Changing Economy, Changing Business Models
I think Jeff Jarvis has this right:
The point in any case is that it would be a mistake to think that we will come out of this financial crisis soon wounded but still seeing the world the way we saw it before. In the graveyard of camels with broken backs, we will see a new world newly structured and we're only beginning to figure it out.
I don't think every retail outfit is going to be destroyed by this, but a lot are, and a lot of others are going to have to shift focus. While we played Wasabi the other night, we were talking about something related to this: Mike has a friend who has taken to ordering just about everything from Amazon (using his Prime membership). That translates into less money for local supermarkets, bookstores, and so on.
If you think about it, you can order everything online now. There are things it's easier and better to buy directly - meat, fish, fruit, vegetables - but a lot of stuff can just be ordered as it runs out. I think this is going to lead to a need for more specialization - a lot of the generalist shops are going to have trouble as more and more people realize they can buy stuff easily and inexpensively online.
As Jarvis notes, this may well get accelerated by the current downturn, as people look for bargains. The media may well have been the canary in the coal mine for a lot of businesses.
Comments
Very Dependent On The Energy Situation
[W^L+] December 29, 2008 13:01:08.686
A few months back, as fuel prices hit their highest ever, it started to look like shipping costs would shut down most online B2B and B2C sales. Now, with fuel prices as low as they've been in many years, online sellers have the advantage--at least until lower revenues crimp the ability of UPS and Fedex to maintain their distribution networks.
I think this is far from settled, since no one has any idea how well their supply/distribution partners are going to come out of this mess. I do think that large, nationwide retailers are the ones most likely to fold. It will be harder for Safeway to supply all of its stores than for Stater Bros (So. Cal. only), just because Staters will not have to worry about whether truckers can get fuel in other states. Such disruptions could also affect Amazon and other online retailers by making it difficult and expensive to deliver to some parts of the country.
Re: Changing Economy, Changing Business Models
[ James Robertson] December 29, 2008 14:19:02.525
Comment by James Robertson
Fuel prices are a short term issue, IMHO. And bear in mind, the retail outfit that stocks your goods is also paying for shipping
Distribution, Etc.
[Patrick Logan] December 30, 2008 18:12:28.669
Fuel prices are definitely a short-term issue. Moreover, on-line vendors have even more opportunities to take advantage of distribution patterns. WallMart manages their supply chain for their stores on-line. Vendors who do not require a storefront near their customers can optimize their supply chain as far down the distribution chain granularity as they desire. Or they can outsource as much of the distribution as they desire.
I am continually surprised at how invisible WallMart is at least to my eyes in building their on-line shopping capabilities. I see Amazon as WallMart's greatest competitor. I still say WallMart should buy Yahoo.