第 345 期：武装叛军

t8M3qais

乔安-金-赫林（Joann King Herring）坐在客厅对面，一如既往地生动活泼、引人入胜。我站在她的世界里。作为休斯顿耶稣会预备学校 16 岁的大三学生，我是一个中下层的局外人，被推入了一个我当时还无法完全理解的世界。20 世纪 80 年代的地缘政治问题早已过去（当时我们都这么认为）。但是，这位 70 岁的社交名媛和慈善家仍然以影响外交政策自居，在位于休斯顿著名的河橡树区的一位共同朋友的家中，赫林仍然大展身手。在这个大城市的一个小角落里，她是一位影响全世界成果的巨人。

那是 1999 年，也许是我第一次听到 "武装叛军 "这个词。赫林是一位名叫查理-威尔逊的得克萨斯州议员的朋友，在那次会面四年后，他们的故事《查理-威尔逊的战争》登上了《纽约时报》畅销书排行榜[1]，并于 2007 年被拍成好莱坞大片。这是一个关于短期成功和长期失败的故事。这是一个关于 "做得太少 "和 "做得太多 "的故事。影片讲述了两个美国人游说美国政府资助抵抗当时苏联在阿富汗的占领军的故事。

现年 90 岁的琼恩和她的朋友查理在长达 10 年的 "旋风行动"[2] 中为叛军提供了武器。在冲突即将结束时，一位受战争影响国家的官员后来对现任美国总统说："你正在创造一个科学怪人。总有一种

但是，赫林和威尔逊的努力在短期内奏效了。他们武装了叛军，叛军赢了。至于他们的劳动成果是否对全球战争与和平产生了净正面或净负面的影响，那就留给国家安全专家们去研究吧。这则轶事的相关性很简单：从 1979 年到 1989 年的十年间，"武装叛军 "的行为保持了三个组成部分：(1) 工具，(2) 金钱，(3) 心理支持。

叛军用美国的工具、美国的资金，以及他们得到美国政府全力支持的承诺，击败了全副武装的俄罗斯军事机器。这向对方军队表明，资金、工具和叛乱将继续下去。无穷无尽的补给、武力和心理战击败了不可战胜的军队。

Shopify 和武装叛军

哈雷-芬克尔斯坦在 Twitter 上："武装叛军 @Shopify-style，三步指南：1.在全美建立履约中心网络 🕸️2.允许小企业利用这些中心 📦3.加入机器人 🤖 结果：平价产品以两天为周期运往 99% 的美国。💪 pic.twitter.com/a6KIptqsbm / Twitter"

武装叛军 @Shopify-style，三步指南：1.在全美建立履约中心网络 🕸️2.允许小企业利用这些中心 📦3.加入机器人 🤖 结果：平价产品以两天为周期运往 99% 的美国。💪 pic.twitter.com/a6KIptqsbm

Shopify 在企业号召力方面做得非常出色：我们武装叛军。在超越 Ebay 成为北美第二大电子商务生态系统之后，Shopify 始终认为亚马逊是下一个目标--它本身就是一支不可战胜的军队。Shopify 曾经仅因其在小型电子商务领域的作用而闻名，现在它提供财务处理、贷款、履约、硬件和开发人员生态系统等服务，只要商家有能力支付其服务费用，就可以随叫随到。

Shopify 的存在基本上是为了武装叛军。我们希望很多人都能出去与亚马逊竞争。

创始人兼首席执行官 Tobi Lütke

但是，如果在没有心理支持的情况下执行工具和资金这两个组成部分，会发生什么呢？Ruby on Rails 的创建者大卫-汉森（David Hansson）在谈到 Shopify 在日益稠密的电子商务环境中所扮演的角色时，创造了 "武装叛军"（arming the rebels）一词[3]。它暗示 Shopify 正在向上冲（的确如此）。但是，Shopify 也需要向下冲刺，以保持自己的地位。

Shopify 让投资者兴奋不已，因为它越来越被视为亚马逊电子商务霸主地位最有可能的挑战者。许多传统零售商和网络零售商都试图迎头痛击亚马逊的 "万能商店"，而 Shopify 则成功地为个体商家提供了相同的技术和能力，但却拥有更多的控制权。[4]

