Has the web become the next Main Street?
I continue to see countless ecommerce/fashion businesses show up in my box. Some I have met with and others I have not. What is interesting is many of these businesses are gaining some traction, not a huge amount but enough that they have built an audience around their individual models. They are also making money.
Certainly there has been some businesses in this vertical that have been explosive. Most of those businesses have been funded for one reason or another and have had the ability to grow quickly and become big. Just to name a few; Fab, Net-A-Porter, Shop-Bop.
Is there room for others in each space? Sure but more than likely many of the businesses that are trying to take a small piece of each large sites marketshare will never get to be the size and scale of the leaders. That doesn't mean that they are not successful.
Decades ago, on every small town or city street were Mom and Pop stores that carried products for the community. One could be a womens clothing store, one could be the home furnishing stores, one could be just kids clothes or menswear. Those businesses built loyal followers and provided a life style for the people that owned them.
Is the web becoming the next global Main street? How many people have you talked to that tell you what their favorite website is that you have never even heard of. Sometimes it is a brick and mortar store with a great site and sometimes it is just a blog that sells products. It does not necessarily make sense for everyone to go out and raise money perhaps there are plenty of businesses who should create their own Mom and Pop store on the web and own it themselves.
In line with what Albert Wenger has been blogging about, that’s a piece of a better vision for the future re: our economy.Better that there are more store owners, than Walmart workers or Amazon packers.
a total piece of a better vision.
.I suspect the long term issue is going to be the same — Walmart moves in whether in your hometown or on the web and local Mom & Pop stores will struggle to survive. No, they will get killed.In some ways, Walmart and Amazon cannot help themselves because they can make a market in anything that can demonstrate a profit margin and then they simply squeeze the margin. And kill the local retailers.Walmart is America’s largest grocer — 15% marketshare nationwide — from a standing start in a 1% margin business and they are not doing it with the quality of their product a la Whole Paycheck but rather with the breadth and depth of their offerings.Huge amounts of shelf space. Huge stores co-located with a Super Walmart and close to a Sam’s Club.It is useful to remember that Walmart started in 1962 and was a local one store retailer. It was the genius of Sam Walton that built the empire.Still, they seem to have a ways to go on their web presence. We shall see..
JLM, I think you’re right, but I was saying on Albert’s blog yesterday, that I think there will be some space, under the broad shadows that walmart, Amazon, and other scale players throw, for various niche offerings…whether in manufacturing and retailing non-scale things though the Maker movement, in food as people realize that bigger has squeezed a lot of quality and nutrition out, and threw various talent elevation platforms as folks realize that bigness is often not the source of quality in services as well.The silver lining of Walmart and Amazon’s bigness is that you can make a living doing things that don’t move the needle for them at all.
Also it seems that Albert has a vision for this as well and I am excited to see his third post next week!
,I would worry about the sun precessing across the sky if I were trying to stay in Walmart’s shadow.I now buy my gas at a Sam’s because of the price.Walmart will eventually be anywhere a big enough market can be made regardless of how slim the margins are.I truly expect them to ultimately dominate health care insurance..
Gas at Sam’s.My creative elephant mobile for our upcoming nursery at Etsy.
Speaking mainly about food here, there’s no reason that bigger retail necessarily means lower quality. That might have been something they got away with in the past (and will continue to get away with at the lowest price points), but their offers them the same opportunities to undercut pricing at the high end as well.If you haven’t been to a Costco in years, they are a completely different place than they used to be. While they may compete with Walmart in some categories, they’ve got tons of high end items in various categories (wine, ready-to-eat, gourmet, etc). Just last week I picked up the same french butter and real jamon iberico that I usually pay 2/3’s more for my local supplier. And it isn’t just mega-brands, they work with smaller vendors as well.Another example is the goodies box (goodies.co) from Walmart. It is a direct knock-off of the foodzie boxes, down to similar packaging and some of the same products, but they’re offering it at half the price and twice the selection / larger quantities inside.There’s certainly a niche for artisans – the direct (online) market for growers and producers is exploding, but don’t count the big guys out of any marketplace.
.The fruit and pricing at Costco is excellent as is the meat and wine..
And a lot of it is organic and local, at least here in Washington. You don’t get the small farmers or quite the variety you see at the farmers markets, but apples-to-apples (pun intended) the quality is definitely on par for a much better price. I shop at both.
Agree.Impressed with what is coming out of WalmartLabs so far. I blogged about this last week. Goodies, in particular, a great way for some of the artisinal brands to get tested by Wal-Mart and potentially get shelf space.Also, love the way Amazon has nurtured the more focused shopping experiences that it has purchased, in particular Zappos and Quidsi (Diapers.com et al). Been blogging about that a lot as well.Not counting any one out.Just hoping (and maybe that is all it is although I don’t think so) that there is some space left for small sellers as well as the organic and artisinal brands that can get big via Walmart and Amazon.
