusual path on his way to victory. That's a good lesson for smaller retailers doing battle online.
Longitudes explores and navigates the trends reshaping the global economy and the way we’ll live in the world of tomorrow: logistics, technology, e-commerce, trade and sustainability. Which path will you take?