Running a small business these days is not easy, particularly in retail. According to the recent data, an e-commerce giant Amazon commands up to 50% of the online retail market in the United States. It ruthlessly exploits its market power by squeezing margins and pushing competition out of business.
Simple strategy for small business
So what should you do as a small business owner to survive in these tough market conditions? Experts suggest this 3-step strategy:
- Focus on your market niche.
Amazon sells virtually everything, but chances are you can do better by being focused on a particular set of goods or a specific consumer auditory. You can provide a better selection of merchandise, expert advice and yes, even price – if you know your niche better than anybody else. And you honestly love what you do, otherwise, why would you be running a small business at all? Customers feel that and will choose you over a soul-less corporate machine if they have a chance.
- Provide great personal service.
Customers choose Amazon not only because of low prices, but also because it’s very simple to order stuff and get it delivered fast, or sort out any problems if they arise. These days a lot of tools available for SMEs to match that service level at a very low price point, like shipping and returns providers, instant chat software and virtual assistants who can take care of customer requests. But don’t forget your biggest advantage as a small business owner – it’s your own business and it’s you who decides how friendly you want to be to your customers. You can set the tone and go an extra mile to reward people for choosing you over Amazon. This attitude goes both ways and can work wonders.
- Save money on traditional overheads
Amazon is famous for ruthlessly cutting its costs. Lately, it provoked a controversy over working conditions and the level of pay for thousands of their warehouse and delivery workers. We are not suggesting you go the same route, and not only because customers will see and punish any unethical business practices.
Payment fees is a huge overhead for small business
One of the often overlooked huge expenses every business has is payment processing. That is, accepting payments by Visa, MasterCard or American Express credit or debit cards, online and in-store. If you are in retail, you’re probably making about 20% of margin on the items you sell and likely paying around 3-5% in card payment fees. Which means you lose 15-25% of your profits right there!
Amazon has figured it out long ago and as a huge corporation, it has arrangements with Visa, MasterCard and other card brands to reduce payment processing costs. It will be fair to estimate their payment fees not exceeding 1.8%, which is roughly 50% lower than the typical small business!
Luckily, you can level the playing field right now by signing up for a merchant account with Payment.Ninja and get access to the same low payment fees as Amazon has. Payment.Ninja offers a typical rate of 1.79% plus 19¢ per transaction, which is about 50% less than PayPal or Authorize.Net. It doesn’t matter if you sell online, in-store or over the phone, the rates are the same and you’ll get your money in the bank the next business day. They also do have a plugin for most popular e-commerce platform WooCommerce which can get you going in 5 minutes or less.
Thanks to the new breed of startups like Payment.Ninja, you have a good fighting chance against Amazon. You have all the tools you need at the affordable price low cost. Now it’s up to your skill, creativity, and passion for your business and customers to survive and strive.