It’s a difficult moment to launch a new retail business. Or is it?
Some experts see opportunity amid the industry’s rapid digital transformation. For founders of retail technology startups, at least, now could be a great time to get started — with the correct approach, of course.
“These days, competing against retail giants calls for a mix of innovative and ‘old-school’ strategies,” says investor Steve Streit, serial entrepreneur and founder of SWS Venture Capital.
Here’s what Streit and other experts advise retail entrepreneurs to get in place today to increase their early-stage companies’ chances of success tomorrow.
1. A Compelling “Case” for the Business
“The purpose of a corporation…is the ultimate goal of the business, the essential reason why it exists, and how it contributes to the common good,” says Hubert Joly, former chairman and CEO of Best Buy. “Explicit in this definition is the view that business can and should be a force for the common good.”
As the onetime head of one of the most successful retailers in history, Joly knows what he’s talking about. The best way for your retail startup to stand out is to loudly and clearly answer customers’ most basic question: “why?”
2. A Detailed, Long-Term Business Plan
Your retail startup needs a detailed business plan. Now. Don’t wait.
This plan must describe the enterprise’s general business concept (including but not limited to its “why”), its important financial features, current business position, starting and future financial requirements, and major business achievements to date, according to Georgetown Law.
It must also take a long view. Writing a business plan to cover the gap between fundraising rounds or other major company milestones is both tempting and, let’s be frank, easier than writing one that anticipates the next five to seven years. It is a recipe for (more) uncertainty and risk, however.
3. An Active, Well-Managed Social Media Presence
Businesses that utilize social selling are about 50% more likely to reach their sales goals, according to marketing expert Christine Ongson. The figure is probably even higher for retail-focused enterprises.
To that end, invest early in your company’s social media presence. You already know that it’s not enough to go through the motions of setting up an Instagram account and occasionally posting self-promotional content; prospects see right through this. To succeed, you must build a following.
4. A Sophisticated Social Marketing Strategy
An active and well-managed social media presence is enough to land your enterprise a seat at the table. It’s not enough to drive the sort of growth that early-stage investors want to see.
And it’s all the more important now that a sales strategy supported by organic search appears to be no strategy at all.
“Recent changes to organic search algorithms, especially at Google, have put retailers and publishers at a disadvantage,” says Daniel Hall, business expert at BBN Times. “This is a problem not only for retailers who previously relied on well-optimized product listings and brand websites to attract traffic, but for those engaged in more sophisticated forms of content marketing as well.”
Social media is a partial antidote to this unwelcome trend. Influencers, for better or worse, may have to play a role in your social marketing campaigns; so too will paid ads, giveaways, user-generated content and much more.
5. Social Features and Gamification (Within Reason)
Done well, built-in social and gamification features can boost app-based sales from just over 10% to about 50%, says Gal Rimon, founder and CEO of Centrical.
“Done well” is the key point here. It’s important to listen to your customers and not set yourself up to be seen as spammy or unhelpful. Like every other app feature, and indeed every other component of your marketing and sales operations, gamification and socialization should aim for usefulness while respecting users’ privacy and autonomy.
6. Customer-Friendly Fulfillment Policies & Processes
Finally, center the user experience in everything your retail tech business does. Most importantly, develop fair, customer-friendly fulfillment policies and processes — including complaint management and dispute resolution protocols. The customer is not always right, of course, but sometimes it’s best to act that way.
No industry is immune from the social and technological changes happening all around us, but it does seem as if retail has had a particularly difficult decade or so.
That could be changing as we sit here. Even if not — and it’s best to be realistic about these things — retail entrepreneurs have a lot to be excited about in the near future.
Indeed, for the first time in years, it’s clear that retail startups with strong fundamentals are well-placed to thrive in the emerging digital environment. These startups do much of what we’ve discussed above, from leveraging sophisticated social marketing techniques to supporting repeat customers with generous fulfillment and returns processes. And those that do it really well may find themselves in the enviable position of being able to share what they’ve learned with the next generation of retail leaders.