The Death of Small Web Shops

Small Shoe Shop [Source]

We have a growing industry that builds upon the dreams of small web shop owners thinking they can build the next Amazon. That’s about to change.

Services such as Shopify, open source projects such as Magento and Prestashop and a myriad of other tools and would-be digital panacea cater to entrepreneurs trying to build ecommerce businesses.

But the truth is very few of them will ever become self sustainable. Very few will go beyond small web shops. Even well funded startups can crush and burn (Fab for example burned through more than $300 million until calling it quits).

I find it hard to believe that there is a future for the small web shop. Just like web pages today or the Gopher protocol in the past, one day the small web shop will be gone and something else will take its place.

Here are a few things that will be either causes of reactions to this change in digital commerce:

1. There are going to be fewer, but bigger, digital commerce outlets

Think of these increasingly influential outlets as the shopping mall for the next century. The likes of Ebay, Amazon and even Walmart will become larger marketplaces catering for both more consumers AND more suppliers / vendors.

In the (near) future ecommerce entrepreneurs will find that the window of opportunity previously open will close and consumers will increasingly rely on larger marketplaces for better prices and more diversity.

Think of it in offline terms. There are little if any incentives in opening a small store in a mostly un-visited area. A better approach is to open your store in an already trafficked shopping mall. Amazon for example caters to sellers and offers a marketplace, fulfillment services and marketing options.

The takeaway is simple: if you can’t build your shop into a shopping mall, you’d better join one or do something else.

2. There is a bubble of marketing tools, experts and know-how that is soon going to burst.

We live in a time where a more educated consumer switched from “buy more” to “buy better” and the advertising agency was replaced by Google and Facebook. Creatives are now replaced by algorithms and data.

There is an abundance of digital tools, digital experts, digital know-how (maybe some can be found on this blog also) providing “support” to small web shop owners. The fact is, very few shops are really going to make it to an actual profitable business. Along the way, however, they will pay developers, designers, marketers, ads, copywriters, SEO experts, content experts, photographers. They will buy subscriptions to dozens of cloud applications that brag about the latest success story and they will try to figure out what the hell the numbers in their analytics app are saying.

In the end they will see the problem and the solution lies within one aspect. Size. You may write the best content, have the best designed Magento or Shopify theme. In the end you can’t compete with Amazon. Size does matter.

3. We will see an increase in manufacturing entrepreneurship

As the small web shop will start fading away, a new breed of entrepreneurs will show up. The manufacturers. With so many options for cheap production, distribution and marketing the only thing that’s missing is but the great product one passionate entrepreneur can come up with.

There will be little place for small commerce entrepreneurship. But that doesn’t mean consumers will buy less. They will buy better and they will buy from more. We are witnessing a rising trend of small manufacturers popping up with amazing models. A very fun example is the the Dollar Shave Club, a startup that’s manufacturing personal care products for men. The Dollar Shave Club takes on the large companies such as Gillette in a very straightforward way.

So about the death of the small web shop… It’s coming but don’t hold your breath. There are many vested interests in the small webshop industry.

First there are the startup owners that still believe their small web shop has a future in its present form. Then there are the billions of dollars that have been poured by VC’s in web shop apps and marketing tools.

Plus there is a (still) growing literature that tells anyone with a few bucks and a dream that they can be the next Jeff Bezos. What they don’t tell them is that the world has place for only one Jeff Bezos but plenty of open slots for other success stories. Just not one involving a small web shop.

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