The Tech SMBs Need to Compete with Big Brands
PRESENTED BY
By Alarice Rajagopal & Lisa Johnston
Fortunately for some SMBs, their agility is proving to be their saving grace. By rethinking the way they approach everything from product development to retail execution — and pairing these efforts with some of today’s cutting-edge technologies — many SMBs are battling their way back to recovery and into the forefront of retail and consumer attention.
Top Impacts of COVID-19 on SMBs
1.
2.
3.
Difficulty communicating with customers
Supply chain reliability and performance
Desire to change or optimize e-commerce tools for new market realities
SMBs Expected Tech Spend Through March 2021
“These companies appear to be spending on IT in any effort to overcome the existential challenges presented by the pandemic,” Jennifer Kent, Parks Associates research VP, tells CGT.
Developing/
updating website
36%
Tools for communicating with customers
36%
Hosting online events for customers
32%
Read on for a look at the technologies SMBs are leaning
into to hold their ground with the big brands.
Source: Parks Associates
Small-to medium-sized businesses (SMBs) are often at the front of the pack when
it comes to creativity and innovation. The freedom of less internal red tape can translate into quicker decision making and execution.
The consumer goods landscape has shifted during the pandemic, however, and many of these unencumbered brands also find themselves navigating a rocky landscape without the safety net that scale can bring.
Nearly 29% of SMBs reported last fall their company is at risk of going out of business due to COVID-19, according to research from Parks Associates. But while belts may be tightening, tech spending isn’t one of them; those at risk of closing are more likely to report spending on IT services and devices.
Source: Parks Associates
The Tech SMBs Need to Compete with Big Brands
By Alarice Rajagopal & Lisa Johnston
New Product Launch:
The Race is On for Being Discovered
New product launches are challenging enough for most CGs regardless of size, but digital technologies have proven crucial to cost savings and getting products to market faster. Tech innovations like simulation, 3D renderings and automation are helping companies like Trek Bicycle analyze hundreds to thousands of design iterations for a given problem, versus 30 to 50 iterations for a typical engineer.
And once those items are developed, next comes the race to get them in front of buyers — more of a challenge today thanks to social distancing. However, digital discovery platforms have stepped up to address this need.
Hy-Vee kicked off 2021 with a series of “Best of Local Brands” summits to expand and enhance the product offerings at its 275-plus retail stores. QVC U.S. and HSN also put a new twist on their Big Find international product search, inviting entrepreneurs and brands to share their stories across the two retailers’ broadcast, digital and streaming platforms.
Brands are experimenting with such things as video technologies for R&D and augmented reality for product trials — and, of course, they’re pulling in plenty of data from the likes of Instacart, Ibotta and even TikTok. Energy drink brand Tenzing even launched its latest product through a fitness tracking app: Participants completed seven consecutive days of activity for a code to redeem a can of the new drink.
We also cannot ignore the importance of an Amazon presence for SMBs seeking to compete with their larger counterparts. The most recent Prime Day event was SMBs’ biggest yet, selling goods worth over $3.5 billion.
“Supporting small, local businesses is important to us, and these quarterly summits will enable vendors in our eight-state region to present their products directly to our purchasing team, and — in return — will ensure our team is aware of all of the incredible, locally-made products that we can share with our customers.”
—Darren Baty, EVP and Chief Merchandising Officer, Hy-Vee
prime
real estate
Independent third-party sellers — most of which are SMBs — surpassed $3.5B in sales on Prime Day 2020 — a nearly 60% increase over Prime Day 2019, growing even more than Amazon’s retail business.
During the two-week build-up to the event, SMBs reported over $900M in sales under the Spend $10, Get $10 promotion.
Amazon intends to spend more than $100M on new promotional activities to help SMBs increase sales and reach.
50%+ of the items sold in Amazon’s store worldwide are from third-party sellers, most of which are SMBs.
Source: Amazon
Supply Chain Strategies to Stay Resilient and Stay Afloat
While SMBs have greater access to social platforms to generate closer and more personal connections with consumers over products, delivering on those goods has been a major hurdle for small and large companies alike.
That is because product availability is key to providing a full brand experience regardless of the channel, which is especially difficult to achieve when navigating through a pandemic complete with multiple rounds of pantry-loading. But where larger companies may experience shortfalls, that is where SMBs can step in with alternative items to fill in the gaps.
High Road Craft Brands was able to receive more clarity into its distribution operations and dramatically improve its logistics through more digestible data with a programmatic commerce platform. “We were experiencing a lot of canceled trucks, a lot of delays, a lot of appointment errors,” according to Madison Schroeder, national director of sales. “Being able to see the inventory on hand, all in one place, helped us navigate that with ease.”
For its part, Swedish fashion brand and retailer Filippa K tapped into RFID to improve its inventory accuracy and increase product availability throughout its retail supply chains and stores.
There is no shortage of supply chain tech available to help SMBs stay afloat: Route planning and delivery management platforms can help close the gap between e-commerce and delivery services, especially as home and grocery orders continue to increase.
Automation can help SMBs tackle transportation for better efficiency, and the Internet of Things can help to connect all facets of the supply chain. Technology in general helps keep manufacturing labor costs down, while calling for more skilled talent (opening up more jobs).
Regardless of the technologies selected to help better deliver their goods, being able to flex with what’s going on in the world to stay nimble and pivot will be crucial for SMBs going forward.
Driven by the need to become resilient, by 2023 60% of digitally determined SMBs will increase their AI/analytics and RPA investments with the aim of reducing human intervention through agile processes.
