The Democratization of Local Commerce | Steven Jacobs

the democratization of local commerce
steven jacobs street fight
@stevenhjacobs #endofbrand
@ 2014 Hyperlocal Industries LLC.

this is the american marketplace.
why is it all the same?
@stevenhjacobs @ 2014 Hyperlocal Industries LLC.

Over the past century, the value of brand has led to the homogenization of the
American marketplace.

It all starts with the business model.
brand
marketing/advertising
product/service
training/education
business equipment
business systems
labor
equity/capital

Each layer of the stack has a purpose.
brand
labor

Capital provides the foundation….
brand
product/service
training/education
labor
business systems
business equipment
equity/capital

Capital pays for labor,
business equipment and systems….
brand
product/service
training/education
business systems
business equipment
labor
equity/capital

brand
product/service
training/education
business equipment
business systems
labor
equity/capital
Training and education turns those
assets into a sellable product or service…

brand
product/service
training/education
business equipment
business systems
labor
equity/capital
Marketing and advertising helps communicate
the product to consumers, reinforcing brand…

We know that business models evolve as new technologies are introduced.

In each technological era, there’s one layer that thrives with scale…
We’ll call that layer the “scale layer.”

brand
product/service
training/education
business equipment
business systems
labor
equity/c
capital
First, the scale layer was capital.

brand
product/service
training/education
business equipment
business systems
labor
equity/capital
Then, it was equipment.
(hint: access to the ‘means of production’)
ccapital

brand
product/service
training/education
business equipment
business systems
labor
Most recently, it was all about brand
equity/capital

brand
A brand is the perception of a business by a consumer.

Brand has two functions…
brand

To shape the way we think…
To solve and information problem…

brand
As we started to work, live and relax in different places,
we became more regional and national consumers.

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.

brand
product/service
training/education
business equipment
business systems
labor
equity/capital
The value of brand was so powerful that
each layer of the stack helped to reinforced
a uniform experience…

The product needed to be standardized.
A burger in Tulsa needed to be the same
as a burger in Toledo.
product/service

So did the messaging.
One message, promoting one product, for
one consumer.

The entire model builds around
centralized networks of consumption,
production, and media.

To make us happy…
But that “information problem” is under attack…

The web introduced a new network structure.

Peer-to-peer networks allow
consumers and business to share
information with one another without
going through a central point.

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

brand
McDonald’s share price is flat…

brand
McDonald’s share price is flat…
But Yelp is killing it.

brand
“The ability for consumers to access near perfect information means that
traditional assets like brand... are becoming less important.”
- Itamar Simonson, Stanford

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
training/education
business equipment
business systems
labor
equity/capital

You used to buy networks..
@stevenhjacobs

You used to buy networks..
@stevenhjacobs
Now, marketers buy audience…

@stevenhjacobs
By 2017, programmatic
buying will account for 42%
of display ad spending.
42% of display
advertising
spending

Individualized customization appears to be
within reach, says McKinsey.
product/service

So, which part of the stack will dominate next?
brand
product/service
training/education
business systems
business equipment
labor
equity/capital

Let’s look online.

The companies that grow help us create — they
don’t create for us.

Over the next decade, business
systems will be the “scale layer.”
brand
product/service
training/education
business systems
business equipment
labor
equity/capital

business systems
The introduction of cloud software has fundamentally changed
the dynamics of the business software (systems) market, making the software
ubiquitous, integrated and networked.

There’s an estimated 13.9 million point-of-sale
systems in the U.S. in 2014.
business systems
1) Ubiquitous

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

Marketing
2) Integrated Point-of-sale
The new systems will integrate across the
entire stack, allowing data to flow from
capitalization to operations to marketing.
Retention
Accounting
Compensation
Payroll

business systems
These systems typically functioned as
independent networks.
3) Networked

business systems
In the cloud, these business now can share
data — and potentially resources — with
thousands of other business on its network.
3) Networked

Ubiquitous, integrated and networked
business software will reduce the need
for standardization and scale across the
business stack.
brand
product/service
training/education
business systems
business equipment
labor
equity/capital

Let’s take a look at the impact of business
systems on four layers of the stack…
brand
product/service
training/education
business systems
business equipment
labor
equity/capital

buesqinueitsys/c saypsitteaml s
Over the past two decades, it’s become increasingly difficult
for a small business to get a loan.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
small business share of all nonfarm, non residential loans
50%
25%
0%

Square Capital uses operating data
from business across its network to
identify businesses well-suited for small
loans.
buesqinueitsys/c saypsitteaml s

Wholesale purchasing has served as an
economy of scale for years, benefiting the
largest businesses.
bpursoindeuscst/ seysrvteicmes
price
per
item
big brand A
quantity purchased
small co. A

But this is an information problem.
Small business A, B and C are all
purchasing the same goods. They just
cannot coordinate.
price
per
item
big brand A
quantity purchased
small co. A
small co. B
small co. C

If small co. A, B and C all use the same
business software, they can purchase
collectively.
price
per
item
small co. A small co. B small co. C
quantity purchased

Loyalty programs have served as an
bulwark against the dissolutions of scale
for brands.
businebsrsa nsdystems

By coordinating small businesses,
software can begin to replicate the value
of brand through new systems.
businebsrsa nsdystems
These software companies become
brands in their own right.

businelsasb osyr stems
40% A lack of payroll system ends up
costing small business in tax fines,
many of whom apply through pen and
of small business are
fined because of
incorrectly filing their
taxes.
paper.

businelsasb osyr stems
“Payroll is set of rules — both internal
and legal — and computers are much
better at following rules than humans.”
— Joshua Reeves, Zenpayroll

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.

instead of this…

we’ll see more of this…

steven jacobs deputy editor
street fight

The Democratization of Local Commerce | Steven Jacobs

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