Giant retailers like Walmart and Amazon have long trotted out shopping incentives like steep discounts on hot holiday toys and free shipping to get you in the door. However this year, as competition for shoppers' dollars heats up, small businesses are ramping up their offerings too.
"Basically to be competitive we felt like we needed to step into free shipping right out of the box," says Patti Bernstein, co-founder of New York-based online luxury bedding seller Threaded. "Nobody is paying for shipping anymore," she adds.
Indeed, a November survey from Deloitte shows that 88 percent of shoppers would rather avoid shipping fees than get their orders faster, with 61 percent saying they'll purchase the minimum to quality for free shipping.
Of course, it only takes one look at Amazon's balance sheet to realize that shipping is an expensive affair. In the third quarter, the retail giant's shipping costs were more than $6.5 billion. Eating those costs can be tough for any business. However for Threaded, the cost is built in to the price (a Queen-size set of sateen sheets retails for $169), so it's less painful, says Bernstein.
Since the holidays are right around the corner, revamping your business model may not be in the cards. Here are four tactics you still have time to employ, no matter how new or established your business is.
1. Add multiple couriers.
One way to save money is to diversify your delivery partners, says Adam Price, founder and CEO of Homer, a logistics management startup based in New York City. Most big companies set up a contract with a single vendor and every year or two they will reassess how much they are charged, says Price. Generally, that works for them because they are big enough to be able to secure lower costs. But the bigger an operation, the more difficult (read, bureaucratic) negotiating can become.
Instead, mix it up with local, regional, and even non-traditional delivery services when appropriate. That way you'll have an easier time negotiating among vendors. If one won't play ball, for instance, you can just transition more business to another. "For small businesses, it's much easier for you to go and renegotiate those rates with these local carriers on a much more frequent basis--as high as monthly."
2. Switch up your timing.
During the holiday season, it's easy to overspend on marketing, says Erica Amatori, director of marketing at Burrow, a New York-based direct-to-consumer startup that sells couches. "Everybody bids for the same thing because it's the holiday season, so it drives up costs significantly," she adds, referring to Google AdWords.
If you want to avoid burning through much-needed cash, consider switching your strategy around. Increasing your ad budget in paid search and paid social now--or better yet, in October--can actually help you save on customer acquisition costs, says Amatori. The idea is to get a ton of referral traffic to your site, even if those customers don't end up making any purchases.
Closer to the holidays, then you switch gears and invest more in the bottom of the [marketing] funnel, she adds. This way you will only need to use retargeting tools, which are significantly cheaper than paid searches or sponsored posts, Amatori says. And for next year: consider starting your sales earlier in the holiday months, she adds, noting that sales throughout November are usually through the roof.
3. Offer limited-run products
Another way brands are getting ahead of big retailers like Amazon and Walmart is by focusing on niche and limited-run products. The Miami-based e-commerce shop, In The Pursuit, for example, offers a curated selection of artisanal and handcrafted items. That slim inventory is intentional, says co-founders, Jesse Bratter and Cara Gibbs. "A lot of the things [on the site] you can't find anywhere else," Bratter says. "You definitely can't find [them] on Amazon or like at Target or these huge operations." Millennial shoppers, in particular, like the idea of owning something unique.
4. Let creativity roam wild
"You really need to stand out during the holidays and it's getting harder to do so," says Amatori from Burrow. It's why you see brands carrying out zany marketing stunts like Domino's offering free pizza for life to customers who get its logo tattooed on their bodies. "The more out of the box you are, the more attention you will get," she adds. Burrow's unusual marketing techniques include filling empty display windows in New York with fortune-teller mannequins that will text you your fortune.
Amatori adds, you just have to think: "What is the [customer's] lifestyle? What do we give off as a brand?"