Risk in retail is no one's idea of fun, but risks are just opportunities in disguise when they are properly planned and managed. Jeff Bezos didn't know the magnitude of success he'd achieve when he dreamt up the idea of selling books, CDs, and a few other products online in 1994. He took a leap of faith and left his cushy investment banking job to work in a garage for nearly a year.
What propelled Bezos forward was (and this still holds true today) is his tolerance for risk. It's something that the retail industry at large could really learn from in order to drive sales and dominate market share. Let's dive into 4 ways to improve e-commerce sales that range from following best practices to risky.
1) Add New Products and Categories
Retailers who are running the market have gotten used to feeling uncomfortable. In fact, it's a main driver of their success. They try things out and make mistakes all the time. That's because they're taking calculated risks and collecting data consistently. With that data, they can decide whether a risk is worth taking in the first place. Then, they can determine whether their hypothesis was right and if running a test seems like a worthwhile use of time and resources.
Amazon has launched new fashion lines, created a phone that no one wanted, sold questionable diapers, and opened a studio to create original TV shows and movies. One of those is a raging success, two were complete failures, and one is too new to judge. But the moral of the story is that Amazon is always testing new products and services to see what sticks. Some mirror what other companies are doing to try to compete head-to-head and others show just how innovative their thinking is, taking crazy ideas to market in record time.
Decreasing white spaces is a key strategy retailers use to improve their assortment and, in turn, become more competitive. Amazon does this perfectly by entering certain product categories and offering good quality items at a much lower price. They cornered the low-cost electronics accessories market. A new iPhone charger from Apple is pricey, but buying a knock-off that may or may not work is never worth the savings. So Amazon came in and provided excellent products at a fraction of the cost because they can count on enviable sales volume. For other retailers looking for a way to stand out, figure out the gaps that exist in your market, whether that's a certain product category that competitors are overlooking or maybe even a new pricing tier for an established category. Filling those white spaces is a great way to pick up market share.
2) Shake up Executive Ideas
With decades of experience in the industry, your C-Suite probably boasts impressive track records of success. But they also need to be well-versed in disruptive thinking. Ideas may already be milling around in the heads of your employees, they might just need a little encouragement to share them. Create a structured way for employees to share the ideas they've come up with and go forward with the ones that have great potential. You could even create an annual or quarterly competition with prizes to incentivize everyone on staff to get their creative juices flowing.
3) Pay Attention to the Subtleties
Small changes add up over time. You must put systems in place to track trends and the state of your market. If you're too stuck in your day-to-day tasks or high-level metrics, you'll miss the canary in the mine when something is about to go terribly wrong. You could be missing out on big opportunities. Recent Deloitte data shows the crash and burn increase for companies. The study explains, "the average lifespan of a US company is shrinking, dropping to an average of 18 years in 2012. That’s a staggering 74% drop from the 61-year lifespan reported in 1958."
Let that sink in for a moment.
Companies are failing fast, but keeping up with market trends, as well as competitor data will give you the insight needed to keep your company alive and thriving. In order to gain access to all of this data, retailers need to keep track of competitor pricing and assortment. Many smaller retailers can do this in-house, but the bigger the retailer, the harder it gets to scale market intelligence strategy, manage all those data points, and figure out exactly what it all means. For large retailers, there are many benefits of outsourcing market research and analytics, such as scalability and cost savings.
4) Consider New Markets
Whether you choose to start selling in a new international market or acquire a company that has cornered it already (such as Amazon's recent acquisition of the Middle Eastern eCommerce giant, Souq.com), tapping new markets is a great way to up your revenue. But approach this cautiously, even big box retailers can have trouble with this. Target tried unsuccessfully to join the Canadian market, and ended up closing all of their stores due to faulty planning.
Be a Disrupter, Not the Disrupted
Just as eCommerce burst onto the scene and gave traditional brick and mortar retailers a run for their money, there are many more changes yet to come for the retail industry as a whole. New selling channels are emerging with the advent of social selling, the growth of marketplaces, and barriers to entry in eCommerce are lowering year by year. Remaining competitive requires the ability to see what's coming in the industry before it happens. But at the very least, successful retailers will plan for the worst.
One responsibility that comes with making changes and trying new things is managing risks properly. Once you figure out what works best for your company, the vast majority of resources should be devoted to your core offerings. But reserve a portion for experimenting. After all, Borders drove the book market, but doing something about the eCommerce elephant in the room could have saved them from their downfall.
This ratio is different for each company. Maybe it's 5, 10, or even 20% of your time and resources, but a decent chunk needs to go to discovering the next big thing. Otherwise, you'll follow in Borders' footprints instead of Amazon's.