We're going to ask you for some help building our digital network and then, leveraging our combined efforts we're going to ring-fence our local community by building a digital network of things, people, and businesses. We're going to surround it with the latest technology by placing a special focus on the mobile ecosystem, and we're going to empower everyone from the local egg producer to the Gig delivery driver to gain a benefit from the network we collectively establish. Ultimately, we're going to empower local businesses to benefit from a program designed to keep our community economically healthy by slowing down the dollar drain orchestrated by online behemoths such as Amazon, Google, Facebook, Ubereats, and others.
The trend toward remote working started long before the COVID pandemic
Widespread access to the internet combined with different lifestyle requirements from millennials and other new entrants to the workforce set in motion trends toward remote working long before the COVID pandemic circled the globe. Health concerns directly related to the pandemic caused a massive spike in remote working and, during this spike, employers learned they could still get day-to-day tasks accomplished without all their employees having to come into the office every day. Of course, as the pandemic progressed, more started to return to the conventional workplace but, in all likelihood, a permanent up-tick to the trend for work-from-home practices has taken place. While there will be ongoing requirements for some "in-office" presence, a higher level of hybrid working is probably here to stay with employees having the flexibility to work remotely for significant portions of their workweek.
Employers who try to resist the trend are likely to fail because employees have adapted to work-from-home practices and, if necessary, will simply change employers to work for someone who permits them to continue doing so.
Furthermore, although in the first stage of the migration from "Legacy Corporate Environment" to the "Managed Hybrid Environment" most of the benefits accrued to the employees, the drive to complete the transition will take place because there are significant financial benefits still to be earned by the employers.
With the pandemic about to enter the beginning of its third year, we find ourselves in the Ad Hoc Hybrid (3rd) phase of the transition that is expected to culminate in a managed hybrid workplace. Events that take place during this third stage will determine if phase 4 is ever reached and whether the full benefits of the cost and time savings are to be realized by both employers and employees for the long term. While some business owners may already be making decisions about reducing their corporate square footage with new or renegotiated leases that involve less space and generate real expense reductions, many are still locked into multi-year lease agreements that prevent them from doing so in the near term. This means, just as during the Forced Hybrid phase, owners must operate at lower utilization rates on their corporate real estate if they are to allow employees to continue any of their work-from-home activities.
Furthermore, and unfortunately from the employee's perspective, so long as business owners continue to have concerns about three important issues that come hand-in-hand with work-from-home practices, it is unlikely they will make long-term decisions to move forward with permanent corporate office downsizing.
While there have been countless pandemic-related hardships, employees have realized significant benefits with lower expenses on fuel and significant time savings resulting from the elimination of a commute to the place of work. However, as they get called back to the corporate office, these benefits face the threat of being eliminated which most employees don't want to see happen. The key initiative for entering phase 4 now lies with the employer, not the employee because, only when the employer is satisfied it is possible to manage these three issues, will permanent decisions on downsized leases for corporate offices be made. It is only when these decisions are made that the transition to a Managed Hybrid Environment will be guaranteed.
On the plus side for employees, there is a strong incentive for business owners to continue down the path toward a Managed Hybrid Environment because, as the model shows, the cost reductions that result from doing so are so significant.
We have been provided with a unique insight into what a Managed Hybrid work environment looks like because of the Forced Hybrid phase that took place when lockdowns were implemented at the start of the pandemic. What we have seen is that the long-term implications for local communities and many of the small to medium-sized businesses they are made up of are formidable.
We have already seen that changes in work practice, should they become permanent, will have an enormous impact on almost every part of the supply chain providing products and services to the 30 million businesses that operate in the United States. This is because portions of the demand for goods and services will permanently move away from corporate offices to the remote offices and, in so doing, will introduce even more challenges for the local businesses who have historically provided many of the products they need.
Over the last 15 years, Amazon has built the logistics infrastructure necessary to deliver quickly and inexpensively to residential addresses where many workers are now operating from. Unfortunately, this is not the case for the smaller, local companies that count on the business from their local customers to survive. When a remote worker needs items such as paper, ink, toner, or one of the countless other items needed for work, there may be an online search for a supplier or an immediate visit to Amazon to seek out whatever is needed. Local businesses, lacking the online presence to appear in such searches or the distribution infrastructure needed to deliver orders profitably to residential addresses, are excluded from the possibility of filling this demand. Furthermore, not only does this preclude local suppliers from filling the demand for products and services to the remote locations, but it also becomes the thin end of the wedge for Amazon and other online competitors to start working on the opportunity to win the commercial business as well.
