Less than a month into the New Year and the e-retailer and marketplace announces plans for three additional U.S. fulfillment centers.
For U.S. Patriot Tactical, a store-based merchant of military gear, “being nimble is survival.”
Many of the struggles retailers ranked in the newly released Internet Retailer 2014 Second 500 Guide faced in 2013 trace back to two of the biggest companies that impact small online retail businesses: Google Inc. and Amazon.com Inc.
Many merchants reported having a tougher time being discovered by new customers on search engines, given the fact that Google is regularly changing the way it ranks web sites. These changes, retailers and analysts say, more often than not favor larger retailers with more recognizable names.
So small merchants with limited budgets are forced to spend more on paid search ads to compensate for the lack of free traffic from Google, and these ads are getting more expensive as competition heats up.
Additionally, Amazon continues to grow its market share, raise consumer expectations for fast and free shipping, and expand into new categories. As Amazon widens its selection, for example beginning to sell groceries to new markets, fresh flowers and streaming music in the past year, it threatens smaller merchants who aim to differentiate themselves with a niche offering of specialized products.
Take U.S. Patriot Tactical, a store-based retailers of boots, apparel and gear for members of the military. The retailer’s online sales have grown steadily over the past few years, but it has to fight hard for every dollar it earns and chooses carefully where it invests its time and money.
That was especially the case in 2013, as the retailer struggled to maintain fast speeds on it site and respond to changes at Google. “A company at our size, we don’t have as many resources available to us, so it’s hard for us to keep up with the updates from Google, or it takes longer for us to respond,” says U.S Patriot Tactical President Paul Yoo.
The merchant also has to adapt to Amazon’s growth, as the leading online retailer’s expansion into new categories and product lines is a threat to Patriot’s business were Amazon to begin selling more military gear. Amazon currently sells some of the more basic items U.S. Patriot does, but it doesn’t have as large of a selection. “Sometimes we’ll buy up the inventory from the manufacturer before Amazon will even get their hands on it,” he says. “For us, being nimble is survival. For now, I have more inventory on many items than Amazon does, since this is my specialty. But the minute they decide to go into my niche, I’m not sure I’ll have very much to say about it. That’s something a lot of small retailers are faced with.”
U.S. Patriot Tactical opts to sell a few items on Amazon’s marketplace, but only products like boots where it stocks 60,000 pairs, as it feels it has a real advantage over Amazon and other sellers on Amazon.com. The retailer doesn’t make much profit from those sales, as Amazon charges a commission of around 15%, Yoo says. But it gets the retailer’s name in front of many shoppers.
“Even if I’m not making as much money on those sales, I want to be the person people buy from,” Yoo says. “If someone orders from me, I ship it that same day. Hopefully they’re pleased and come back to my site later to buy some more.”
U.S. Patriot Tactical, ranked No. 667 in the 2014 Second 500 Guide, experienced modest growth in 2013—it brought in $11.64 million in web sales, up 12.8% from $10.32 million in 2012. That growth was slightly behind the Second 500 collective average. Merchants ranked in the new guide grew online sales 14.1% to $4.741 billion from $4.155 billion in 2012.
However, 2014 is tracking to be much better at around $16 million, Yoo says. In November of 2013, the merchant switched from a custom-built, open-source Magento e-commerce platform to all-in-one software from Bigcommerce. The site is now faster, and the user experience is much better thanks to improved navigation and better site search, Yoo says.
U.S Patriot also increased its focus on including more in-depth content that is search engine-friendly. The merchant hired a team of copywriters to craft detailed product descriptions, and U.S. Patriot now shows up higher on search engine results, he says. In a recent Google search for “military boots” U.S. Patriot showed up as the No. 1 result in organic listings on Google.com.
The Internet Retailer Second 500 Guide is available in print, digital and online database formats. Click here to order a copy.