The Democratization of Local Commerce | Steven Jacobs
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Transcript of The Democratization of Local Commerce | Steven Jacobs
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
the democratization of local commercesteven jacobs street fight
#endofbrand
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
this is the american marketplace.
why is it all the same?
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Over the past century, the value of brand has led to the homogenization of the American marketplace.
It all starts with the business model.
equity/capital
brand
marketing/advertising
business equipment
business systems
labor
training/education
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
product/service
Capital provides the foundation….
equity/capital
brand
labor
business systems
business equipment
training/education
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
marketing/advertising
product/service
Capital pays for labor, business equipment and systems….
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
equity/capital
brand
business systems
business equipment
labor
training/education
marketing/advertising
product/service
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
brand
business equipment
business systems
labor
training/education
marketing/advertising
product/service
equity/capital
Training and education turns those assets into a sellable product or service…
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
equity/capital
brand
business equipment
business systems
labor
training/education
marketing/advertising
product/serviceMarketing and advertising helps communicate the product to consumers, reinforcing brand…
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
We know that business models evolve as new technologies are introduced.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
In each technological era, there’s one layer that thrives with scale…
We’ll call that layer the “scale layer.”
c
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
equity/capital
brand
marketing/advertising
business equipment
business systems
labor
training/education
product/service
First, the scale layer was capital.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
equity/capital
brand
product/service
business systems
labor
training/education
marketing/advertisingThen, it was equipment.
(hint: access to the ‘means of production’)
cequity/capital
business equipment
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
brand
product/service
business equipment
business systems
labor
training/education
marketing/advertising
Most recently, it was all about brand
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
A brand is the perception of a business by a consumer.
brand
To shape the way we think…
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
To solve and information problem…
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
brand
As we started to work, live and relax in different places, we became more regional and national consumers.
brand
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
brand
In solving the information — helping us trust a place we’ve never been —
brand allowed us to become active and informed consumers wherever we went.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
equity/capital
brand
business equipment
business systems
labor
training/education
product/service
The value of brand was so powerful that each layer of the stack helped to reinforced
a uniform experience…
marketing/advertising
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The product needed to be standardized. A burger in Tulsa needed to be the same
as a burger in Toledo.
product/service
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
So did the messaging. One message, promoting one product, for
one consumer.
marketing/advertising
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The entire model builds around centralized networks of consumption,
production, and media.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
To make us happy…
But that “information problem” is under attack…
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Peer-to-peer networks allow consumers and business to share
information with one another without going through a central point.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The centralized network — once at the core of what made brands valuable — is no longer relevant
customer a can tell consumer b what to expect about x business
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
brandMcDonald’s share price is flat…
But Yelp is killing it.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
“The ability for consumers to access near perfect information means that traditional assets like brand... are becoming less important.”
- Itamar Simonson, Stanford
brand
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
As peer-to-peer networks erode the value of brand, they also have allowed for decentralization in other parts of the stack.
brand
product/service
business equipment
business systems
labor
training/education
marketing/advertising
equity/capital
@stevenhjacobs
You used to buy networks..
marketing/advertising
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
@stevenhjacobs
You used to buy networks..
marketing/advertising
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Now, marketers buy audience…
@stevenhjacobs
marketing/advertising
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
By 2017, programmatic buying will account for 42%
of display ad spending.
42% of display advertising spending
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Individualized customization appears to be within reach, says McKinsey.
product/service
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
So, which part of the stack will dominate next?
brand
marketing/advertising
business systems
business equipment
labor
training/education
product/service
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The companies that grow help us create — they don’t create for us.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Over the next decade, business systems will be the “scale layer.”
brand
marketing/advertising
business systems
business equipment
labor
training/education
product/service
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The introduction of cloud software has fundamentally changed the dynamics of the business software (systems) market, making the software
ubiquitous, integrated and networked.
business systems
There’s an estimated 13.9 million point-of-sale systems in the U.S. in 2014.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systems
1) Ubiquitous
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systems
By 2020, the number is set to nearly double, driven primarily by the emergence of less expensive and mobile cloud-based software.
1) Ubiquitous
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
The new systems will integrate across the entire stack, allowing data to flow from capitalization to operations to marketing.
2) Integrated Point-of-sale
Compensation
Payroll
Marketing
Retention
Accounting
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systems
These systems typically functioned as independent networks.
3) Networked
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systems
In the cloud, these business now can share data — and potentially resources — with thousands of other business on its network.
3) Networked
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Ubiquitous, integrated and networked business software will reduce the need
for standardization and scale across the business stack.
brand
marketing/advertising
business systems
business equipment
labor
training/education
product/service
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Let’s take a look at the impact of business systems on four layers of the stack…
brand
marketing/advertising
business systems
business equipment
labor
training/education
product/service
equity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systemsequity/capital
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013small business share of all nonfarm, non residential loans
Over the past two decades, it’s become increasingly difficult for a small business to get a loan.
50%
25%
0%
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Square Capital uses operating data from business across its network to
identify businesses well-suited for small loans.
business systemsequity/capital
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Wholesale purchasing has served as an economy of scale for years, benefiting the
largest businesses.
business systemsproduct/service
price per item
quantity purchased
big brand A
small co. A
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
But this is an information problem.
Small business A, B and C are all purchasing the same goods. They just
cannot coordinate.
business systemsproduct/service
price per item
quantity purchased
big brand A
small co. A
small co. B
small co. C
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
If small co. A, B and C all use the same business software, they can purchase
collectively.
business systemsproduct/service
price per item
quantity purchased
small co. A small co. B small co. C
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
Loyalty programs have served as an bulwark against the dissolutions of scale
for brands.
business systemsbrand
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
By coordinating small businesses, software can begin to replicate the value
of brand through new systems.
business systemsbrand
These software companies become brands in their own right.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
of small business are fined because of
incorrectly filing their taxes.
business systemslabor
40%A lack of payroll system ends up
costing small business in tax fines, many of whom apply through pen and
paper.
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
business systemslabor
“Payroll is set of rules — both internal and legal — and computers are much better at following rules than humans.”
— Joshua Reeves, Zenpayroll
@ 2014 Hyperlocal Industries LLC. @stevenhjacobs
These business systems networks will allow thousands of brands and products to flourish, adapting to the intricacies of the consumer rather than making the
consumer adapt to the brand.