Staples 2.0: When Online Resembles Offline

5 12 2008

Sarah Tavel of Bessemer Partners has a great post about The Staples 2.0 effect, how large e-commerce retailers are leading to the closure of mom-and-pop stores.  I highly recommend it.

The conclusion that e-commerce will come to more closely resemble physical retail in the long run always struck me as a largely underrepresented one. The seismic drop in consumer spending seems to be the catalyst to put this reality front and center.

The post got me thinking. Search Engine Ranking is the key ingredient here.

Many direct comparisons can be made between online retail and physical retail: branding, repeat customers, customer acquisition cost, economies of scale, etc. Many insurmountable benefits to scale.

With Search Ranking, it’s as if once you’ve “earned” your spot, you’ve not only got a flagship store in Times Square, but also in London Square, Union Square, Mall of America, and so on… for FREE. The land grab for this space spawned Web 1.0, Web 2.0, and on.

The existence of Search Ranking, based on popularity (links), makes it even more insurmountable to dethrone a market leader. It’s not the only benefit to scale, but my gut says that it’s the straw that breaks the camel’s back for new entrants.

Some of the thinking is very obvious. Commodities will be bought from the low-cost producer. Long tail wise, there can be a healthy long tail serving infinite small-scale interests given removal of geographical barriers. Today’s basically zero cost of real estate means these niches have a lot of room to thrive.

Hence an Etsy, Zazzle or such can thrive as well.

You’ll basically see large e-commerce retailers, with niche retailers competing on a specific niche service, which sure looks a lot like physical retail.

There’s still of lot of room to grow and create value to build a brand and your base of loyal users/customers/followers: aggregation, customization, community, socialization.

It’s just unoriginality that will go unrewarded… it’s no different on the Wild Wild Web.

(via GigaOM)


GenieTown: Devilish on the Details?

20 02 2008

GenieTown launches today, just like CitySearch, Yelp and Craigslist before it for local services such as plumbers, electricians and other such service providers. The initial piece on TechCrunch signals two details that might help and hinder this business.

Michael Arrington points out that the Q&A section is the best part of the strategy. From what I can tell, there’s also a provision to provide guides and articles. In the Squidoo way, this will prove to be a great move from SEO, traffic generation standpoint.

What local, SMB targeted startups have in common is the chicken and egg, critical mass problem. Furthermore, locally targeted businesses always have trouble signing up SMBs to varying degrees. The ability to creatively and effectively sign up businesses and customers provides the most important differentiation.

Commenter #2 Dito writes:

    It doesn’t allow you to link back to your company’s website. worthless.

Like many of the local, long tail startups, it’s not immediately useful enough to start. This exacerbates the chicken and egg problem.  Similarly, you might not like the dismissal offered in the above comment but it’s correct by and large in that one-liner way.

I like the overall concept, but there are some things I’d do differently. And it’s interesting to watch how other startups hop into a somewhat similar sandbox as we’ll be entering.