Shopify 的商家几乎拥有一切可以利用的资源，但有一点除外。该公司在支持使用其平台的品牌方面进展缓慢。由于担心被视为偏袒一方，Shopify 至今仍犹豫不决，不愿意提供一个可以将品牌长期锁定在其生态系统中的优势。没错，这就是武装叛军所需的三个要素之一：心理支持。

没有的大型游戏广告

屏幕截图 2020-02-02 at 10.07.59 PM

我一直在等待 Shopify 的超级碗广告，但毫无结果。我想让这个品牌在最多的观众面前讨论它随着时间的推移而发生的演变：它的生态系统所培育的机构、它向金融技术的进军、Shopify 的发明所开创的DTC 时代，以及最终将充斥其 3PL 的机器人。

Shopify 通过向一些反叛者提供运营或扩张所需的资金，武装了这些反叛者。现在，它需要影响其平台上企业的需求曲线。Shopify 需要成为其品牌的传播者。

武装叛军 "这句话让人充满希望。这意味着，Shopify 正在向上发力（的确如此），但也需要向下发力来保持自己的地位。

当Squarespace的超级碗广告首播时，它对Shopify的市场地位构成了足够的威胁，以至于该公司的企业推特（Twitter）在一连串的推文中回应了他们的小竞争对手，这让人感觉有些出格。Shopify 目前的市值为 540 亿美元，而 Squarespace 则小得多，而且还是一家私营公司。

推特上的 Shopify："嘿，@SquareSpace 我们也相信支持独立企业！事实上，在 #WinonaMN 有 40 多家企业使用了 @Shopify。因此，我们将在 #BigGame 期间尽可能多地推广它们。#WelcometoWinona #SupportingIndependents pic.twitter.com/CPq8Ld6Pgl / Twitter" #WelcometoWinona #支持独立企业

嘿，@SquareSpace 我们也相信支持独立企业！事实上，在 #WinonaMN 有超过 40 家企业使用了 @Shopify。因此，我们将在 #BigGame 期间尽可能多地推广这些企业。#WelcometoWinona #支持独立企业 pic.twitter.com/CPq8Ld6Pgl

鉴于 Shopify 已经赢得的市场地位，吕特克在心理支持上的立场显然必须改变，而且应该从超级碗 LIV 开始。Shopify 的促销能力可以减少叛乱竞争，同时缩小与它所挑战的现任公司之间的差距：亚马逊。Shopify 必须发展成为自己的市场。随着中小型市场零售商获客成本的上升，亚马逊已成为零售商提高渠道顶部知名度的合理合作伙伴。摘自2PM的《熟悉的策略》：

亚马逊正在收集消费者数据，以成为高效的垂直经销商。亚马逊产品将继续在产品页面上占据优先位置。这样一来，反对派营销人员的不满就有了依据。与亚马逊自有品牌竞争的外部品牌可能会继续受到惩罚。这家西雅图电子商务巨头似乎正在为他们的数据采集行为（这一过程催生了无数自有品牌）受到质疑的那一天做准备。

Lütke很可能反对这种想法：通过选择品牌或产品以市场的形式进行展示，Shopify就成了某种程度上的 "造王者"。所谓"造王者"，是指对候选人的价值有巨大影响力的个人或组织。这个人或组织利用政策、金融和竞争力量来影响接班人。我认为，向商家提供贷款或预付款是另一种形式的 "造王"。现在，Shopify 已经开始销售金融产品，所以就没有什么可争论的了。

Shopify的护城河已被详细讨论过：社区和合作伙伴生态系统是人们想到的两个流行词组。但是，这家总部位于渥太华的 SaaS 公司在推广支持生态系统的企业方面却划清了界限；该公司很少将流量和媒体关注度推向在生态系统中成长的企业。

旋风行动的三大资源之一是心理支持。在 Shopify 使用这个短语的背景下，第三个资源缺失了。如果 Shopify 能够通过在 Twitter 上宣传独立零售商来捍卫自己与 Squarespace 的竞争地位，那么他们的管理团队也应该能够自如地支持自己的市场。

2019 年 12 月，Shopify.com的访问量接近 4700 万，其中超过 40% 的流量来自美国。虽然官方数据尚未公布，但观看超级碗比赛的人数超过了 1.5 亿。在这些观众中，有可能是想创办自己公司的潜在消费者，有可能是想为 Shopify 建站的开发者，也有可能是想从 Shopify 购物的消费者。

