The $5.53 Trillion E-Commerce Opportunity
Every day, 25 retail stores close in the US.
That's a 59% jump from the amount of store closings in 2018…
And led to 19 major retailers in 2019 going bankrupt.
The retail apocalypse is upon us.
You'll see for yourself if you drive through middle America and count the shops boarded up.
Or if you go to the shopping malls you used to visit 10-20 years ago and count the weeds growing through the pavement in the abandoned parking lots.
But just because storefronts are going away, Americans (and Earthlings in general) aren’t slowing down their purchasing behavior.
In fact, according to the US Census Bureau, 2019 saw $5.53 Trillion of retail sales… And as much as online purchasing has exploded with growth, only 15% of total retail was e-commerce.
Peter Diamandis, founder of the X Prize and Singularity University, predicts that in the next 10 years retail as we know it will be replaced predominantly by a world of e-commerce that is easier and easier to buy as Artificial Intelligence and the Internet of Things knows your buying behaviors better than you do.
So what does this mean for the owners of the product businesses currently making their revenue from purchases at traditional storefronts?
It means winter is coming, and you have two options…
OPTION 1: SELL ON AMAZON
There's an obvious reason that Amazon is the 5th largest company in the world today: lots of people buy there.
So you can always join the masses and start selling your product as a commodity on Amazon (or Alibaba).
The price war will create a race to the bottom, and if at any time the Amazon Gods decide to smite you for any reason they can make you irrelevant at the press of a button.
That's not to say that you cannot create a profitable business selling on Amazon, but you'll definitely remain dependent to their platform for one key reason:
You have no way of following up with your customers who bought your products on Amazon, because you don't own the data.
And that's costing you hundreds of thousands or even millions long-term.
OPTION 2: POSITION YOUR OWN IMPACT-DRIVEN DIGITAL BRAND
Or, Option 2 is you take start investing in your own professional, omnipresent, profitable and meaningful digital brand.
With a digital brand of your own, instead of depending on physical storefronts or Amazon to sell your products, you take your margins and your brand identity into your own hands and position your products directly to your customers while still keeping their customer data to continue the relationship for years to come.
With this strategy, you can double or even triple the margin you would have earned wholesale, while still presenting a reasonable price to your end-customer without them having to get in the car to make the purchase.
More importantly, selling through your own brand enables you to control exactly how your customer experiences your brand, including your purpose, message, impact goals and giveback models.
This opens the door for you to create meaningful and high-quality viral videos that very quickly build trust with your customers and drive the price of your Facebook ads down.
Full disclosure- our team at Viral Purpose Media specializes in impact-driven 7-figure launches for product businesses using viral video, premium branding and Facebook ads. So obviously I'm a bit partial to Option 2.
But I’m writing this article because I believe strongly that when ethical, purpose-driven companies that sell a quality product succeed, they can give more to their chosen giveback models, become a model for business done right in the world, become an inspiring force for their employees and become the most powerful vehicle for meaningful change in the world today.
BUT AREN'T FACEBOOK ADS TOO EXPENSIVE NOW?
Sometimes I get flak for my optimism about ecommerce because of the increase we've seen in the prices of Facebook ads over the last few years.
And if the rest of our society stayed exactly the same while more and more businesses took to the online advertising space, then those naysayers would be right. We would definitely be headed for a situation where the demand for eyeballs on Facebook drives the price too high to run profitable campaigns.
But what that theory doesn't take into account is the fact that...
We're due for a mass implementation of self-driving cars within the next 5-10 years.
This means that every single American who currently stares at the road with two hands on the wheel on their commute to and from work will soon be freed up to relax in their autonomous vehicle, likely spending some of that time scrolling through Facebook and Instagram and coming across your company's ads.
I believe this increased supply of attention on social channels will keep the price of the ads down, and thus profitable to run for years more to come.
Plus, Facebook is a $53 Billion company that makes literally 95% of its revenue on the ads it sells to business owners, and I don't see them allowing their own prices to run their customers off their platform any time soon. They're going to do whatever they can to keep that ad money coming in, even if it means artificially adjusting the economics of supply and demand.
WHAT DOES THIS MEAN FOR YOUR BRAND?
So amidst what looks like a total end to retail, we're not actually seeing the death of physical retail…
In fact, commercial real estate firm JLL reported that companies that originated selling products online are opening 850 physical stores in the next 5 years.
This includes Amazon Go stores, which use sensor and camera tracking technology all around the store merged with Artificial Intelligence on your smartphone so that you don't have to even check out. Just grab whatever you want off the shelf, walk out and it's deducted from your Amazon account.
I know, spooky right?
Obviously, 850 new stores doesn't offset the 9,125 stores that closed in 2019.
However this trend DOES tell us that an e-commerce company can create a unique experience at physical storefronts to help drive traffic to their website, and a business that began as a physical storefront can create a solid online presence to survive...
But there is absolutely no hope for product companies (retail or wholesale) that depend entirely on purchases at physical storefronts to survive unless they also build a rock-solid digital brand.
... Unless you're Walmart.
Honestly, as soon as fresh grocery delivery gets solved and distributed nationally, I predict that even Walmart will be disrupted unless they adopt and properly tell the world about an extremely convenient Amazon-ish online ordering process.
In the 2020's, the name of the game is e-commerce first, physical stores second, and...
Every product-business owner (wholesale or retail) should start building their strategy for the future of their digital presence or their hourglass is running out of sand. Period.
Whether that strategy looks like doubling down on Amazon sales, social media sales or both, it's worth looking into bringing in the right team who understands the nuances of the social media landscape - from premium branding, web design, viral video, brand video, influencer marketing, Facebook ads, Instagram ads, email marketing and ethical upsells.
Keep in mind, consumer consciousness is also raising faster than ever before.
That means you can't just throw together a salesy Facebook ad with a discount slapped on it and expect it to build long-term, loyal customers and meaningful brand recognition.
People smell an overly transactional ad a mile away these days, so your brand is going to need to be congruent, consistent, omnipresent, well-designed and meaningful when your potential customers start clicking around and doing their homework on you before making the decision to buy.
In other words, you're going to have to actually give a s**t about making an impact that matters, and being comfortable telling the world about it.
It's time to plant your flag for a cause that you care about and committing a percentage of sales or profits to it, year after year and making it a part of your brand and messaging strategy.
It's time to take an honest look at your supply chain and make sure you have ethical work standards all the way throughout, and environmentally-safe sourcing of materials.
As Simon Sinek famously taught in one of the most-watched TED talks of all time…
"People don't buy what you do, they buy why you do it."
It's time to become a company that stands so firmly for the meaningful change you believe in that you’re ready for millions of people to know about it through viral videos that tell your story.
As a byproduct of this wave of impact, your followers will want to tell the world about you.
And as a byproduct of that brand awareness, you'll see your online sales climb.
Not because you were the cheapest commodity the customer came across, or an impulse sale at the checkout line they didn't want to be standing in in the first place…
But because you've reached them online at the perfect time with the perfect message and opportunity, and shown them that you are a trusted partner, ready to build the future together with them.