How do you compete with Amazon? The simple answer is you don’t.
Imagine the following retail scenario. You discover beautiful piece of furniture only to find that it is a “one of a kind”. You discover where you can order one only to find out that it could take 4 to 6 months to receive your order. So, how does this retailer manage to survive in the age of free two day shipping? Salt Creek Farmhouse is an example of a vertical furniture retail shop that has found ways to develop customer relationships to thrive in an omnichannel world. Retail survival requires transformation to new paradigms. Lesson 1 starts with focusing on doing what the giants are not doing.
Why this is important: When you don’t have the resources or infrastructure, the best way to compete with Amazon is do something different. Some of the smallest retailers are deploying strategies that other retailers can leverage for differentiation.
Salt Creek Farmhouse – A success story of how the tiny can compete
Salt Creek Farmhouse is a story from “fly over country“. It is a great story of a young couple’s passion to develop a business around their purchase of a farmstead. A story of a woman, Ashley Welch, who made the time to understand her core customers and build a business and products to fit them. A story about quality, not quantity. A story about connecting with customers online, and engaging them to tell the “Farmhouse Story”.
I heard about Salt Creek Farmhouse the same way that most of their new customers learn about them – through word of mouth marketing from a very satisfied customer that had just purchased some of their products. The rest of the story is how they have developed ways to reach customers. This is also a much larger story about how the smallest of retailers can compete and thrive in the age of giants like Amazon and Walmart.
Lessons learned from grass roots for thriving in an omnichannel world
Retail is an expensive business to launch in terms of physical locations. First, there is the space, purchased or leased. Then there is a sizable investment in inventory to stock a store. Another major cost are the people to staff and operate the store. It, perhaps, should not be surprising that many new retailers start online where the costs are lower and their reach can be greater, even international in scope. Many startup retailers are creatively leveraging digital assets to reach core customers before they consider building any stores.
Salt Creek Farmhouse literally started selling products without a storefront. Social media was a natural medium. Customers helped lead the way by posting photos of their Farmhouse purchases on social media like Facebook and Instagram. Salt Creek Farmhouse’s first “store” was actually a digital presence on Etsy. Like many retail startups, Salt Creek Farmhouse has leveraged digital to now come full circle and open a physical retail store.
Many businesses can leverage lessons from the smallest in retail
Salt Creek Farmhouse is literally a “retail shop” of old main street, with a limited selection of focused products. They certainly do not compete on breadth of selection, speed or two day free shipping. With all of the types of furniture sold online today, it is in fact remarkable that they can compete at all. Yet, the very reason for their survival is a counter strategy of doing things that the giants are not doing, or not doing well.
Some might argue that the story from a “small shopkeeper” is not relevant and will not scale. Yet, the smallest of retail must literally win customers from those who turn to Amazon and online first. They must also compete with national chains who have broad selections in store, with home delivery in days. Whether it be Salt Creek Farmhouse or Warby Parker, todays emerging retailers are deploying digital strategies before opening stores to sell “things”.
Five lessons from Salt Creek Farmhouse
1. Telling your story is as important as the products you sell
In the age of mass merchants, much of retail lost its “soul”. Stores merely became places to sell products. Salt Creek Farmhouse is a small business and retail shop with a great story. Their story creates a unique brand identity and differentiation for their products. You can read their story under the “Our Story” tab on their website.
2. Engage your customers to help tell your story
Far too many retailers use social media as another way to advertise products and promote sales. One of the most powerful aspects of visual social media like Instagram is having customers posting photos of how they are using products in their home. Social media is the new WOM (Word of Mouth), and it is most powerful when customers lead and speak about their experience. To quote Salt Creek Farmhouse’s Instagram page: “Lovely pieces should come with a lovely story.
3. When you can’t compete on price, compete on value and personalization
If it comes down to selling products at a price, game over, Amazon and Walmart win. People still value quality. Salt Creek Farmhouse competes on quality artisanship. They also create personal relevance by designing things for customers, and pieces that you cannot purchase everywhere. Even giants like Nike are realizing the power (and gross margin) of enabling customers to “create” and personalize their own shoes.
4. Know your customers and go where they are shopping
Salt Creek Farmhouse’s production volume is currently too small to fit the needs of Amazon or Walmart. Moreover, their products would get lost and never be found in the millions of SKUs online. Etsy was a perfect digital format for Salt Creek Farmhouse. Their products fit the artisan style of the other digital stores on Etsy. Salt Creek Farmhouse found core customers would organically search for products like theirs on places like Etsy. It is more important to be where your customers are, than to be on sites or in stores with the most traffic.
5. Lack of inventory can be managed as an asset
Historically, retail operated on the premise of purchasing items inventoried on the shelf in store. This requires substantial capital investment in inventory and distribution systems. Salt Creek Farmhouse literally carries almost no inventory. In order to sell pieces as they build them, they focus on other value propositions of customization and exclusivity. This requires breaking the old paradigm of “mass merchandising”. It also requires developing an intimate relationship with customers who appreciate quality and service beyond the expected.
There is no apocalypse … retail is transforming
Those forecasting a “retail apocalypse” are typically focused whether on historical models will survive. Retail stores that are no longer relevant die. Innovators who transform replace them. Kudos to women like Ashley Welch, who brought Salt Creek Farmhouse to market based upon a vision and new paradigms … including using stay at home dads as a primary labor force.