亚马逊（Amazon）、谷歌（Google）、微软（Microsoft）、沃尔玛（Walmart）、Hulu、Quibi、威瑞森（Verizon）和 Squarespace 都在比赛期间投放了广告。然而，直接面向消费者的品牌却明显缺席，它们被高昂的经营成本拒之门外。试想一下，一个耗资 570 万美元、时长 30 秒的广告能让数千万美国人访问marketplace.shopify.com。当这些潜在客户、开发者和消费者到达时：他们将看到 Shopify 最伟大的品牌--新的、旧的、成熟的和新鲜的--的集合。Shopify 赢得的不仅仅是新客户或潜在合作伙伴。Shopify 还将影响依赖于三大资源的众多品牌的知名度、增长和生存能力。

在外电2013 年 6 月的一篇报道[5]中，爱德华-卢特瓦克（Edward Luttwak）列出了武装叛军的五条规则：(1）弄清谁是你的朋友；（2）准备好做所有的工作；（3）不要放弃任何你不想要的东西；（4）不要招致更大势力的等价反击；（5）为终局奠定基础。对于 Shopify 来说，终局就是强调需求方经济学。对于那些依赖 Shopify 不断增加的工具套件的公司来说，他们必须不断发展壮大，才能继续成为 B2B 用户。

1999 年在休斯顿的那个晚上结束时，我鼓起勇气问了赫林一两个问题。那天晚上，我穿着漂亮的蓝色西装外套，所以比平时更有自信。我们在一门课程上从一位校友那里了解到 "旋风行动"，但当时这个故事还没有广为人知。因此，那天晚上，在麦迪逊大道的公关人员对她的回答进行打磨之前，我有幸与她进行了交谈。我向赫林女士提出了一个 16 岁学生都会提出的简单问题："你从中学到了什么？"她的回答大意是："我们应该给他们更多、更快的东西。时间拖得太长了。我们本可以在三四年内完成十年的工作"。

当你武装叛军时，要竭尽全力确保他们获胜。他们是在为供应商而战，也是在为自己的福祉而战。毕竟，他们的战争就是你们的战争。

点击这里阅读第 345 期。

Web Smith 报道，Hilary Milnes 编辑 |约 2PM

第 342 期：对立的埃利奥特先生

Elliot

In the closing scene of AMC’s final episode of Mad Men, the viewers are left to believe that our seven season survey of Don Draper ends in his personal enlightenment. In this particular moment: Draper is seen sitting on the grass, cross-legged and with no shoes. He’s meditating on a hilltop with a dozen or so other students. For what seems like just a moment, the audience is led to believe that the embattled protagonist is finally at peace with himself. And then he smiles. It’s the kind of smile that communicates “I’m still the best at what I do.” The audience is left guessing. The scenery, the moment, and Draper’s skill set suggest that Draper was responsible for conjuring one of the most impactful and audacious brand advertisements of the 20th century. It was a rare moment in brand history: an incumbent brand operated like an insurgent. The result? An ad that reshaped Coca-Cola’s narrative for nearly a decade.

The Mad Men scene of the origin story was fictitious, of course. The story of the advertisement’s impact was not, however. Like Ford and General Motors in the 1960s or Nike and Reebok in the 1980s, Coca-Cola and PepsiCo’s rivalry gave rise to the idea of insurgent brands. Insurgents are brands that arise out of the rivalries of incumbents.

In early 1886 an Atlanta chemist (and morphine addict) introduced Coca-Cola to the world. He called it a “potion for mental and physical disorders.” For him, it was a solve. The product’s main ingredient was cocaine, a narcotic that was – perhaps – less detrimental than his addiction. Pepsi-Cola followed just seven years later. It would be decades before the two companies became legitimate rivals. The arc of the two brands has become a case study in corporate brand competition. One that remains relevant to this day.

