Should Niche Retailers Be Added to The Endangered Species List?

Should Niche Retailers Be Added to The Endangered Species List?

From Main Street to .com there is growing alarm among niche retailers, especially those who market product nationally. This concern is not new. I recall having the same worries as a young High School student working in my families lumberyard when Home Depot came to town. That said, the battle seems to be becoming more and more difficult.  

Google and Facebook seem to be devaluing pages and posts by small business owners. Manufacturers and freight carriers often make it possible for mass retailers to sell below niche retailers costs and legislation like the Marketplace Fairness Act is being used by large retailers as a wedge issue to divide and conquer small business.

For companies who go to market online, constant changes within Google present a major threat to niche companies. When I entered this business in 2001, the online market allowed small business owners to offer products and services not readily available in the local market. Quality sites were recognized by Google and placed well within their search results.

Today, mass retailers have expanded into these niche markets. Their massive PR footprint and internet presence coupled with updates to major search engine algorithms means they dominate the front page of search engine results for almost every major keyword. Although they lack the expertise to support the products and provide a quality user experience, they are rewarded with first page rankings by simply adding a product and basic description to their website. This means that niche companies who specialize in the products they sell are becoming more and more difficult to find. Quality information on specialty products is being pushed further and further down the list. Small business owners are being relegated to ‘Pay Per Click’ advertising which drastically increases their cost of doing business. Alternatively they are being forced to invest even more in so-called ‘Search Engine Optimization. (SEO) ‘ SEO has become both a bad word and an illusive moving target.

As the search engines moved in on small business owners, many companies took to social media as a legitimate method of getting the word out and educating consumers. Facebook, and others, have responded by reducing the visibility of posts by small business owners –presumably to force them towards the pay to play methods they now offer.

Brick and mortar companies don’t exactly have a walk in the park either. They are seeing growing competition from companies like Amazon.com, Wal-Mart, Best Buy and more. Like online businesses they must struggle to stay competitive. Lower margins, increased rent and advertising expenses become necessary evils to compete with mass retailers and their online counterparts. 

Many consumers subscribe to the views that they can purchase the same toys at Wal-Mart or Target that they can purchase at the Main Street toy store, and do so for less. In many cases the assumption itself is simply not true. In other cases products are being provided to mass retailers at or below what a local retailer can bring the item in for.

As if this was not enough, legislators are considering a bill which inappropriately called the Marketplace Fairness Act. While lobbyists are pretending this bill is about small business, the lobbyists themselves are paid by big business. This bill, even if it does not pass may just be the straw that breaks the camels back.

Why? Its simple. Go on any major social media network and search for #MarketplaceFairnessAct #eFairness or #NoNetTax . Big business has used this to distract small business owners from the real fight. Big business has small business owners fighting with each other instead of focusing on how to compete with large companies and deal with price discrimination.

If the bill were to pass it would all but destroy a large segment of the online small business community. The bill does not deal with the core issues of implementing a sales tax nationwide. Each state can still define what is taxable and what is not and each city, state and county can define their own rates. Even within that there are special taxing districts. Small business owners simply cannot afford the resources necessary to comply with the bill. Implementation costs alone are tens of thousands of dollars and that does not even begin to consider the unfathomable and undeniable legal and accounting costs.

Small business is the backbone of this country and it is under attack by mega corporations whose stock is traded on the public market. Small business owners need to band together and address the real issues or risk a world where Main Street looks more like Wall Street. 

Justin Krauss is the Co-Founder and President of Garage Flooring LLC. Garage Flooring LLC is a niche online retailer that focuses on garage flooring and garage storage products not generally available in the local market.