The people in the toughest spot aren’t the producers and niche retailers, they are the middle-of-the-road general stores that don’t have anything to differentiate on and can’t beat the big guys on prices.
no disagreement.Like with restaurants, you have to differentiate and be creative to survive if small and can’t play the price game.
What do you think of amazon new marketing social pages for their brands that was launched last week. It is my understanding that they are trying to improve relationships with their retailers.
haven’t seen this — thanks for the headsup!
Here is the link from Amazon https://ams.amazon.com/prod…
As a Prime member, it is a amazing how many times i find myself buying from a non-Amazon seller; some non-Amazon sellers are so integrated, I am indifferent and go with best price.I am not sure how the economics work for the retailers on the Amazon platform.The Pages initiative seems like a step to broaden that third party platform element, but it seems fairly unambitious so far,It will be interesting to see if they can develop a Pinterest style functionality to the platform. That way Amazon can not just be the place I go to when I know I want to buy something, but also the place that inspires me to buy something.
it makes sense. amazon is the largest shopping mall in the world that happens to live online.
Yup. I wonder how this will affect services such as shopify http://www.shopify.com/ or goodsie http://goodsie.com/
I read a terrific piece about Walmart labs and their social web efforts in FastCompany yesterday that I thought it might be of interest you http://www.fastcompany.com/… – Also, what is the link your blog about Walmart labs?
This is terrific. Thanks for posting. I have been impressed with a lot of what they are trying, and it will be interesting to see if Walmart can pull off the Clay Christensen ideal of disrupting themselves before Amazon completely does it for them.That said, the Junglee guys leaving hints at a problem. Hard to believe that they would not have stayed if they truly had the autonomy that they are supposed have.The Walmart labs posts are under the Retail category of my blog at http://www.takingpitches.com. There is also a related post about a partnership they are pursuing with AmEx to serve the unbanked under New Payment Systems.Thanks again for the link.
Also a link back right at you:Here is from a Founder who sold to Walmart and adjusting to that…http://tobiaspeggs.tumblr.c…
Interesting that you mention Amazon. Remember, once upon a time, Jeff Bezos was pretty much mom and pop… packing up items in his garage…
Yep. IMHO, no one alive today has been more disruptive and innovative than Bezos. And with AWS empowering to other disrupters as well
ha. yes he was.
Nice excerpt from a book published last year on Amazon from the WSJ to that point:”The site was launched on July 16, 1995—just as masses of people started moving onto the Internet and before many competitors had created strong commercial sites.Mr. Bezos moved the company to an industrial neighborhood that it shared with a needle-exchange program and a shuttered pawnshop. He had 1,100 square feet of office space on the second floor and 400 square feet in the basement to use as a warehouse. The desks were made from cheap doors, with sawed-off two-by-fours for legs. The warehouse could store just a few hundred books on their way from the distributor to customers.Thanks to discounts of 10% to 30%, orders started coming in as soon as the site launched. At first, there were a half-dozen orders per day. One of the programmers set up the computers so that a bell would ring every time an order came in. A great novelty at first, it quickly got annoying and had to be turned off.Three days after launch, Mr. Bezos got an email from Jerry Yang, one of the founders of Yahoo. “Jerry said, ‘We think your site is pretty cool; would you like us to put it on the What’s Cool page?’ ” Mr. Bezos later recalled. “We thought about it some, and we realized it might be like taking a sip from a fire hose, but we decided to go ahead and go for it.” Yahoo put the site on the list, and orders soared.By the end of the week, Amazon took in over $12,000 worth of orders. It was hard to keep up. That week, the company shipped just $846 worth of books. The following week brought in nearly $15,000 worth of orders, and the team was able to ship just over $7,000 worth of them.”
Great find. Im pretty sure I was one of the customers who got the bell. Lol
“How many people have you talked to that tell you what their favorite website is that you have never even heard of.”Hadn’t thought about it in this way before, but it’s so true!
Definitely it is a big trend, especially that you can open an online transaction store in minutes with tools like Shopify and ShopLocket.The trick is in finding them.
exactly. the trick is finding them. that is why the “mom and pop” concept makes sense. you can be clever and figure out how to build a nice audience but to build a huge audience you really need tremendous capital to build that kind of a brand.
.If you have good products do you really have to employ a lot of capital on the branding or is it just blocking and tackling marketing/messaging?It is a bit different when you are talking about niche products and niche marketplaces.Take as an example Moleskine notebooks which were a cult item once upon a time and now are widely availableAs a commodity, they can be purchased directly from the manufacturer, on Amazon of course and at Barnes and Nobel.A three pronged distribution model — direct from the manufacturer, web discount/aggregator and old school retailer.I am interested in Civil War cavalry swords — isn’t everyone these days really? — and there are only 2 places you can really find them plus the big auction houses from time to time.As a aficionado, I find them. It is my energy which drives the connection..