Source: IDC, “IDC FutureScape: Worldwide SMB 2021 Predictions”
Leveling Up the Sales and Marketing Game
Lacking the scale of large consumer goods brands, getting on the radar of both retailers and consumers is an ongoing challenge for SMBs. Some, such as GoodPop, are leveraging trade promotion management technology in order to more easily streamline their trade activity and gain spend visibility, while others like Argo Tea are engaging consumers through digital signage at the point of sale.
Consumer goods SMBs need to reach their customers where they are, says Park Associates’ Kent. “SMBs need vendors who can increase their marketing reach, improve sales conversion rates, and take customer support capabilities to the next level.”
Bombas leveraged discovery technology for its Pride 2020 marketing campaign that promoted a line of limited-edition socks and gave back to The Ally Coalition at the same time. Tapping this tech drove increased website traffic and click-through rates to help the apparel brand reach more than 1 million people.
The savviest SMBs are also experimenting with social media in order to connect directly with their consumers. Beyond the traditional social mainstays of Facebook and Twitter, more brands are exploring platforms like TikTok and Triller to reach and understand their consumers.
Accessories brand Sassy Jones regularly holds Live Shopping events on Facebook.
And these platforms are taking notice: TikTok launched last summer a set of marketing and advertising solutions geared specifically toward SMBs, even throwing in $100 million in ad credits. These self-serve TikTok For Business solutions are designed to help brand marketers easily create content and optimize their campaigns.
U.S. consumers who have tried Facebook’s Live Shopping video commerce in the last year
23%
Source: Facebook, “Emerging Trends: The Forces Shaping the Future Today”
Expect to increase their Live Shopping in the coming year
66%
Like many SMBs, Tiesta Tea leverages social media — primarily Instagram and Facebook — to communicate with its audience and understand its desires. And as the pandemic shut down the possibility of in-person meetings, the company turned to video to conduct its tea tastings as a way to continue its marketing efforts.
The beverage company also leaned heavily on e-mail marketing platform in order to communicate to its customers about the COVID-19 safety precautions it’s taking in its distribution centers, as well as notify them of carrier-related shipping delays, says Rachel Heinzinger, Tiesta Tea marketing manager.
Harnessing the Power of Consumer Data
Consumer data has become the lifeblood for all consumer goods companies, providing value for everything from marketing efforts to product development. The ability to forge deep, personalized connections with consumers is a cornerstone of any successful CG strategy — SMB or not.
For those like apparel manufacturer Primary, employing social media and user-generated content for community building, as well as social listening, informs both their marketing efforts and their product development.
Home goods company Resident, which includes such mattress brands as Nectar, DreamCloud and Level Sleep, as well as Bundle furniture and Wovenly rugs, cites attribution as a key metric within its playbook. Most of its customers interact with the company 12 to 14 clicks before making a purchase, supplying information for the company’s targeted marketing efforts.
Rothy’s, meanwhile, also leverages consumer data in its quest to provide superior customer service and build lifetime value. The footwear and apparel brand prioritizes such metrics as contact frequency, method, time, length and repetitiveness, and leans on a synchronous platform that enables customers to engage via e-mail, phone or chat to build a single customer profile.
It also keeps tabs on its net promoter score, customer browsing journey and review site info, aggregating all of this data to locate trends, inform product development, and polish its brand positioning and communication.
“It was very important for me that we don't go down that path where we think people are tickets. Customers are not tickets. It's not a transactional relationship.”
— Nic Cadwallader
Director of Customer Experience, Rothy’s
Key Takeaways
Nearly 29% of SMBs reported last fall their company is at risk of going out of business due to COVID-19.
SMBs are gaining
support through retailer partners and social media platforms, including Amazon, Hy-Vee and
TikTok For Business.
SMB sales soared
by 60% on Amazon Prime Day, selling $3.5B worth of goods.
60% of digitally
determined SMBs will
increase their AI/analytics and
RPA investments with the aim
of reducing human
intervention through
agile processes.
Two-thirds of
consumers expect to increase their Live Shopping in the
coming year.
SMBs have
an opportunity to fill shelf gaps as larger CGs navigate supply chain struggles.
PRESENTED BY
New product launches are challenging enough for most CGs regardless of size, but digital technologies have proven crucial to cost savings and getting products to market faster. Tech innovations like simulation, 3D renderings and automation are helping companies like Trek Bicycle analyze hundreds to thousands of design iterations for a given problem, versus 30 to 50 iterations for a typical engineer.
And once those items are developed, next comes the race to get them in front of buyers — more of a challenge today thanks to social distancing. However, digital discovery platforms have stepped up to address this need.
Hy-Vee kicked off 2021 with a series of “Best of Local Brands” summits to expand and enhance the product offerings at its 275-plus retail stores. QVC U.S. and HSN also put a new twist on their Big Find international product search, inviting entrepreneurs and brands to share their stories across the two retailers’ broadcast, digital and streaming platforms.
Brands are experimenting with such things as video technologies for R&D and augmented reality for product trials — and, of course, they’re pulling in plenty of data from the likes of Instacart, Ibotta and even TikTok. Energy drink brand Tenzing even launched its latest product through a fitness tracking app: Participants completed seven consecutive days of activity for a code to redeem a can of the new drink.
We also cannot ignore the importance of an Amazon presence for SMBs seeking to compete with their larger counterparts. The most recent Prime Day event was SMBs’ biggest yet, selling goods worth over $3.5 billion.
“Supporting small, local businesses is important to us, and these quarterly summits will enable vendors in our eight-state region to present their products directly to our purchasing team, and — in return — will ensure our team is aware of all of the incredible, locally-made products that we can share with our customers.”
—Darren Baty, EVP and Chief Merchandising Officer, Hy-Vee