Pepsi-Cola had made hay during the Depression. Like Coke, the drink cost a nickel, but it came in a 12-ounce bottle nearly twice the size of Coke’s dainty, wasp-waisted one. But by the 1950s, Pepsi was still a distant No. 2. It nabbed Alfred Steele, a former Coke adman, who arrived embittered and ambitious. His motto: “Beat Coke.” Coca-Cola refused to call Pepsi by name — the drink was “the Imitator,” “the Enemy,” or, generously, “the Competition” — but it began tinkering with its business (and imitating Pepsi) to stay ahead. [1]

When John S. Pemberton secured the recipe for Coca-Cola in 1886, he couldn’t have foreseen a feud that would span three centuries. But for many consumers, the Pepsi vs. Coke feud is about as American as baseball. In 1899, Caleb Bradham decided to compete head on. Also a chemist, Brad’s Drink was later incorporated as Pepsi-Cola. And so began a roller coaster of a century that crescendoed in the 1970’s with the Pepsi Challenge – a marketing push that aimed to convince younger consumers that rival Coca-Cola had inferior taste and less cool. It worked. And so continued the back and forth. The two companies were well-established when the 1970s’ Cola Wars broke captivated American consumers (and international ones, alike).

The cola competition study [HBS Case Summary: 2] is a prologue to a greater point. What happens when incumbents ignore insurgents? The inertia of dominance often becomes an incumbent’s nemesis. At the peak of the cola wars, a future founder was employed by Unilever and then Procter & Gamble. There, he led marketing for German toothpaste manufacturer Blendax. By working for these conglomerates, Dietrich Mateschitz had an early education in the gifts and curses of incumbency. And one chance meeting in Thailand provided his platform for insurgency.

In 1982 he met an Austrian toothpaste salesman called Dietrich Mateschitz, who had started drinking Krathing Daeng (founded in 1976) during visits to Bangkok and found it cured his jet lag. Mateschitz became convinced that the drink had wider commercial potential, and in 1984 the two men became business partners. [3]

The emergence of Red Bull serves a case study in insurgency-driven marketing and branding. Over the next three decades, Red Bull would go on to master alternative marketing, clawing domestic and international market share from incumbents that should have been equipped to stifle the Austrian beverage manufacturer’s advances.

Screen Shot 2019-12-17 at 8.58.27 AM
Global beverage market: leading companies 2018, based on sales | Source: Beverage Industry Magazine

But as with anything, it can be difficult for incumbents to obsess over potential competitors when existing threats exist. By 1979, Pepsi overtook Coca-Cola in sales after a clever “taste test” marketing push that outwitted the Atlanta-based manufacturer. This victory was relatively short-lived. By 1996, Fortune magazine declared the cola wars to be finished. And since, Pepsi shifted its focus altogether.

IMG_7163-1024x682
Concepting a new form of brand marketing.

Retail has been witness to a history of these brand battles. And if the future of retail is eCommerce, it’s likely that today’s next surprise is brewing. Insurgents take markets by surprise by operating in ways unanticipated by established corporations. They move differently and they rarely play by traditional rules. Incumbents are incentivized to preserve the status quo, retaining market share. It’s often the case that product-wise, all things are equal. It’s the subtle differences in messaging and community that tends to shift the conversation from old and stable to new and dynamic. Shopify is the Coca-Cola of this conversation. Shopify wasn’t first to democratize eCommerce but no platform has a better understanding of marketing and branding than the Ottawa-based SaaS company. In a recent 2PM report, I explained:

The growth of the DTC era can be attributed to SaaS companies like Shopify, BigCommerce, Magento [Adobe], and Demandware [Salesforce]. But in an industry where innovations are finite development cycles away, community and brand equity has become the key differentiator. [4]

Shopify’s innovations are numerous. Two of their top competitors (Salesforce and Adobe) are now cogs in corporate wheels. In this way, BigCommerce is the Pepsi to Shopify’s Coca-Cola. Of all of Shopify’s innovations, branding and sociology are ones that BigCommerce cannot seem to contend with. Led by Brent Brellm, the Austin-based SaaS company competes on the merits of its product. “We taste better” may as well be on his CEO’s whiteboard. But Shopify is more than the merits of its product, it’s a lifestyle brand. This perplexes BigCommerce’s leadership. In the platform wars, taste will matter as technologies shift toward no-code architecture. But brand will be equally important. Enter Elliot, a platform that seems to possess the tools that Shopify’s other competitors do not. And an emphasis on substance and brand.