Moleskin got significant funding
.I am only referring to the issue of branding not the capital structure of the company. As I recall Moleskine (French company) cratered in 1986 and was revived by an Italian company in 1997. I think it was Modo&Modo.Then it was bought by the former SGCapital Europe which became Syntegra Capital.Syntegra operates it as a stand alone business and has very cleverly nourished the brand and slightly broadened the product line.They are a cult now.Most of the money changing hands was in the acquisition and merger line item. Very little was spent in the branding.In any event, Moleskine is one of my favorite stories of all time..
True, but having people find your product has always been an issue, online and off. In addition to all the traditional marketing and advertising, you can also now more easily leverage marketplaces that have existing traffic (amazon, etsy, ebay, fab, whatever fits your offering), then try to leverage your brand audience into higher margin direct sales.
.The whole world of commerce is evolving but with some basic characteristics that are unchanged.Customer location dynamic is the same whether your customers live in Manhattan or occupy Internet real estate. Location, location, location. You have to be in the “right” place or space.The ability to “see” the product.Great customer service.The 4 P’s of marketing. Pricing is very important. Madden shoes from Madden or Madden shoes from another retailer on sale are simply a “pricing” issue. Product is not a discriminator any longer.It is also not omni-directional — everyone going to the web. Take as an example Piperlime which started on the web and has now opened their first brick and mortar store. I think it is in SoHo on Wooster.Because they started on the web, their brick and mortar presence has an interesting twist. They have big monitors which show their website in real time. If they do not have the product or size you want, they order it for you right in the store off their website.This integration is very interesting. It seemingly allows them to inventory less of a product relying upon their website for fulfillment.Added bonus — you don’t have to carry it around with you and you don’t have to pay sales tax.They are owned by the Gap, so they have some real staying power.There is another antecedent for this evolutionary thinking — the big category killer catalog companies like LL Bean, Lands End and Eddie Bauer.In some form or fashion, they all started as physical plants which went to the catalog — perhaps the catalog being the first “social” marketplace — and thus the movement to “catalog on web” was not a huge leap but a baby step.What distinguishes them, in addition to the comparative product focus and quality of their goods, is their exquisite customer service and inventory control.I was once overseas in Korea in the Army — hellishly cold and wet — and ordered some boots from LL Bean’s fledgling catalog. Strictly forbidden to wear the Army being the Army but I was absolutely freezing. Frostbite kind of freezing.LL Bean sent me the boots plus some unbelievable woolen socks and charged me $0. Thanked me for serving and called it a day.Think I love LL Bean?.
Yes and no. I’m still waiting to find for certain products main street equivalents where the website owner knows me and my preferences. EG: There is a store where I grew up that sells vintage jewlery. The store manager knows my preference for interesting yet simple pieces. If I come, she knows her stock well enough to choose something for me (about 3/4 of the time)Websites don’t really do that without investment in either tech or people. And tech can be a bit cold.
.No doubt. I am mindful of Amazon’s ability to link one’s reading preferences. I believe I own every book ever printed on the Finnish-Russian War because of Amazon’s “discovery” process..
For years I have thought about manufacturer’s going straight to the end customer and cutting out the middle man( retailer). Look at the manufacturer’s point of view: I sell my product to Limited for $2.00. Limited marks it up to $8.00. Do I, should I, as a manufacturer, care if i sell to the Limited for $2.00 or sell to end customer for $2.00? What exactly is the Limited doing for me? In other fields, this business model has worked, what is stopping it from happening here?
.Nothing. I have bought a couple of very expensive long shearling coats from the original manufacturers saving thousands of dollars.it should become the model — cutting out the middle man.This is also what is done by Moleskine. Moleskine is very interesting as they pass along no manufacturer bargain but have multiple means of distribution — direct, category killer web presence and old fashioned brick & mortar stores.In Moleskine’s example, they do not provide any manufacturer’s discount relying upon the retailers to shore up the price.Sorry for such a blatant love affair with Moleskine notebooks but I just love them..
agreed. I think large manufactures cannot meet the niche needs of consumers the way different fashion sites–like Nasty Gal and Black Milk–are meeting the wants and needs of key markets (namely the 16-25 demographic, who consume a lot). What’s more, manufactures would have a hard time communicating/reaching these demographics since so many of these large-scale niche successes start off as a niche.
Absolutely. The www is the ultimate department store – sans, erm, the department store!
Buying and Selling are two different points of view.Some things can get bought, like books or refrigerators or office supplies. No one will ever be more efficient that Amazon at this.Some things need to be sold like fashion and wine. Amazon will never be any good at that. They will fail for the third time with wine IMO.Some marketplaces like Etsy and Kickstarter can actually sell things and that is the core of their dynamics. They are an exception.When I think of mom and pop or lifestyle businesses they fall into two categories. Really small niches but honestly even for a lifestyle biz if there isn’t a national or global market customer acquisiton is a bear. And those that require selling. People do this best and small is usually where it is done best.Interesting post.Thanks.
Supporting a local web site (business) sounds an oxymoron (ie, with the notion of the www truly enabling a ‘global village’), but it makes sense.