Running a retail business isn’t easy these days, especially given the monstrous size of the competition. It’s not just Amazon and Walmart that are destroying the retail business for small and large competitors, but they are certainly major factors. Thanks to their huge scales, Amazon and its few true peers can afford to sell products at very slim margins, meaning that it’s awful hard for smaller retailers to survive.
It is possible to make it in retail these days, though, even for small business owners. To get by, you’ll need ingenuity and plenty of dedication. It won’t be easy, but if you’re smart about pouncing on opportunities to maximize your profits you can do just fine. Here’s how to improve your profit margins as the owner of a retail business.
Get cheaper inventory via liquidation sales
Depending on what sorts of products you sell, you may find giants like Amazon, Walmart, and Target aren’t just your rivals. In fact, their business practices may offer you some unique opportunities.
It’s about liquidation. When companies like Walmart and Amazon need more room for new products (or when they receive products back in customer returns), they just want the extra inventory out of the way. Their spread across so many industries means that selling these products at cost or even at a loss is not a big deal. Small businesses can take advantage of this by turning to trusted auction sites for B2B liquidations and returns auctions. You could grab pallets full of products for less than market value and then resell those products at a profit — a bigger profit, for that matter, than you might be able to achieve with more traditional inventory sources.
Focus on visibility and customer experience
Whether you own a brick-and-mortar store or an online retail company, you need to think about the customer experience. What and how much customers buy isn’t just about what they need and how much cash they have on hand; it’s also about what they see.
Great visibility can help move products that might not otherwise have been sold. Poor visibility can keep inventory from moving even when it should. Improving the customer experience and making sure that customers see products they might be interested in will make a huge difference in your retail profits.
Watch the discounting
Discounts and coupons are great ways to move product fast, and they can be a real blessing when you need cash in the bank right away. However, they also mean letting your products go for less, and reckless use of these tactics can really eat into your profits
How necessary are the discounts and promotions that you offer now? How quickly do you turn to sales and coupons to move inventory? Can you find a way to hold onto products just a bit longer and get more customers to buy them at full price?
Do the math
What does your profit margin look like? How has it changed over the past few months? How about the past few years?
We can share great ideas for improving profit margins all day, but they won’t matter much unless you have the knowledge that it takes to implement the right ones — knowledge about your own company. When you hire analysts and consultants, they may have great ideas, but the real key to their methods is to crunch numbers and look at your business closely. You can do many of those same things by simply being more proactive about record-keeping and analysis.
The more information you have about your business, the better. It’s only by looking at the sales figures for individual products, rates of abandoned carts, fluctuations in figures from month to month, and other in-depth mathematical and statistical facts that you can find the weaknesses in your business. Only by first finding those weaknesses can you effectively shore up those points and maximize your profits.