Future of Small Business Commerce (Part 1)

April 29, 2014

(This blog post is an extended version of a contribution I made to Street Fight Mag. Read the original here.)

In 1994, Pizza Hut was the first website to offer online ordering of pizzas. They exclusively serviced Santa Cruz, California, but it marked the first time a website accepted online payments. E-commerce was born.

Fast forward 20 years and consumers no longer bat an eyelid placing their credit card details into a web browser to purchase products online. It's safe, secure, and so convenient. Year after year, we see hockey stick growth as consumers spend more money online than ever before.

It’s an obvious transition that’s turning the offline shopping world upside down. Experts have called this for years, but it’s finally become a reality, as both small business owners and big box outlets are forced to close doors because of showrooming and online competition.

“There’s finally a common enemy. Someone that we didn’t take seriously. An evil force that must be dealt with” -- Retail Store Manager, Vancouver, Canada

What we’re really talking about is the war against Amazon and the radical shift in consumer buying behaviour. Behind closed doors at every major big box outlet, senior executives are scrambling to build strategies to not only compete, but simply survive. Some call it a blood bath, I would describe it as the next Klondike Gold Rush -- endless opportunities for those that quickly adapt and implement change.

Keep ahead of the pack by rethinking the shopping chain and looking for early signals as it relates to your business, big or small. Here are some predictions on where I see the future of commerce. Don’t get left behind, grab your shovel and get panning.

Marketplaces For X
Marketplaces are the new shopping mall. Why walk around for hours on end, when you can view millions of products from your mobile device, tablet, or desktop, anywhere in the world?

We’ll continue to see new kinds of marketplaces in new verticals with new experiences ( currently in marketplace 1.0 territory -- tons of innovation and exciting possibilities). VCs will continue to heavily invest in this area. Greylock Partners and several other VCs have created teams devoted to finding the next mobile mammoth marketplace; more craigslist-killers. New service based marketplaces -- plumbers, cleaners, carpenters, bartenders, event planners, travel agents, entertainers, etc.

Tumbleweed Shopping Malls
Serious struggles ahead for shopping malls. Big box outlets will continue to close doors and focus efforts online. Those big stores drive foot traffic and support other chains and independent small businesses. High vacancy rates could drive malls out of business (ghost malls), or drive new experiences and opportunities. Eg. -- speciality malls, rezoning for office space (desirable and cheap with food/drink/ample parking), restaurant courts (think Vegas, replacing food courts with restaurant courts), Amazon/ecommerce pickup outlets, new types of shopping experiences (see virtual shops below). Malls located in heavily populated areas/major cities/attractions/travel hubs may not see this shift.

Shopping Malls Servicing Stores
Online marketplaces offer tools and services for their retailers to sell more products online, shopping malls need to follow suit to compete. That could include marketing services, collaborated events or sales, and providing whatever services their store owners require (shipping fulfillment for all stores in the mall?)

Food & Beauty Ripe for Ecommerce
Online grocery and beauty commerce are now feasible. All of your favorite big chains will offer online ordering and delivery. Monthly “box of x” subscription services will fade out, more focus on local + health/organic + environment. Expect to have local delivery men/women for all of the major grocery chains (bi-weekly deliveries by Walmart).

Influx of Delivery Providers
New shipping providers in the delivery space. UPS, Fedex, DHL, etc., will be unable to handle the volume of same day delivery. We’ll see more options for local couriers/delivery companies and major retailers partnering with these providers to fulfill orders within hours of purchase. Companies can start to strategically place popular selling items throughout different areas of the city for quicker delivery times. This won’t work well for rural areas, but more applicable for major cities. Bikes + smart cars for the next 5 years. By 2025, we’ll see self driving delivery vehicles (drones + self driving cars).

Local Retailers as a Supply Source
Instead of the factory/head office shipping ecommerce orders, they’ll reroute the order to the customers’ local town where a local business can ship the product. We’re still 5 years out, but think auto-dealers -- they can all see each other’s inventory, especially similar branded outlets (eg. Ford).

Bufferbox for X
Bufferbox provides consumers the convenience of picking up their online purchases at kiosk locations, 24/7. We’ll start to see companies placing their lockerbox in strategic locations, and even within stores (Eg. -- Amazon lockerbox within Whole Foods).

Local Distribution As A Service
Brands and small businesses will work with local ambassadors to provide marketing distribution on retainer/affiliate lead basis. Think product placements with celebs, but instead using 100s of influential locals to reach your target audience. Youtube = the biggest ecommerce marketing channel ever.

Stay tuned for part 2 and part 3

Do you agree or see things differently??