Setting The Record Straight: Fierce Competition Is The Hallmark Of Modern Retail
Today, sellers enjoy access to innumerable marketplaces and scalable tools, while benefiting from direct access to consumers. Small businesses and new entrants in particular are finding unique ways to connect with consumers and stand out among a growing number of brands. Despite what you might have heard at last week’s House Judiciary hearing, when it comes to competition in the retail space, it’s important to remember:
— No single player holds the key to the retail sector, which is more competitive than ever.
— There is no barrier to entry in today’s retail sector—small businesses have more options to scale and reach customers.
— Online and physical retailers compete for the same customers daily and directly.
No single player holds the key to the retail sector, which is more competitive than ever.
Consumers today can choose from over 100 online retail channels, notes a 2021 Channeladvisor report. “A few years ago, sellers had a handful of onlines sales channels to choose from. Then came the explosion of e-commerce marketplaces, and the options available to consumers suddenly expanded far beyond the likes of Amazon.”
— Online shoppers now have more than 100 retail channels to choose from and 35% of shoppers are spending more time than ever on non-Amazon marketplaces.
Small- and medium-sized businesses have countless marketplaces to partner with when it comes to selling online, including Walmart, Wish, Poshmark, Depop, and more.
— The number of sellers on Walmart’s online marketplace has doubled to more than 50,000 since July 2019.
— Wish had more than 1 million sellers selling on its marketplace and 300 million active users around the world, as of August 2020.
— Poshmark has 70 million users, Vinted has 34 million, Depop has 21 million, and Mercari has 15 million as of 2021. All of these marketplaces make it incredibly easy to start a small business and make your listings pop.
There is no barrier to entry in today’s retail sector—small businesses have more options to scale and reach customers.
Small retailers and entrepreneurs can access a variety of tools and services to scale up quickly, reminds Michael Ronen, Co-Founder and President of Branded. “I think what’s appealing is a vast marketplace that Amazon has invested in and made very vibrant, and a massive community of entrepreneurs that are building businesses and growing.”
— “As you said, these entrepreneurs have done a great job getting from zero to one, and folks like us at Branded can help them get from one to ten to one hundred. I think the opportunity is just amazing.”
More businesses are adopting direct-to-consumer strategies to expand their consumer base, offering differentiated products and establishing valuable partnerships with big-box retailers, highlights Retail Dive.
— “[F]or digital natives like Thinx, Ipsy, and Bombas, expanding into these categories seems like a natural extension of their brand. As top brands lose market share in certain categories, DTC companies have the opportunity to expand their product offerings. Social distancing measures have only made customers more reliant on e-commerce platforms, and in entering new markets, DTC brands are finding creative ways to retain their new customers.”
— “Some big-box retailers also formed partnerships with DTC brands. Target, Sam’s Club, and Nordstrom are just some of the stores that feature DTC brands on their shelves. From the beginning, DTC brands displayed inherent values, such as personalization and user-friendly platforms, that have proven valuable during the pandemic.”
Small and local retailers are joining forces and forming local online marketplaces to offer consumers convenience, highlights National Retail Federation. “‘Local stores have proximity and knowledge of their communities,’ [Cinch founder Maya] Komerov says. Cinch leverages that to help businesses reach a broader market area. Already, some stores are capturing shoppers who live outside the neighborhoods from which their customers typically come. Komerov plans to launch a similar site for Manhattan retailers in October, and then expand beyond the New York area.”
Online and physical retailers compete for the same customers daily and directly.
Retail will only become more competitive as brands compete to improve their multichannel experience, explains a 2020 McKinsey report. “The consumer product and retail landscape continues to evolve as companies race to catch up with leading e-tailers. Traditional brick-and-mortar retailers such as Macy’s, Nordstrom, and Walmart are expanding their online offerings and introducing new models, such as in-store fulfillment of online orders. Online players such as Amazon and Zalando are opening their own brick-and-mortar stores. Vertically integrated players such as Bose, Burberry, and Nike are strongly pushing their direct-to-consumer business through both online and new physical stores. And players of all kinds are complementing their physical stores and e-commerce offerings with innovative applications and social media to mount a truly omnichannel presence.”
Ignoring the fact that online and physical retailers represent the same market results in an unrealistic understanding of how people shop, highlights University of Pennsylvania law professor Jonathan Klick. “[R]elegating Amazon’s market to e-commerce rather than retail more generally might be a little like treating Sonic as controlling the market for hamburgers delivered to your car while you sit in a parking lot stall because McDonald’s won’t do that. That is, there is little a priori reason to carve out something known as e-commerce from retail more generally. In fact, data from a 2018 survey suggest that most consumers still prefer shopping offline.”
Retailers, spurred by growing online sales, are investing in multichannel capabilities, leading to key success and differentiation from Amazon, writes Glenn Manishin, Managing Partner at ParadigmShift Law.
— “Part of this retail revival is a result of what is termed ‘omnichannel marketing’: providing a seamless shopping experience at physical locations and through an array of consistent digital channels that differentiates retailers from peers and offers a competitive edge over online-only competitors by leveraging store assets.”
— “These are all illustrations of how the push by Amazon into new markets, and its core focus on consumer satisfaction and data-driven logistical efficiencies, has been a good thing. Those traditional brick-and-mortar chains that ‘get it’ and apply the lessons of Amazon’s success—indeed, go beyond replicating to surpass and differentiate from Amazon—are prospering and growing, not dying.”