Leveling the (local) playing field: How tech can help merchants compete

This is a guest post by Rene Reinsberg, CEO and Co-Founder at Locu

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There has been a lot of talk lately about how the best business technology, historically only available to big corporations, has become increasingly available to small businesses.

Jeremy Levine, a venture capitalist at Bessemer Venture Partners, recently told me that “innovations in software UI, online distribution and application development will drive massive new software offerings for small businesses.”

So let’s take a step back and understand the technology tools that can benefit the largest group of people who have been hardest hit by large enterprises and new technologies: the tens of millions of local merchants all over the world.

A few weeks ago, Angelica’s, my favorite small café a few blocks from Union Square, stopping making their trademark sandwiches (trust me, they made to order and made with love) to selling only pre-made, wrapped items. Why? The old way of doing things took too long, and lost them revenue.

But what they really lost is the quality of the food and the personal experience that made Angelica’s special. The good news is that there are myriad technology tools that allows local businesses to be more efficient without sacrificing what makes them unique.

The digital equivalent of the big, friendly sign?

For local businesses, discoverability is key — both offline and online. If Angelica’s Café were bordering Union Square, it wouldn’t have difficulty attracting the throngs of pedestrians — a big, friendly sign would probably do the trick. Most local businesses are not that easily discoverable.

They need to leverage the digital equivalent of the big, friendly sign to ensure they are easy to find online. This will most likely still end up being solved by an online assistant – “Hey Siri, where can I get a massage nearby?”

A quick search on Google Maps, Yelp, and Foursquare or specialty sites like OpenTable, TripAdvisor and Citysearch are often consulted by consumers before they settle on a local business. It’s crucial for our café to be on the digital map and listed everywhere with up-to-date information, including price list and menu data. Companies like Infogroup, Yext, Constant Contact and my own, Locu, can help local businesses manage and distribute their information online.

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Beyond the third party sites, a local business’s online presence matters. Does the business appear reputable? Website builder tools like WordPress or Squarespace have become more and more versatile and easy-to-use and have started to offer vertical-specific functionality. A great web presence will drive a lot of online visits (that may translate into offline visits) via search, and can be complemented by online advertising, either directly using Google’s Adwords or Facebook Ads, or online marketing facilitators such as Yodle, ReachLocal, or ThriveHive.

How about about social media?

Purchase intent is also increasingly triggered by Facebook and Twitter — it probably hasn’t been too long since you’ve heard someone say, “I really want to buy those pants I recently saw pinned on Pinterest” or “I just got this deal from Groupon today, this could be a great place to visit this weekend.”

Making live updates to Angelica’s web presence is not the kind of thing a busy local merchant has time to do, but it’s so important.

I recommend posting menu changes online, instead of just on their menu board, with photos of specials to allow their customers to easily find and share the information. This is where where automating and optimizing a merchant’s web presence based on the customer, time of day, and other contextual cues will drive foot traffic to a merchant.

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It’s all about the transaction

Once the decision where to buy has been made, it is all about the transaction. Whether booking a yoga class on SpaFinder, making an appointment with a hair stylist on StyleSeat, scheduling a car repair via YourMechanic, finding a photographer on Thumbtack or making a reservation at a restaurant with OpenTable, more and more transactions are initiated and facilitated by smart technology. Plenty of companies, including GrubHub, Seamless and Eat24,facilitate take-out and deliveries for restaurants.

The point-of-sale (POS) market has been undergoing a huge transformation, with many of the new solutions operating on non-proprietary tablet devices, such as AppleiPads, reducing the hardware cost and increasing usability.It’s never been easier for a local business to set up areliable POS system and leverage its data to gain insights into its sales and identify areas to improve profitability. The newer POS systems like Square’s Register, Groupon’s Breadcrumb and Instore come with a set of intuitive analytics, and startups like CoPilot Labs can offer additional insights based on POS data (even from the old-school POS systems).

One specific example of how Angelica could benefit from all this would be to allow customers to pre-order sandwiches. It would not only reduce the waiting time but also help Angelica sell more sandwiches during the busy lunch hour.

Loyalty shouldn’t be the last marketing tool

Chris Luo of FiveStars points out in a recent blog post that “loyalty has often been the last marketing tool deployed, and the methods used to drive it have been rudimentary.”  While there have been a number of startups, including Belly, Punchcard and Cardify, that provide digital loyalty programs in all shapes and forms, I still see a lot of businesses hand out physical punch cards.

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Digital loyalty systems can help merchants provide customized, relevant promotions, in turn increasing engagement, and ultimately driving word-of-mouth.

What’s next? Integration

It’s easy for local merchants to be overwhelmed by the seeming laundry list of technologies they should adopt to make their lives easier.   In fact, there’s a wide open market for integrating the many tools and signals a merchant has access to, so that they can start to get insights from multiple channels.

Wouldn’t it be nice for a local business to know at the point-of-sale where a certain customer has been, and how frequently they have made a purchase? Some of the new POS solutions have taken an integrated approach, looking to offer a seamless end-to-end solution. As more and more data surfaces at each interaction point between merchant and consumers, and becomes available through analytics tools, local merchants will be able to gain actionable insights to increase revenues.

Marc Andreessen, an entrepreneur turned venture capitalist, referenced the classic ‘Walmart versus local retailer’ example in an interview with TechCrunch, pointing out that “Walmart’s advantage in logistics and in pricing and in data analytics was just so great that they could kill small retailers at will.“ But perhaps not anymore, and he adds, “There is an opportunity here for a shift of the balance of power for big businesses to small businesses.”

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The world is a much more interesting, vibrant and beautiful place because of local businesses like Angelica’s café.

Rene Reinsberg is the CEO and Co-Founder at Locu, a startups that helps local businesses manage and distribute their menus and price lists across the web and connect directly with current and prospective customers.

Locu’s API gives developers access to the world’s largest real-time, structured repository of local business offerings data, leveraging a patent-pending technology platform that digitizes and structures real-world content.

Small business owner via mangostock, Shutterstock

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