Career Testing
Career Testing
Career Testing
ENTREPRENEURSHIP / JUN. 28, 2014
version 4, draft 4

Competing With Digital Retailers Shouldn’t be Scary

It’s difficult to compete with digital retailers. In the digital era we can investigate everything from flight reservations, mobile devices, to clothes and then proceed to buy them online. This can be problematic for small business owners who are trying to make a profit, but at the same time remain competitive in the market.

Yes, competing against Expedia.com, Amazon, and Zalando to name just a few digital retailers can be scary. Many small business owners believe it to be impossible to compete with them. But this is not necessarily true. The truth of the matter is that consumers are often willing to pay a few extra dollars for a real life retail experience.

So, what exactly is meant by this? Let’s take for example the purchase of a bicycle. I love cycling, and I have been told that I am a pretty well informed customer when it comes to cycling. Yes, I can probably buy a bicycle or any accessories that I may need for a biking trip online, but there is something special about walking into a store, asking questions and receiving more information then you need with a big smile. Online retail can’t compete with face to face customer service.

Let’s continue with the cycling example. Not too long ago I read the success story of Velo Cult Bike Shop in Portland, Oregon. Many people believed that moving the shop from San Diego, California to the heavily saturated bike shop market in Portland, Oregon was a suicidal move, but this did not stop the owners from attempting the unthinkable— trying to create their own niche. Rather than compete on price or selection with local and online retailers, they focused on the customer experience. For example, you can take your bike to be repaired, and while you wait you can have a beer or coffee at their bar inside the shop. People interact and exchange cycling stories, and they really don’t mind paying a few extra dollars for tires. What Velo Cult did was create a community. They focused on the overall cycling experience rather than just pricing.

Another example is Umpqua Bank in Oregon. The financial crisis in 2007-2008 left many banks vulnerable or out of business, but Umpqua Bank found creative ways to keep their doors open. The bank provides ample seating, coffee, and free wifi to customers. Umpqua Bank also offered up their branches for meetings and workshops. They are now one of the largest regional banks in the West Coast of the United States.

The reason both Umpqua Bank and Velo Cult succeeded in less than a desirable circumstance is by orienting their business around community first and sales second. People like to feel special. The internet can give you free shipping, and cheaper prices, but it can’t compete with your business when it comes to real life customer service experience. Customers will often pay a few extra dollars if they walk out of your store with more than what they came to purchase. It’s that simple offer of something that your competition doesn’t have that gets you a loyal customer base.

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