Post Coronavirus global commerce will increasingly become distributed and local, enabling the era of “Distributed Hyperlocal Commerce.”
Local economy is temporarily dead. Many small businesses would not be able to reopen even after getting financial assistance from the government. This includes restaurants, cafes, brick and motor stores. Due to the absence of local markets, online e-commerce giants like Amazon have become even more powerful. Stay at home orders has made the powerful even more powerful and rich even richer. This has already started happening as Uber offers to buy competitor Grubhub.
While a limited few are becoming richer and powerful due to the global shut down, millions have lost their ability to put food on the table. The unemployment rate is a staggering 14.7%. According to Business Insider, the number one industry that has suffered from this pandemic is sightseeing with over 60% job loss from February to April, while restaurants and bars have experienced 48% job loss rates during the same period. As we patiently wait for United States to return to normal, these numbers will only get worse. With such an unprecedented number of jobs lost in such a short period of time, even when we go back to normal, your neighborhood might not look the same.
Business Empowerment Through Platform
You may have noticed Amazon and Ebay trying to push the message that they work with local businesses to sell their products on their platforms. The truth is that many platforms have forced sellers to sell at the thinnest of margins. These low margins are often unsustainable for U.S. based sellers. As a result, you can expect to see numerous counterfeit products in the marketplace. Moreover, foreign sellers can sell counterfeit products or even generic products at a price U.S. sellers cannot match. This has effectively created a foreign sellers and US buyers marketplace powered by U.S. tech companies.
Many Have Abused So Much
Groupon forced businesses what deals to offer, how much to discount their products or services and when to offer them. Grubhub and DoorDash forced steep cost increases of up to twenty five percent on restaurants. Often times, those costs get passed on to consumers. Many consumers are not even aware they are paying more prices for an entrée that’s being delivered in addition to delivery fees. Uber takes such high cuts from their drivers that they barely make minimum wage. In addition to charging various fees, Amazon also steals the best selling product information from the sellers and launches its own private label effectively stealing business from its own seller.
Sellers are at the mercy of these platforms as they lack mainly two things: the reach and supply chain infrastructure necessary to compete. Instead of abusing sellers, future marketplaces need to serve and enable sellers to thrive.
Businesses Will Adopt Scalable Changes
Businesses need to have an option to seek alternate platforms to sell their products. These platforms would enable businesses to freely sell their products at whatever price point or time they desire. In this system, platforms would no longer coerce their marketplace sellers. With this new found freedom, businesses would increase their ability to attract customers. Simultaneously, with so many people unemployed and holding on to their money, more and more people will be looking for ways to make their money go farther. There would also be a strong sense of responsibility to help local businesses whenever possible. Any platform that enables local businesses to thrive and help local community, while at the same time saving consumers money, would be the winner.
The Turning Point
Pre Coronavirus, we shopped around our neighborhoods. We also ordered products online which were delivered right to our door. In some cases we could even order online and pick up in stores.
“We will have many more Amazons around us in the future: these Amazons will be distributed, yet have supplies to meet your needs. Fewer goods will be shipped to you from thousands of miles away; more will be available to you locally.”
These local places would have the reach and supply chain infrastructure that would allow them to serve their markets effectively. Walmart is leading this category.
Those who only shop online should remember how their neighborhood looks when local businesses are shut down. It’s time to remember the feeling you get when you want something like a red dress or a suit and all you need to do is walk in a store and walk out with the things you want instantly. You don’t have to wait for your shipment to arrive. Instead of shopping online and waiting for your order to arrive, you could drive or just walk to the nearest store.
Imagine what you would be doing if markets weren’t shut down. You might be meeting friends at a bar for drinks or dinner. People would be going out to work and most likely eat lunch at a restaurant. Coffee shops like Starbucks and Peet’s would be occupied with students and professionals sipping latte and studying or conducting business meetings.
Walking around the streets, you miss the smell of fresh pizza, chatter at a bar, musical performance by the guy at that busy landmark, or the ability to shop for a jacket. While technology has enabled us to order coffee beans online, the instant gratification of actually getting the fresh coffee with a friend at Starbucks can only be achieved in a thriving local economy with infrastructure to meet the needs of the local community.