On Insurgency and No-Code Development

Screen Shot 2019-12-17 at 11.10.58 AM
The rise of the no-code economy

Founded in July 2017 by Sergio Villasenor, Elliot announced a $3 million round in January of 2018. And like many venture announcements in that first quarter, the news came and went. Beyond a PR wire, the company’s announcement made no headlines. There was no grand entrance and even less buzz. This, despite a list of admirable investors and advisors.

We have orchestrated a blue-chip syndicate of seed stage investors including Bowery Capital, a national seed stage fund with offices in SF and NY leading the round, and Susa Ventures as the co-lead. Others participating include Acceleprise, Bam Ventures, Flexport, and SV Angel. [5]

Early on, Elliot’s founder built the company’s value proposition on the common premise: “We taste better.”  In SaaS, this is akin to iterating fast and architecting software superiority. For product developers, this product-first concept is the default.

On the merits of its product alone, Elliot has a number of clones. A casual observer will find them in the brand’s Twitter mentions questioning how the company has begun to consume mindshare with its unique approach to antagonizing incumbent brands. The company, itself, has little protected intellectual property. And until recently, it had no marketing flywheel. But over time, I’ve observed the company’s playbook evolve into one reminiscent of an insurgent of old: Red Bull. The brand has become uncomfortably antagonistic. But you can’t behave insurgently without some level of discomfort.

Elliot on Twitter

@tobi Emojis must be a Plus feature 😉

Elliot contends that Shopify’s products aren’t for everyone. And that its no code approach is early but it will be of increasing relevance as vendors begin to shift away from development agencies to launch new merchandising operations. A Shopify Partner, who asked for his identity to be withheld, commented on this trend. He noted: “As no-code becomes more common, agencies like mine will need to find new ways to add value for our clients. Who is paying $100,000 to do what can be done for free?” In the Lean Luxe slack channel, former Shopify Editor-in-Chief Aaron Orendorff and notable copywriter contended with Elliot’s brand voice:

There’s a 100% chance I’m not your target audience. So that’s probably part of it. For me, it’s the mixed feelings of: (a) that’s clever and attention grabbing vs (b) I’d be uncomfortable to retweet it.

The founding team is rounded out by Clayton Chambers (formerly of Yotpo) who serves as the Head of Growth. Additionally, Villasenor was successful in hiring Marco Marandiz (formerly of Capital One, VRBO]) as his Head of Marketing. The team has made an early impact, though it remains to be seen as to whether it has had a material effect on penetrating one of Shopify’s top advantages: its partnership ecosystem. What is evident is that the DNA of the team is different than the rest. And that, more than anything else, makes them something to watch. They’ve begun to build Elliot into a lifestyle brand, merchandising and all. They are out-Shopifying Shopify.

Sergio Villaseñor on Twitter

est. 2019

The technology and promotional DNA that the company possesses aside, a few questions remain. Can Villasenor convince Shopify’s target consumer that no-code architecture is an acceptable path forward? And can he convince development agencies to shift their offerings to account for a no-code economy? Frequent justifications for merchants considering no-code platforms include: speed, cost reduction, and ease of launch. No-code architecture allows early stage brands to sidestep developer shortages and agency fees, potentially decreasing startup costs and early investment needs.

Although no one is saying that coding is dead or that programmers are going to be out of a job soon, there is no denying that the current demand for software far exceeds the supply of coders and that many traditional ways of building applications are complex and time-consuming. [6]

According to my research, less than 8% of Shopify Plus merchants have a GMV that exceeds $10 million annually. Although, this number can improve. Shopify brands like Supply can grow from $2.5 million annual run rates to $10+ million run rates in just a year.

Shopify’s gift is that its brand partners mature over time, a process that has been aided by the company’s support systems and suite of technical services. Some analysts would argue that BigCommerce (or Salesforce or Adobe) would be positioned to benefit if Shopify ever lost community support. However, it’s likely that Shopify’s incumbent competitors are ill-equipped to facilitate such a shift. And besides, all proverbial cola tastes the same. But no-code is a different value proposition altogether. One that may become relevant as the economy tightens and venture capital becomes less available to early stage eCommerce brands and retailers.

