Smaller retailers face tough obstacles forging their e-commerce operations in the face of competition from larger rivals and tend to strategize growth over profits, according to research from Internet Retailer magazine.
Smaller retailers have grown online sales 14.4% in 2014 to $6.047 billion, from $5.284 billion year over year, compared to total U.S. e-commerce growth of 15.4% growth reported by the U.S. Commerce Department, to 15.7% growth among the largest web merchants reported by Internet Retailer.
That reflects retail sales growth 3.5% greater than overall 2014 U.S. retail sales growth. Median growth rate by smaller retailers was 11.5% last year, compared to 11.9% enjoyed by larger retailers.
Smaller retailers are holding their own in e-commerce, according to this research by Internet Retailer, even in face of intense competition and the heftier resources enjoyed by larger rivals like Wal-Mart Stores Inc. and Amazon. The focus for many smaller retailers is to leverage their e-commerce presence to maintain slow but steady growth and stay on shoppers’ radar, rather than to stoke profits.
The trick is to offer merchandise and experiences not found at those larger companies, according to Forrester Research analyst Sucharita Mulpuru.
“When you’re a small business, you’ve got to eat and figure out how to make a profit,” Mulpuru says. “But that means they can’t the same sell the same product that everyone else does. You need to be hyper-focused on your niche, develop products to support that niche, own them uniquely, and use traditional marketing to get the word to help drive those sales.”