It is our view that the transition to a managed hybrid environment is inevitable but it will not be a "black and white", clear-cut, or fully predictable journey. Two key elements will drive the process:
These two groups will either force the laggards to follow or face otherwise unresolvable competitive pressures. Of course, there are many employees in customer-facing service industries or manufacturing environments that don't have an option but to travel to their place of work, so there will never be a 100% work-from-home environment for all business types.
Small to medium-size businesses throughout the thousands of local communities they are located in, face many headwinds. These mostly revolve around their inability to develop an online presence and to appear in organic search results. Because almost everyone doing any kind of research goes to Google and conducts a search, businesses not on the end of any of those search results will be increasingly overlooked.
Business owners generally look in the wrong places for solutions to their online problems and get sucked into platform sites that purport to provide the answer they are looking for. Unfortunately, however compelling these platform pitches may appear to be, smaller businesses should not be tempted into thinking these provide the solutions they need. Not only will they fail to solve the online dilemma, they will extract profits, while in some cases also simultaneously preparing themselves to compete with the businesses they purport to serve. Ultimately, their business models are all about increasing their own brand and online presence, not those of their customers, at least not without them paying heavily for the privilege of boosted postings and paid listings.
The one thing each of these platform sites have in common is vast amounts of web traffic, the prospect for which a share of, is used to entice unsuspecting subscribers into their clutches. The problem, however, is that in addition to having vast amounts of traffic, they each also have a vast number of members. This means, by the time the traffic is divvied up, the amount of traffic available to each member is very small. Doordash, for example, with 60 million site visits per month also has 850,000 subscribers which, if allocated equally, equates to 70 potential leads or transactions per subscriber per month. However, a potential customer visit to Doordash doesn't always result in a member transaction. With conversion rates more likely to be in the 25% range, 70 multiplied by 25% nets down to the possibility for about 18 transactions per month per member. Let's assume a typical store does 100 walk-in transactions per day or 3,000 per month, then 18 eCommerce transactions from Doordash represents an incremental 0.6% on top of the existing total and, adding insult to injury, these are transactions for which Doordash will also extract a hefty fee.
Assuming for a moment a local business signed up with all twelve of the platforms shown, then (in its most simplistic form) 12 x 18 = 204 transactions/leads per month. Think about the enormous effort required to maintain a presence on all twelve of these platforms. Not just money, but time and know-how also. It just doesn't work. There is no return on the investment because the web traffic or transaction volume needed to generate the return is not mathematically feasible.
Attempting to build a successful eCommerce presence without a plan for developing activity on the portal (i.e., traffic) is an utterly futile effort and, trying to develop sufficient traffic for meaningful volumes of transactional activity while using conventional traffic development tactics is also an utterly futile effort. So, as small to medium-sized businesses are increasingly bypassed because their former customers are now searching online for the products and services they need and are gravitating toward the dominant (behemoth) websites, a moment in time has arrived that will determine the role of local businesses in the digital era economy. At first, it seems an intractable problem;
The solution to the seemingly intractable problem is, in fact, staring all small to medium-sized business operators in the face. Amazon and other platform operators have already invented the marketplace solution that's needed, but they have distorted it so that it works solely in their favor. However, in doing so, although few yet realize it, they have already sown the seeds for their own demise. Amazon (for example) operates a marketplace for the so-called benefit of the merchants that populate it, however, the fees are high and they own the customers, not the merchant. Ultimately, this means the platform operator benefits more than the merchant which, in turn, means merchants will abandon the platform as soon as a better alternative becomes available.
The reality is that merchants don't need to go to Amazon, Target, Walmart, or any of the other marketplaces, because the technology exists to join and grow their own market, one that ultimately helps establish a protective economic barrier around their community and is independent of the behemoths. The big difference is that, instead of a "funnel" for divvying up the traffic coming by way of the platform operator (i.e., Amazon), funnels into local geographic marketplaces are developed by way of the common interest of the individuals and businesses that make up the local communities, and their desire to do business amongst themselves.
The ecosystem we are talking about is built on a technology platform consisting of hundreds or even thousands of local marketplaces that become defined by their members within each of their individual geographic boundaries. A marketplace that evolves independently of the exorbitant fees and future threats inherent in the offerings provided by the behemoth platform operators. The true enabler here is the mobile ecosystem that allows local people within their local communities to do business with each other in an environment where the typical local business friction points that usually hinder them from doing so are eliminated.
It is this ecosystem that will allow smaller businesses to establish the eCommerce activities and infrastructure needed to support the growing work-from-home labor force and, by leveraging the same infrastructure, to also gradually expand into the B2C space.