February 24, 2020

The Digital Land Rush

To digitize or not…Is that the question? For many digital startups, 2019 is going to look like a proud Irish immigrant planting their stake in the westward land grab. Just like Tom Cruise in Far and Away. Only the land is called market share. It’s not land at all. It’s digital market space. It’s up for grabs, and anyone with a good product and tech savviness can enter the race. Watch out Big Box, the starting pistol just fired!

Meet one competitor in the race, Rebecca Berger. Female entrepreneur extraordinaire! This MBA owns a company called WeatherWash Coatings, an earth-friendly, reactive stain that has high reviews and a strong foothold in the wood stain market. Type “wood stain” on Instagram’s search, and she’s often ranked #1. She’s focused on hyper growth and she’s proving she can compete against big-box players by inventing her own wood stains and using a shipping model similar to Amazon’s two-day shipping model. The questions she’s asking herself is, “how quickly can I maximize this new location and how fast can I find another warehouse?”  

The largest contenders in the digital market space race are undoubtedly Walmart and Home Depot; Depot is the world’s second largest economy. In their 2017, 10-K report, Depot revealed they plan to compete with Amazon by spending $11B on “store, supply chain, digital experience, and people.” With that kind of funding, the retailer known as the eight-hundred-pound gorilla expects to be on equal footing with Amazon’s one-click, two-day order fulfillment this year. The question is, can they REALLY do it? In 2001, Home Depot opened its online store.

 Where Depot only had to worry about Lowe’s retail physical stores, it now has to worry about both physical stores and online sales. A lion gazelle relationship exists between retail and suppliers that never existed before. Why? Because late entrant suppliers like Sherwin Williams are building websites that sell directly to end consumers as well. However, CEOs of supply companies like Sherwin Williams have a basket of problems all of their own. When the topic of online sales comes up among in house software developers, these questions buzz around like killer bees, “What are our total startup costs? When will the product be fully operational? Will the software maintain our market share? Considering 60% of software development will never reach completion, should we even develop this?” 

Bezos has already answered ALL of these questions, and he did it six years ago. Bezos built a solid platform, from HTML source code to the back-end JavaScript. He built Amazon so soundly, he survived the dot com bust. He has invested heavily in hardware and software and essentially owns some portion of hosting services. Bezos owns AWS and an undisclosed share in Google, meaning at some point, large retailers are going to slam into the cloud services owner. The end game may be what happened to mom-and-pop bookshops, here today, gone tomorrow. 

In a nutshell, Mr. Bezos may have opened Pandora’s box when he invented the online retail store, he created unlimited potential, both for traditional retail and new online entrants. Time will tell who the winners and losers are in the cyberspace marketplace land grab, but as for now, the race is on!
Zack Lovelady

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