Competing with the Big Boys
Conventional wisdom says that it's difficult, if not impossible, for small businesses to compete directly with big retailers. When Wal-Mart comes to town, mom-and-pop shops go out of business. When Borders opens the local bookstore closes.
The thing is, it's simply not true. OK, sure, there's certainly an element of truth to it. But the fact of the matter is that small businesses can do all kinds of things that large retailers can't, both online and in brick-and-mortar stores.
For example, Derek Vaughan says there are a few things big online retailers don't want you to know:
- You can look just as big and professional as them online.
- You can reach niche audiences better.
- You can deliver more personalized service.
- You can rank higher in the search engines.
- If you're exclusively an online retailer, you're more focused on your business than a large brick-and-mortar retailer is on its web operations.
And Arts & Crafts Business Guide William T. Lasley has some suggestions for overcoming the "Wal-Mart mentality" (i.e., "I can buy it cheaper at Wal-Mart") when pricing your crafts, although these can be more generally applied to a wide variety of products:
- Emphasize quality workmanship.
- Offer customization.
- Exceptional service.
- Offer products that are unique.
- Price = positioning. No one collects cheap mass-manufactured items.
Guest author Scott Stratten says that small is in the eye of the beholder:
When asked the inevitable question "So, what do you do?" more times than not, a small business owner will reply "I run a small design company" or "I own a small business". [...] How does it help your business when you refer to it as small?
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The issue is when you use the term small; it's up for the listener's opinion. How do they define small? You may think small is: I can handle work for mid-size companies, up to 200 employees. While the person you are telling it to might think "Too bad she can only handle businesses with under 50 employees, my mid-size company could sure use some help." Do you think by saying you a run a company that isn't small, you will be buried by too much work from bigger clients? That would be a problem most of us would love to have.
I don't feel sorry for small businesses suddenly faced with competing with a big retailer. Many of them have never really had to face competition before. Perhaps they were the only bookstore in town. Or nobody else wanted to open a coffee shop in the neighborhood since they were already there.
Small businesses have a huge advantage over big retailers -- they are agile. As a small business owner, you can simply make a decision about the strategic direction of your business and act on it immediately. Want to offer a new coffee flavor? Order it from your supplier, write it up on your chalkboard and blog about it -- done. Think by comparison what it must take to add a new flavor to the Starbucks menu!
No, I don't feel sorry for small businesses who have to compete with big businesses. The trick is simple -- don't try to beat them at their own game. Find your niche (video) and serve it well -- play the game on your own terms. While you probably won't drive that big retailer out of your market, you'll find that you can coexist peacefully and profitably.
Comments
This is so true Scott. Small businesses have a lot of power when it comes to competing with the big guys. Most of that power comes from personal interaction with the customer. But if a small business owner thinks they will be defeated by a big company, sadly, they probably will.
Scott - this is excellent, and you start with an underlying assumption that is the most important part of all. There IS a way to compete with (and beat) Wal-Mart. Until people grasp that idea, your suggestions and 100 others won’t make a difference.
Great post!
Kevin
So True …. Attitude is everything.
To-day’s dirt cheap technology let’s the little guy go to to toe with the Goliaths …. and Win.
Simple tools let the little guy turn on a dime and vaporize competitor’s promotions …. Life can be so sweet.
It’s true that Wal-Mart has negatively impacted small businesses over the years. But it’s also true that those businesses that don’t go heads up against Wal-Mart and instead offer selection that their customers want at a fair price can prosper. Bad companies that don’t understand their customers rules will die even if there isn’t a Wal-Mart store within 50 miles. I live in Colorado and often drive the state on short vacations. I can tell you that I see healthy downtowns with local companies even when there is a Super Wal-Mart a few blocks down the road. So while it’s easy to make Wal-Mart the whipping boy, they don’t deserve all the bad press they get. It’s easier for a company to blame Wal-Mart then to blame their failure on themselves.
What you say are good suggestions. However, there are so many layers that go into what kills the town after the Walmart has moved in. It would be pompous to assume that small businesses only have this to consider to stay in business or beat the bully.
Speaking of Wal-Mart, let’s not forget that they own Sam’s Club, which is a HUGE cost-saver for small businesses. In addition to all the merchandise, they have good rates on business insurance, credit card merchant services, etc.
Like I said — peaceful co-existence IS possible.
I love the concept of playing the game on your own terms. Forget about the big boys. Let them do what they do. Don’t try and beat them at their own game. … www.readtheanswer.com/index.php?RTA=web2
I couldn’t agree with point 2 anymore. The key to dominating in business as the new comer is being a niche player. A small niche business can out service, out perform, out everything over a big retailer who’s playing a volume game.
- Mike Michalowicz