Like Coca-Cola, Ford, and Nike before it – Shopify’s name represents more than its product. In May 2020, Shopify hosts its next Unite conference in Toronto. It’s the annual event that hosts thousands of loyalists that converge to praise Shopify’s continued growth. In the process, the event fortifies the phalanx of protection that the SaaS company has surrounding it. More than software, Shopify is the people, brands, and agencies that evangelize it. These are the company’s strategic advantages. If Villasenor and team have it their way, they’ll be in Toronto as well. But they won’t be in the event’s venue handing out cards with software specs, that’s what an incumbent like BigCommerce would do. They’ll be down the street from Unite, hosting their own party. And perhaps, a few Shopify clients will trickle in to see what the fuss is about. Some will scoff at the lack of decorum and some will nod at the audacity of it.

报告人：Web Smith |大约 2PM

第 340 期：机动性碰撞课程

Steve Jobs believed that one of the few things that separated humans from high primates was our ability to build tools. In some cases, these tools mitigated the crippling inferiority of human mobility. Compared to some animals, humans possess lesser top end speed, endurance, and efficiency of movement. It’s our ability to engineer solutions that ultimately improves our collective mobility. Jobs assessed these shortcomings in a 1995 interview:

I read a study that measured the efficiency of locomotion for various species on the planet. The condor used the least energy to move a kilometer. And, humans came in with a rather unimpressive showing, about a third of the way down the list. It was not too proud a showing for the crown of creation.

Over the course of Jobs’ career, he predicted the future quite a few times. He foresaw what the inter connectivity of internet would do for humanity. He predicted the efficacy of the computer’s mouse, and the dawn of cloud computing, and the professional preference of the laptop computer. Jobs even understood that the diffusion of this technology would be so profound that ten year olds would own computers that are orders more powerful than the ones used by 1960’s-era NASA engineers. But it was perhaps his two distinct thoughts on figurative and literal mobility that may go on to define the next ten years of disruption.

Jobs indirectly recognized the inverse relationship between online retail and shopping centers:

People are going to stop going to a lot of stores. And they’re going to buy stuff over the web.

The second thought expounded on his obsession with human physical efficiency:

Somebody at Scientific American had the insight to test the efficiency of locomotion for a man on a bicycle. And, a man on a bicycle, a human on a bicycle, blew the condor away, completely off the top of the charts.

This line of thinking is the origin of Jobs’ commentary on the personal computer serving as a proverbial bicycle for the mind. According to Jobs, “What a computer is to me, is it’s the most remarkable tool we’ve ever come up with. It’s the equivalent of a bicycle for our minds. Walking is relatively slow and inefficient.” This remarkable thought may end up meaning something more than what Jobs meant at the time.

The advancement of mobile payment technology and the evolution of physical mobility are on a collision course. The diffusion of one technology may lead to the diminishing of the other. There is no greater example of the potential disruption than China’s stark contrast to the nature of American retail. Cashless consumer economies will have a profound effect on mobility. Paul Haswell of Pinsent Masons notes:

Many Chinese cities are now the closest we have to cashless consumer economies.

According to eMarketer’s Shelleen Shum: 79.3% of smartphone users in China will operate within a completely cashless economy. By comparison, the United States will see just 23% of smartphone users doing so by 2021. And Germany will have just 15%. Why is this significant? The move towards a cashless economy corresponds with a shift in mobility preferences. “The use of digital technologies—from smartphones and wearables to artificial intelligence and driverless cars—is rapidly transforming how city dwellers shop, travel, and live.Without a firm foundation in electronic payments, cities will not be able to fully capture their digital future, according to our analysis,” said Lou Celi, Head of  the Roubini ThoughtLab.

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Mobile payments are influencing a collision course. No. 1 market for mCommerce (payments) is China. Here is a quick comparison. Mobility:1a/ US cars per 1000: 8381b/ China’s cars per 1000: 179Retail locations:2a/ US sq. ft. / person: 23.5 2b/ China sq. ft. / person: 2.8

And here is the key question. If the United States is moving towards a cashless society driven by mobile wallets and smartphone-driven payments systems, will the shape of our economy begin to change with it? The data affirms. The shuttering of American retailers outpaced all of 2018 by April of 2019 according to data from Coresight Research. As of now, the correlation does not rely upon mobile payment tech. Rather, it’s driven by the growing adoption of online retail. However, online retail adoption in China is driven by mobile payment technologies. American adoption of such technologies will accelerate overall growth. The percentage of retail in the form of eCommerce will hockey stick when it does.

