What separates small business owners from the major players in the retail industry like Amazon and Wal-Mart? Well, a lot of things, if we're being honest. No small-time proprietor has the weapons to ascend to power overnight and become the next Jeff Bezos. But there is good news - there's one small improvement that entrepreneurs can make that will help them gain some competitive ground. They can step up their attention to analytics.
One of the major factors that sets Amazon apart is the success it's had with direct marketing tools. Because the corporation has such deep, comprehensive information on its target consumers, it's always had sharper tactics for marketing and sales than its competitors. The company can find the most relevant pieces of information, act on them quickly and thus maximize their profits.
It remains to be seen whether the minor-leaguers can make up some ground.
Retailers are struggling
This should come as no surprise, but according to Sys-Con Media, many retailers are struggling to keep up with Amazon in terms of analytics maturity. According to the news source's latest projections, 80 percent of sellers are falling short in this area. Furthermore, 71 percent are performing either basics analytics reporting only, or no reporting at all.
"Retailers view analytics as extremely strategic, yet they currently struggle to derive commensurate value from their analytics investments," said Gaurav Pant, senior vice president of research and principal analyst at EKN. "However, there are significant opportunities for retailers that can harness the power of analytics. Retailers that can overlay their analytics capabilities with a strategy and organizational capability tightly linked with their business model will gain competitive advantage."
What can sellers do?
One thing that merchants of all sizes need to do is free up a little bit more money in the budget to invest in analytics. Sys-Con reported that slowly but surely, this is indeed happening - retail organizations pushed the analytics portions of their IT budgets from 14 percent in 2013 to 23 percent this year, which is no small push.
This is a definite step in the right direction for the small business community. While the "little guys" may not be able to dominate the world the same way Amazon does, they can gain a more precise understanding of their local markets, one small piece at a time. This is the beauty of high-quality customer data.