In June 2020, months after the Covid-19 pandemic, the Mall of America was unable to pay its expensive mortgage payments north of a billion dollars for two months in a row. Lockdowns, financial distress and evolving consumer buying habits have shifted the way we shop in America and still shop today.
The effects of the Covid-19 pandemic on online shopping have affected consumer behavior for the foreseeable future. While retail chains face their unique challenges, the stakes have never been greater for small, local entrepreneurs fighting for their livelihood. Hope was hard to find.
Today, however, a number of technologies have converged in ways that could help SMBs increase their online visibility where it really counts. Rather than blindly flinging around for interested consumers, SMEs have a greater chance of collaborating for mutual benefit. Rather than an ecommerce world dictated by a few players who already dominate the online shopping industry, collectives of niche business owners can position themselves to make consumers responsible again for their shopping experience and decisions.
Enter the ‘digital mall’, a networked e-commerce marketplace of independent retailers looking to compete with the giants and revolutionize the way we shop.
Can digital malls level the playing field for e-commerce?
Founder of the hyper-local digital marketplace city shop, Ash Cintas believes digital malls represent the future of retail for consumers and small businesses alike. City Shoppe allows consumers to browse by product, location, and other criteria to help form a targeted marketplace.
In return for support from local retailers, customers receive incentives, including health and wellness products, home decor and clothing.
“To be successful in today’s retail climate, businesses need to be reachable and competitively priced,” says Cintas. “More and more, that means a strong online presence that celebrates individuality and understands consumer wants and needs.”
There is simply no escaping it. Potential customers search for what your company has to offer via their smartphone. That percentage is only going to 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 within reach of consumers and provide a fighting opportunity for small and medium-sized businesses to compete in the fun, convenient and fast marketplace of e-commerce.
As the market evolves, business owners should avoid a black-and-white mindset when overhauling their business model. Digital malls can help SMBs realize the same benefits of shared resources as their physical counterparts. Make sure not to leave any of your traditional customers behind.
Spend your marketing budget smarter, not faster
Online retail giants had a decisive edge in shopping convenience long before the Covid-19 pandemic wreaked havoc on small businesses around the world, leaving the international supply chain in its wake.
The e-commerce industry currently stands at $56 billion. About 50% of that pie goes to one company, Amazon. The retail giant brought 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 improving their online profile, but often receive little to no ROI.
E-commerce is expected to account for as much as 95% of purchases by 2040. Without innovative solutions such as digital malls, our SME community could quickly disappear. Meanwhile, the retail giants continue their lucrative reign of e-commerce and significantly outnumber small and medium-sized businesses. While the Amazon Marketplace offers third-party sellers the ability to reach millions of consumers every day, enhanced access brings with it the hefty price tag of 19 percent of sales.
From this point on, business owners must respond by demanding greater accountability and empirical results for everyone online marketing dollars they spend. If your marketing team still takes an approach of throwing content on the web and hoping for the best, it’s time for a new tool. Wishful thinking and vague statistics that don’t translate into sales are out.
SMEs need to remove and remove barriers in the customer journey
Unfortunately, things in the physical world are equally bleak for retailers. More than 12,200 retailers closed their doors in 2020. Department stores and shopping centers were the hardest hit. Businesses deemed “non-essential” were given the blunt force of the closing restrictions. Many shoppers looking for local options were left empty-handed.
While “Shop Local” has long been the mantra of the U.S. Small Business Administration (SBA), shoppers typically find it challenging to figure out how to support businesses with local flair when global health issues limit travel and increase costs.
Competing eCommerce giants can crush the opportunities for small to medium-sized businesses to grow with advertising and search engine optimization (SEO) budgets alone. With the five major tech giants claiming the lion’s share of the market and brick-and-mortar stores at risk of unprecedented rent spikes, where does this leave small to medium-sized businesses looking to sell targeted, curated products? without the risk of being taken over?
Collaborate with like-minded SMBs for greater reach and better results
Working together, digital shopping centers can provide safety and security to more substandard retailers. By creating a community of companies that share acquisition, cost, and audience to achieve real returns, shoppers receive search results that boast location, diversity, and character.
The potential benefits extend far beyond personal preferences and the feel-good vibes we get from supporting local entrepreneurs. Shopping locally, even online, has a tangible impact geographically. For example the SBA Estimates that two-thirds of new jobs are created by small businesses. These dynamics foster a culture of innovation and healthy competition.
In addition to creating jobs and encouraging a healthy workforce, these companies also generate taxes locally through trade and corporate income tax that benefit education, health programs, and community projects.
Ultimately, of course, the decision always rests with the consumer. However, if you’re looking for that ‘just right’ gift or specially curated item for your friend, chances are you need to head to the digital mall of the future. The good news is that at least you have a choice.