Smart Cities and Urban Mobility

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From Polymathic: The market opened to red, post Black Friday 2019.

There may not be a greater example of the potential clash between online retail and mobility than the city that is quietly known for its specialty retailers. In retail circles, Columbus is known as HQ City; the Central Ohio region is host to Abercrombie & Fitch (and Hollister), L Brands (Victoria’s Secret, Bath & Body Works, etc.), Express, Ascena Retail Group (Limited, Justice), DSW, Value City Furniture, and ties to American Eagle Outfitters. There isn’t a mall in the United States that isn’t influenced by this region’s businesses.

For Columbus, it’s a double-edged sword. The city’s working population is heavily influenced by this small group of very large employers. And these large employers have a symbiotic relationship with America’s inflated 23.5 square feet of retail real estate / person. In comparison, China has just 2.8 square feet of retail / person. Despite this lacking physical infrastructure, China passed the United States as the number one retail market in 2019. [1]

In 2015, Columbus, Ohio applied for a national grant for the Smart City Challenge, a national competition between a collective of technologically progressive cities.

Smart Columbus will help shift travel patterns. Even more, we want to shift people’s thought patterns and behavior. This means inspiring policy makers and influencing people’s preferences. We will partner with others to create programs, introduce new solutions and promote adoption. Once our city understands what’s possible, everybody should be able to get on board. This will be a gradual process over the coming decade. As a region with urban sprawl, we are committing to a new, improved ecosystem of solutions to move people and goods. [2]

A smart city is tasked with testing technological solutions and progressive policies to innovate mobility practices. As the winner of the first-ever Smart City Challenge, the city agreed to embrace the “reinvention of transportation to accelerate human progress.” The city would then serve as a standard bearer to other cities as they continue to evolve. In 2017, the city outwitted dozens of other top cities to include: Pittsburgh, San Francisco, Portland, Kansas City, Austin, and Denver. The result was an award of a combined $50 million grant from the US Department of Transportation and the Paul Allen Foundation.  This award would then be amplified by hundreds of millions in public-private partnership, generated by the cities own businesses and political partnerships.

Through the Smart City Challenge, the Department committed up to $40 million to one winning city. In response, cities leveraged an additional $500 million in private and public funding to help make their Smart City visions real. [3]

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United States: eCommerce as a share of retail

The data suggests that the advancement of eCommerce adoption would influence mass transit and ride sharing as primary means of urban travel. This same data would suggest that eCommerce would also spur economic development in harder to reach areas of the region. But it would have to get much worse before conditions improve. Some 92% of the citizens in China’s largest cities use Alipay or Wechat as their mobile wallets and sole means of transacting. In rural China, that number is 47%. In both cases, the primary means of retail is through eCommerce channels. In contrast, America will see just 12.4% of retail by eCommerce in 2020. For rural citizens and underbanked Americans, that number is significantly lower. The majority of eCommerce transactions are located in or near major metropolitan areas. This is relevant and will be explained shortly.

Black Friday 2019

In September of 2017, the proverbial floodgates opened. Amazon’s patent for one-click purchasing expired. With this, any and every online retailer could build or integrate payments solutions to promote better consumer experiences on desktop and mobile platforms. The improved experiences were especially noticeable on mobile operating systems, where dropped carts were commonly 60+%.

The end of Amazon’s hold on one-click ordering gives opportunities to large and small retailers to reap benefits they haven’t had before. Perhaps the most widespread benefit will come in the world of mobile commerce where there are high rates of cart and purchasing abandonment. […] The patent expiration will allow for widespread adoption of one-click purchasing, which will challenge the market to adapt quickly. There is an opportunity for major reconfiguration of social networks to challenge major e-commerce giants such as Amazon.  [4]

This coincided with the integration of tools like Apple Pay, Android Pay, and Shopify Pay, three solutions that would fuel mobile commerce in ways that were only previously seen in Chinese markets. Apple Pay recently crossed Paypal in volume of transactions. Amazon’s YoY growth was closely tied to the stickiness of similar technologies. An unnamed Shopify analyst suggested that with Shopify Pay, conversion rates were nearly identical to Amazon’s – an extraordinary improvement in performance between 2016 and 2019.

