It’s been a bad few years for retail.
Toys ‘R’ Us is closing all of its stores. Radio Shack already has. Even Sears, the company that largely created home delivery, is closing 200 stores this year.
Most of these companies have blamed the same shadowy figure for their failure...
Or, more accurately, online sales in general.
Big box stores can’t compete with the sleek, streamlined superiority of online stores that offer the same goods at lower prices with free delivery.
With more and more of our business being conducted online, many people have predicted the end of small businesses.
If the big stores can’t compete, how can a mom and pop store have a chance?
But in my experience, the exact opposite is happening.
In the last four years that my wife and I have been self-employed, we’ve rubbed elbows with tons of other small business owners, many of them with their own physical locations.
And for almost every single one of them, the internet is bringing sales, rather than taking them.
How can the internet be helping small businesses but hurting big corporations?
A lot of that has to do with business model.
Let’s look at Toys ‘R’ Us, for instance. All of their inventory is manufactured by third parties and shipped to the store. The customer comes to the store to make their purchase. They don’t make anything themselves—they only serve as a middle man between the manufacturer and the end consumer iIt’s worth mentioning that companies like Mattel, Hasbro, and LEGO aren’t going out of business).
If you’re looking for a Star Wars action figure, you can go to Toys ‘R’ Us for that. You can also go to Wal Mart. Or Target.
Online warehouses have a much lower overhead than fully staffed brick and mortars. And if you can get the same product, most consumers would rather wait a couple days than go through the trouble of going to the store without being sure that the item is even in stock.
But for a small business that sells unique items, this is a huge advantage.
Most of the local business owners I know manufacture (or at least design) their own goods. You can’t go to Amazon to get it for another price—you can only buy it from them.
This also poses a unique challenge. Because these goods aren’t mass produced, you can’t rely on the same name brand recognition that large manufacturers can. Even consumers in the same city might not know that there’s a great local shop that sells items that they would love, because they’ve never heard of them.
Enter the online marketplace.
Local businesses aren’t dependent on local sales anymore. And if you’re selling niche goods in a small town, internet sales might be the only thing keeping you afloat. You don’t need to live around people who understand anime to make a living selling your custom Gundam Wing models: you can find a market from people living in every corner of the globe.
And you don’t even need to be a tech wizard to do it.
Once upon a time, owning a website was limited to the most tech savvy. You needed a good handle on computer science just to browse the internet, let alone run a web store. But now, there are many easy-to-use online marketplaces where you can set up a store. Or, you can hire a web design firm to build a beautiful website for you without needing to worry about the technobabble.
But your shop doesn’t have to only be online.
While online marketplaces have allowed many people to sell their wares without a physical location, they’ve even made it easier to run a physical location.
A few decades ago, a brick and mortar would be completely dependent on the physical sales coming through the shop. As those sales are drying up, many have turned to a fully-online storefront.
However, many consumers still like the experience of a physical shop—even when they can buy online. Because of this, many business owners see a brick and mortar as a necessary expense.
Some local businesses have used online sales to support this expense.
My local record store has a steady stream of foot traffic, but it’s nothing compared to their business before the rise of MP3s. But, they do a large majority of their sales online, through sites like Amazon and Discogs.
Some friends of mine design fruit/animal hybrid plushies and travel to different comic cons to sell them. They do pretty well, but their convention sells are massively outpaced by their webstore.
Clearly, the dichotomy between online stores and physical stores is inaccurate. Rather, the true dichotomy seems to be between corporate owned, mass produced commodities and unique, well-made local goods. And if you’re focused on the latter, you won’t have to worry about Amazon.