5 Ways Small- and Mid-sized Merchants Can Compete with Large Merchants

Feb 18, 2012 1:25 AM  By

According to a Forrester Research report, online sales are expected to reach $210 billion in 2012, with that number increasing to $249 billion by 2014. This report illustrates the real opportunity for small and mid-sized merchants to capitalize on the continuing surge in ecommerce.

However, these retailers need to ensure profitability while avoiding risk. Merchant fraud detection, cloud computing and mobile commerce are among the top trends currently driving business, therefore small businesses need to prepare themselves to edge out their competitors.

Jacque Pelletier, founder of Fashion Connection, says that the ability to manage his inventory across multiple platforms has helped the business flourish and differentiate itself from local brick-and-mortar competitors. Additionally, the Fashion Connection, is looking ahead and readying themselves to take on bigger challenges such as mobile commerce.

To that end, there are a few things all SMB merchants can keep in mind when aiming to excel in their respective industries:

Understand cross-channel integration
Cross-channel integration allows retailers to ensure they’re showing accurate inventory availability across multiple sales channels, such as their own online stores, marketplaces like Amazon, catalog and phone orders, etc. In order to provide exemplary customer service and compete with bigger companies, SMBs must ensure that the inventory promised to a customer is readily available.

Protect your business from fraudulent orders
According to a recent CyberSource study, more than one percent of all online transactions are at risk of being fraudulent. While online fraud rates have been steady, according to the CyberSource and Merchant Risk Council report, there is more at risk today as more transactions move online from other channels.

Therefore, it’s important to use PCI-compliant software applications, activate fraud prevention tools in the payment process, require card identification (CID) information and review past orders that have been fraudulent to identify warning signs.

Move on to mobile commerce
All SMBs that are not optimizing their websites for mobile phones should begin to do so as soon as possible in order to keep up with and surpass the competition. According to a recent report from eMarketer, m-commerce more than doubled in 2011 to $6.7 billion, and it is expected to quadruple again by 2015 as mobile payments take a seat. While orders may still come through your website, our merchants say a lot of the browsing done by potential new customers is through mobile devices.

Consider partnering with Amazon
If a merchant has the type of product that can be sourced or produced in large quantities, and if they’re willing to compete on price, Amazon is a great opportunity to expand sales and grow your business. However, merchants need to keep in mind that Amazon maintains principal contact with the consumer and therefore Amazon builds the customer relationship.

If you are selling a product that’s a one-time purchase, or where there are many similar, Amazon is a good choice because of volume considerations. The exposure to the global marketplace will outweigh the fact that the merchant is not making a direct connection to the customer.

Look to the clouds
Cloud usage has excelled in larger businesses, but SMBs should stop admiring the technology and start using it as well. SMBs need to be aware of a lot more cloud applications, offering everything from desktop applications to enterprise-type software like customer relationship management or database programs.

Cloud services will increasingly enable small businesses to look like large companies while still remaining fast, flexible and profitable, allowing them to achieve with their non-cloud using competitors cannot.

Fred Lizza is the chief executive officer at technology platform provider Dydacomp.