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United States: Projected revenue from mobile commerce ($B)

Over this most recent retail holiday, there was a contrast to observe. In 2PM’s most recent Executive Member Report, I explain the context behind the title “The Blackest Friday.” According to data pulled from Alibaba, Amazon, and Shopify – Black Friday was a success for the burgeoning eCommerce ecosystem and a disappointment to traditional retailers like Kohl’s, JCP, and Nordstrom. The holiday shed light on the growing divide between mobile adoption and the dependence on traditional retailers.

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It wasn’t deals that drove the BF, it was ease of purchase. Via Adobe Analytics: 1/ 39% of eCom: mobile2/ 61% of traffic: mobileAnd Shopify added 400k stores in 2019. The avg. BF $ / merchant dropped just 1.8%. Payments ease mitigated the lack of trust or perceived value.

Adobe, which now owns Magento, revealed data that communicates a permanent shift toward mobile traffic (61% mobile). Shopify’s data (69% mobile) reflected the same. Physical retail continued to slip.

The drop in Black Friday physical shopping mirrors a year-long share pullback in departments stores including Macy’s, Kohl’s and Foot Locker, all of which are down more than 25% this year. Meanwhile, Amazon, the dominant U.S. e-commerce retailer, has gained about 20% this year. [5]

For Shopify, the result was especially positive. On the heels of Apple Pay adoption and the growth of Shopify Pay,  the company added 400,000 new stores in 2019 while dropping just 1.8% in average store revenue on Black Friday. This tells a story. Despite the relative infancy of nearly 40% of the stores on the platform, new merchants were able to generate nearly enough in sales volume to match the per capita avg sales figure of the previous year’s merchants. This would indicate that the shift away from desktop and towards mobile payments mitigated issues of trust or early-stage brand equity concerns by lifting conversion rates. As mobile payment adoption increases, the divide between DTC-minded brands and traditional retailers will continue to grow. So where does this get us?

Conclusion: On Primates and Politics

If you’ve ever frequented Amazon Prime Now, you understand the value of two hours saved. In a matter of 90 seconds, you can click through on recently purchased grocery items to replenish your pantries. Then, in a matter of 60-90 minutes, those selections manifest. There are four packages at your door. When Steve Jobs suggested that software engineering would impact our mobility, it’s unlikely that he imagined the effect that mobile commerce would have on developed cities. Mobility isn’t just the efficiency, speed, or distance traveled. It’s what we can do with our time. Mobility is freedom.

When Columbus, Ohio was awarded $50 million to build the blueprint for a smart city, it’s unlikely that the city’s leaders understood the ties between commerce technology and physical mobility. If so, the heaviest investments would have been earmarked for commerce infrastructure:

  • improving shipping lanes by designating key routes for delivery vehicles and couriers
  • retrofitting struggling malls and shopping centers as fulfillment hubs
  • investing in the numerous local businesses by equipping them with the same types of technologies that enable the DTC mobile revolution
  • repurposing successful malls as meeting grounds, deemphasizing the emphasis on shopping
  • and laying the groundwork for a city with 60-80% fewer cars and 70-90% fewer shopping centers

America is over-retailed. And unfortunately, innovation in online retail will exacerbate this. For Columbus (and many other forward-thinking cities), this is a conflict of interest. As regions shift toward mobile commerce-forward models, old ways of retailing will subside. And given early data  – the numerous retailers that are headquartered in and around the city would be placed at existential risk.

It’s for this reason that Columbus serves a microcosm of traditional retail as a whole. The industry will have to choose between its past and its future, both of which are tied to shifts in mobility innovation.  Like Jobs said in 1995: “People are going to stop going to a lot of stores. And they’re going to buy stuff over the web.” This is beginning to reflect in public and private markets. What happens when we stop driving to stores? What happens when shopping centers no longer have sufficient demand? What happens when advancements in last-mile delivery becomes carbon negative? This is happening now.

The largest retail economy in the world is no longer the United States. But this will potentially change, as the United States closes the gap in mobile computing and payments adoption. China has 10% of the retail square footage and 79% fewer cars. This should give us pause. These numbers provide a bit of foresight into how this country must adapt to modern retail. Computers did become the bicycles for our minds. And now, advancements in mobile computing and payments are influencing physical mobility. The smartest cities will correct for these advancements before the markets correct it for them.

Research and Report by Web Smith | About 2PM