Where does Internet Retail Go for the Small Retailer Now?

As a casual observer and advisor to several small business who retail their wares over the Internet, this year has thrown up a few interesting thoughts that might point to the future of Internet retail for the small “shopkeeper”.

This year has already been tough on the high street, with household names as obvious casualties. Mary Portas’ recent review was perhaps a combination of “statin’ the bleedin’ obvious” combined with some less sensible ideas (Bingo? Seriously?).

But the dramatic reduction in business on the high street has not immediately translated into a boom in sales for the small retailer in the Internet retail world. A drop in sales in the high street, has anecdotally in my case, been reflected by a drop in sales online for small retailers.

This posting does not discuss the issues faced by large household names online, many of whom have seen a dramatic rise in people moving to a different channel – in particular shoppers who purchase across many different channels. In this area, one has to look at the rise in click-and-collect services made available by household name retailers and brands. But that’s a story for another posting entirely.

Casual observation of a number of small internet retailers (family operations on the whole) seems to point to a couple of things that are having a serious effect and produce difficult decisions about the 2012 trading year.

The Amazon Effect – Amazon has become the long-tail retailer of choice for many, and it’s possible to buy almost anything there.

The eBay Factor – As people become price-conscious, the apparent (yet flawed) view that eBay is where you can buy things cheaper than elsewhere, means that it’s the first point of call for many shoppers rather than using something like Google Shopping.

These two massive players have one thing in common – they have open marketplaces. It’s possible to ride on the luxurious search engine advantages of either and host one’s own business within their marketplace listings. Plenty of small businesses now pop up in Amazon as the supplier. eBay relies on eBay shops rather than just the C2C auction business. eBay isn’t the cheapest in many cases. Neither is Amazon, but both brands have a high level of trust amongst consumers. For many eCommerce/Internet retail is either Amazon or eBay, in the same way that Facebook has become the Internet for millions of people.

Anecdotally I’ve seen sales and traffic slump on dedicated eCommerce sites whilst I’ve seen a dramatic rise in sales through eBay and Amazon for small retailers. This has stark consequences for channel maintenance in 2012 – is it worth keeping a dedicated hosted Internet retail business or is it better to move the business into Amazon and onto eBay?

My view is that 2012 will be a difficult year for dedicated eCommerce Retail hosting services as many of their retail customers simply end hosting contracts and focus on the 2 channels that bring them all their business.

It will however be a good year for people who can customize eBay stores. Coding hats on!

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