Expanding into the digital space and gaining access to the new age market space is a trend not all small businesses are familiar with. Very few brick and mortar businesses today have truly understood the importance of the digital market space. Most are stuck in their old ways and are ignorant of this market evolution which slowly leads to their extinction. Red Box and Blockbusters are classic examples of an expansion of physical presence ignoring the trend which Netflix capitalized on.
How Do We Expand Our Operations Online
Answer to this question will vary from industry to industry and services to services. The model which will work for one company may not work for another so no company should try to copy another’s business model. For the sake of this post, we will look at one example; a grain distributor, let’s call it XY Inc. XY Inc. is an established small business with a good number of dealers. It delivers to its dealers bi-weekly and has an online platform for its dealers to place orders.
XY’s success is directly linked to the success of its dealers thus in order for XY to expand its operations it needs to go out and find more stores who will be willing to carry its products. This traditional way of doing business is very unsustainable to XY Inc. Now XY Inc. as a distributor can decide to sell its products directly to consumers (B-C) bypassing the need for retailers/dealers (B-B) but in order to do this, XY Inc. will need to compete with the dealers it’s currently distributing to and such a move will put XY Inc. at risk of losing its B-B model which may be unsustainable in the long run. As a distributor, XY Inc. will need to thread carefully ensuring such a move won’t ruin its existing relationships.
Most small businesses with an established supply chain can perform such moves by slowly testing the market to see exactly how viable their product actually is to the consumer. In the case of XY Inc. they have mastered what their dealers want and know exactly how to deliver it to them. However when testing a new sales channel, a lot of market research need to be employed in order to jump into this new process.
Today, we have Amazon, Google and Facebook. These are great tools for testing product demand, market demography and with the information. It will help guide your decision when choosing a sales channel.
Amazon is literally an online mall where you can dig all kinds of information just by sitting on one spot. As a dealer XY Inc. only knows how to supply in bulk and at wholesale prices to retailers/dealers. However XY Inc. can use Amazon to find out how its competitors package products when selling directly to consumers. How the packaging is designed and the current retail prices of the product.
After gathering such data and replicating it in its own way, XY Inc. will now have a product of its own that can be sold directly to consumers. With a product in hand, next step will be to find its market demography and which channels it will use to sell it.
This Search Engine and Social Network aren’t only used for the purpose of searching and socializing. They can be used as tools to gather insights on the population which can help in decision making and planning. When ads are ran on these platforms, there are cool features “Google analytics and Facebook Insights” that if used properly will give you information about the population demography that are interested in your product. There are companies specialized in gathering such information, one of such being Hiraya Solutions.
Once XY Inc. understands the population demography that are a potential market for its new program, it can now choose which platform will be profitable. It could be creating a new retail space online of its own, or selling through established ecommerce outlets like Amazon, Walmart and Costco. Whatever decision XY Inc. takes from here will be a well-informed one and it will insure the sustainability of its business beyond its traditional business model.
This article is part of a 3 part series where the author explores the small businesses and means of digital expansion.