San Francisco Chronicle - (Sunday)
Small retailers seek survival online
Chandler Tang didn’t think she’d have to close her gift store four months after opening it.
Like many retailers deemed nonessential, she closed Post Script in midMarch, when Bay Area health officials ordered businesses like bookstores and clothing, toy and furniture stores to close in an effort to curb the spread of the coronavirus. Many small businesses complied, doing their part to flatten the curve.
Tang was left with a crucial question: What now? Her Fillmore neighborhood gift store that sells a range of stationery,
home goods and accessories was highly dependent on customers walking in. She decided to jump into opening an online shop, and her longterm ecommerce plans came into fruition within a week.
“I always knew we were going to expand to online sales, but COVID19 pushed us to do that. It’s important to reach a wider audience,” Tang said. “As soon as we launched, we immediately saw some purchases, mostly from folks who already shopped with us.” While online revenue hasn’t offset the decline of instore sales, Tang said she’s investing a lot more into her ecommerce operations for longevity, taking note of items that sell better online such as games, hair accessories and kitchen and dining items, which spiked upward of 88% since her opening on March 25.
Even with businesses slowly starting to reopen, a retail rebound is unlikely for months. Large and small retailers alike are thinking critically about an online presence (or increasing it) as shoppers change habits and continue to have concerns about
the virus. Walmart and Target both announced earnings in May and reported huge increases in online sales, rising 74% and 141% respectively in April, compared to the same period a year ago. To meet demand, Walmart hired 235,000 employees since midMarch, with a good number headed to its fulfillment centers. Target also hired thousands of workers, training them for newer features like curbside pickups.
In San Francisco, mobile payments company Square saw new ecommerce sellers increase almost sixfold since midMarch. This was based on sellers who had their first online transaction during the months of January and February versus March and April, the company said. The first big wave of local businesses signing up with the San Francisco company were restaurants, followed by retail.
“Some businesses were already on this path, but one big trend we saw was that the threeyear adoption cycle got shortened to three weeks,” said Dave Rusenko, Square’s head of ecommerce. COVID19 “made it very immediate,” he said. “Buyers now are going to expect a lot more options.”
Ecommerce requires capital and figuring out logistics, but not having a website in a pandemic world is akin to a sad, eventual closure, said Tane Chan, who owns the Wok Shop in Chinatown.
“I’ve been online since 1999,” Chan said. “My online business is what’s keeping my livelihood, and my workers’ livelihoods, from falling apart.”
She’s managed to retain her staff of five at the store, which sells one of the largest assortments of woks and other Chinese cookware. She has a basement that functions as her warehouse, where she and her staff do most of the packaging. Before the pandemic, online sales made up half of her business, but now it’s closer to 70%, she said. She averages 50 shipments a day, an increase of roughly 20% from midMarch, though revenue is down about 20%. It used to average about $40,000 per month, she said.
“Instore sales are nonexistent, and we haven’t had much luck with curbside pickup,” she said. “A lot of that has to do people’s apprehension of coming into Chinatown, I think. We’re hitting some hard times too.”
But the transition to ecommerce is tough for some traditional brickandmortar stores. It requires money, logistics and, in some cases, hiring more staff. And learning about customer behavior is different online than it is in stores, which means quickly positioning operations to meet customers where they are.
People often selfselect in how they receive goods, said Anoshua Chaudhuri, a professor and chairman of the economics department at San Francisco State University.
“Some customers may be willing to drive to pick up goods in a matter of hours, while some are fine waiting for 10 days. So how do you capture both those customers?” Chaudhuri said. “You need to offer different options — online checkout, curbside, delivery and more to cater to customer needs. That might be challenging for some small businesses, but it’s crucial for survival.”
Some ways retailers can build a following outside of regular instore customers is to be transparent about sales and let customers know how much inventory is available and when an outofstock item is likely to return — much like what Amazon already does. “Those kinds of things build loyalty,” Chaudhuri said.
Still, it might be hard to stand out in a crowded online market. Chaudhuri said the first thing businesses need to do is get the word out and increase their social media presence. And small businesses need to figure out what the concept of “experience,” a hugely popular retail strategy aiming to bring customers into stores, looks like online.
“We saw brickandmortar turn into event spaces to get customers in. What does that look like online?” she said.
For Natanya Montgomery, owner of Naza Hair in the Mission Disrict, that looks like offering a weekly Zoom class on different hairstyles for African American hair, which her salon specializes in. Her salon, which closed a month after opening in February, has been able to retain staff and started selling hair kits online, largely thanks to a $1 million funding round led by Initialized Capital — she’s one of the few female and minorityowned businesses that’s seen some venture funding.
“The kits have been selling out ever since we started selling them,” Montgomery said, though she declined to give unit sales and revenue figures. “Our Zoom classes are a way to be connected and engaged with our community, and that is invaluable to us.”