The Black Hole: Why Many Independent Retailers Struggle to Sell Online

The Black Hole:
Why Many Independent
Retailers Struggle to
Sell Online

Working for an independent brick and mortar retailer for 5 years and now working with them for 12 years on the e-commerce side has given me a unique perspective on why selling online can be elusive for some.

If you would like to skip the next two thousand words and get it all summed up in one sentence then here you go.
Steve Berke
June 09, 2021

Owners don’t treat their online store
like a brick and mortar store.

It sounds so simple and something they should inherently know, but for a variety of factors it’s not. The core reasons independent owners have made their businesses successful are:

1. They work hard.

2. They hire the right people.

3. They listen to their customers.

4. They provide a great in store experience.

5. They differentiate themselves from their competition.

I was asked by one independent owner recently for a “blue print, template, step by step instructions” on how he can have a guaranteed successful online business to complement his wildly successful brick and mortar business. While I usually don’t give my secrets away for free, I figured I could make an exception, so I gave them to him.

1. Work hard.

2. Hire the right people.

3. Listen to your customers.

4. Provide a great online user experience (UX).

5. Differentiate yourselves from your competition.

Many independent owners have been thriving for decades, so these things don’t scare them or they would have gone out of business a long time ago. However, once you look closer you see something that does scare many owners and it can be summed up in only one word.


Change

“The only constant in business is change” which means owners have been here before. However, many I meet fail to change and do not apply their same core principals to their online business. It all starts and stops at the top; the owners themselves and 1. on the list.

Most owners can’t work hard on their online business because they are already working hard on their brick and mortar business. I have yet to meet an owner of any size, in any vertical, anywhere in the world who said, “Sure. I have an extra 50-60 hours a week to wear another hat.”

Yes, there is a “can’t teach an old dog new tricks” aspect happening as many owners in the independent channel are on the north side of 60, so this whole technology (change) thing is certainly harder for them to grasp. But that’s not the core issue. It’s the time or lack thereof.

Okay, so owners don’t have time to do a lot of things this isn’t exactly a revelation. That’s why there is 2. on the list as they just hire the right people to get the job done. Problem solved.

Only this creates a bigger problem as many owners don’t know who to hire, so often they hire the wrong people. With the right people a business can do tremendous things. With the wrong people a business can go out of business.

They are looking for
the wrong people
to begin with.

Instead of looking externally for an e-commerce manager with business experience they look for an “IT guy” with IT experience. The world certainly needs IT guys and my company would not run without them, but they are there to help build the online store, not the online business. They need to be an integral part of the team, not run the team.

Instead of looking internally at a top performing store manager, salesman, or marketing lead who can learn the e-commerce manager position they look for an underachiever who isn’t an asset to the company. Why? An e-commerce manager is still not seen by many owners as a real full time position in their company, so taking away a top performer from something that does make money to put them on an unknown is viewed as counterproductive.

Imagine an independent opening a new flagship brick and mortar store that will be their most visited and visible. The owner first goes to hire a store manager who will help build the team and run the day to day.

Would they look to hire outside the company for someone with IT experience (IT Guy) or someone with business experience (Business Guy)?

Business Guy

Would they look to hire within the company and promote a bottom performer who doesn’t even do the bare
minimum or a top performer who excels and goes above and beyond?

Top Performer

If an IT guy or bottom performer was running that flagship brick and mortar store then I would question the long-term profitability and viability of that location. Same goes for having no manager at all. In the brick and mortar world this would never happen to any store. In the online world, it happens every day and whether owners like it or not “your website is your flagship store; it’s the most important store in your arsenal” and having the right person at the helm is a necessity.

The buck stops here as 3-5 on the list won’t even come into play without an engaged owner and the right person leading the way. Only the buck doesn’t stop, it gets passed externally and a phrase I have heard on multiple occasions, from multiple independent owners gets thrown around.

“ The Black Hole ”

No, not the one in space. The one in a business where money keeps getting dumped into an initiative with no ROI. Are the owners, right? Can their online business become the proverbial black hole they fear the most?

Yes

Only not for reasons most think and this goes back to the early days when an online store was a minimum 6 figure investment. Ten plus years ago it was expensive to get into e-commerce and out of the reach for almost all independents. They have all heard the horror stories of enormous sums going into technology with no results. This should scare anyone.

Flash forward to today and Open SaaS e-commerce platforms like BigCommerce have leveled the playing field for independents. Even five years ago if I would have told an owner in the appliance vertical that they could be on the same technology, infrastructure, and 24/7 support network as GE Appliances for only $299 a month, then I may have been called crazy.

If I would have told a owner in the furniture vertical that they could migrate to the same highly customizable and scalable platform as an e-commerce startup who has raised 55 million to date with only a 4 digit investment then I may have lost all my credibility. Burrow Gets Cozy With New Ecommerce Platform

Over time, technology (tangible or not) gets better, more intuitive, sleeker, faster, and more affordable. No different than the products they sell, but independent owners still predominantly attribute a direct correlation to the black hole and technology. Also, agencies like ourselves often get sucked in as well. Technology and those who support it should be independents best friend, not their enemy.

After I already put fingers to keyboard on this blog post I ran across a polarizing article from Forbes “Independent Home Furnishings Retailers Are Losing. Only The Big And Virtual Will Survive.” I’ve since read several compelling counter arguments, so to please everyone I suggest to alter the headline to “Many Independent Home Furnishings Retailers Are Losing.” There are some independents who fully embrace the new omnichannel reality, but I would put them in the minority.

If Technology Isn’t the Cause of
the Black Hole, What Is?

In Feb 2020, I was at an event in Houston where I was set to present with some colleagues in front of a small buying group of about 10 independents on how they can enhance their e-commerce business. Right before I was about to speak the head of the group stood up and said, “If you do not do this, you will go out of business.” While I would not have been so blunt, certainly echoed his sentiment. Now he was not referring to next month, next year, or even the next 5 years. This was more of a 10-15 year down the line statement.

Look at that date again. At this point Covid was still just a joke or a punch line to many. I know I was still sending memes on how the Corona Virus was only going to be bad for Corona Beer sales. Then a month later the world changed overnight. Stores closed and e-commerce boomed, which gave those words immediate merit.

This of course meant the independent owner who made that bold statement worked even harder to get their online business up and running, right? They would put the right people in place, right? Then everything else would take care of itself, right?

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