Original article by Scale Advisor, John Hall, in Forbes here
In June 2020, months into the Covid-19 pandemic, the Mall of America wasn’t able to pay its costly mortgage payments—north of a billion dollars—for two months in a row. Lockdowns, financial distress, and evolving consumer buying behaviors caused a shift in how we shop in America and continue to shop today.
The impacts of the Covid-19 pandemic on online shopping have influenced consumer behavior for the foreseeable future. While chain retailers face their unique challenges, the stakes have never been higher for small, local business owners fighting for their livelihood. Hope has been hard to come by.
Today, however, a number of technologies have converged in ways that just might help SMBs increase their online visibility where it really counts. Instead of casting about blindly for interested consumers, SMBs have an increased opportunity to team up for mutual benefit. Instead of an eCommerce world dictated by a few players already dominating the online shopping industry, collectives of niche business owners can position themselves to put consumers back in charge of their shopping experience and decisions.
Enter the “digital mall,” a networked eCommerce marketplace of independent retailers looking to compete with the giants and revolutionize how we shop.
Can Digital Malls Level the eCommerce Playing Field?
Founder of the hyper-local digital marketplace City Shoppe, Ash Cintas believes digital malls represent the future of retail for consumers and small businesses alike. City Shoppe offers consumers the ability to browse by product, location, and other criteria to help form a purpose-driven marketplace.
In exchange for supporting local retailers, customers receive incentives, which could include health and wellness products, home decor, and apparel.
“To be successful in the current retail climate, businesses have to be accessible and competitively priced,” says Cintas. “More and more, that means having a strong online presence that celebrates individuality and understands consumers’ wants and needs.”
There’s simply no getting around it. Potential customers are looking for what your business has to offer by using their smartphones. That percentage will only increase, so SMBs without a high-profile, niche-specific online presence risk losing sales to more visible competitors.
The Dawn of a New Retail Era
Digital malls have the power to put shoppers back in control of how they spend their money. They bring a greater diversity of stores to consumers' fingertips and represent a fighting chance for small- and mid-sized companies to compete in eCommerce's fun, convenient, and fast marketplace.
As the marketplace evolves, business owners need to avoid a black-and-white mindset as they retool their business model. Digital malls might help SMBs realize the same benefits of shared resources as their brick-and-mortar counterparts. Just make sure you aren’t leaving any of your traditional customers behind.
Spend Your Marketing Budget Smarter, Not Faster
Online retail giants held a decisive advantage on shopper convenience long before the Covid-19 pandemic wreaked havoc on small businesses across the globe and left the international supply chain smoldering in its wake.
The eCommerce industry currently stands at $56 billion. Approximately 50% of that pie goes to one company, Amazon. The retail giant raked in more than $200 billion in revenue in 2021, according to an April 2022 report from The Economist. SMBs spend millions of dollars and thousands of hours trying to raise their online profile but often receive little to no ROI. eCommerce is projected to account for a whopping 95% of purchases by 2040. Absent innovative solutions such as digital malls, our SMB community could quickly disappear.
Meanwhile, the retail giants continue their lucrative reign over eCommerce, vastly outpacing small- to medium-sized businesses. While the Amazon Marketplace offers third-party sellers the opportunity to reach millions of consumers every day, enhanced access comes with the hefty price tag of 19 percent of sales.
From this point on, business owners must respond by demanding increased accountability and empirical results for every online marketing dollar they spend. If your marketing team is still taking an approach that boils down to throwing content out on the web and hoping for the best, it’s time to retool. Wishful thinking and vague statistics that don’t translate into sales are out.
SMBs Must Root Out and Eliminate Barriers in the Customer Journey
Unfortunately, things in the brick-and-mortar world are equally grim for retailers. More than 12,200 retailers closed their doors in 2020. Department stores and mall-based retailers were the hardest hit. Businesses deemed “non-essential” received the blunt force of shutdown restrictions. Many shoppers looking for local options were left empty-handed. Although “Shop Local” has long been the U.S. Small Business Administration (SBA) mantra, shoppers typically find it challenging to figure out how to support enterprises that boast local flair when global health concerns limit travel and increase costs.
Competitive eCommerce giants can crush the chances for small- to medium-sized businesses to grow with advertising and search engine optimization (SEO) budgets alone. With the big five tech giants claiming the lion’s share of the market and brick and mortar stores at risk of unprecedented spikes in rent, where does this leave small-to-midsize businesses who want to sell purpose-driven, curated products without the risk of being taken over?
Team Up with Like-minded SMBs for Greater Reach and Results
Digital malls can offer more undersized retailers safety and security in collaboration. By creating a community of companies sharing the acquisition, cost, and audience to garner actual returns, shoppers receive search results that boast locality, diversity, and character. The potential benefits extend far beyond personal preferences and the feel-good vibes we get from supporting local entrepreneurs. Shopping local, even online, makes a tangible impact geographically. For example, the SBA estimates that two-thirds of new jobs are created by small businesses. This dynamic fosters a culture of innovation and healthy competition.
While creating jobs and encouraging a healthy workforce, these companies also generate taxes locally through commerce and corporate income tax that benefit education, health programs, and civic projects. Ultimately, of course, the decision will always be up to the consumer. However, if you’re shopping for that “just right” gift or the purpose-driven curated item for your friend, chances are you need to hit the digital mall of the future. The good news is that at least you have a choice.