O2O Platforms Even the Playing Field for Small Businesses

By Anthony de Freitas Friday, March 19, 2021

The era of Amazon’s lone grip on the ecommerce market may finally be coming to an end. Learn how your small business can compete with ecommerce supergiants.

Small business owner preparing product for delivery.

Local Ecommerce Platforms Keep Your Small Business Above Water

Hyperlocal ecommerce platforms offer a way out of the dilemma of building a proprietary website or listing on a national or international marketplace like Alibaba, Amazon, eBay, or Rakuten. Any retailer worth its salt should have its own website. But, relying on your own site to increase exposure may take a long time. On the other hand, while listing on a large marketplace may increase the potential for greater visibility, actual visibility will depend on how many competitors you find once you’re there.

Small Business Ecommerce Evolution and O2O Platforms

It had to happen. The era of Amazon’s lone grip on the ecommerce market may finally be coming to an end. New online ecommerce platforms are emerging that could threaten Amazon’s global dominance. This may not be a bad thing. In addition to acting as a trusted watchdog over shipping, Amazon’s online shopping platform also offers a wide selection of products, good prices, and fast shipping. These qualities have contributed to its quick growth, but the ecommerce giant’s expansion has come at the expense of small businesses.

One former Treasury Secretary has lamented that Amazon has “destroyed the retail industry” across the United States. A 2018 report by the nonprofit Institute for Local Self-Reliance (ILSR) complained that Amazon affected small businesses negatively in two ways. First, Amazon’s market dominance has forced many small retailers to shut up shop. Second, since “more than half of online shopping searches start on Amazon’s platform,” small retailers feel they have no choice but to “join Amazon’s Marketplace in order to reach consumers.”

Nevertheless, a lifeline for small retailers is emerging. New ecommerce platforms created to promote hyperlocal businesses are becoming available. They are meant to boost both in-person and online sales. Although online sales are rapidly growing, they still comprise a small share of total retail sales. Census Bureau data shows that US retail ecommerce sales were $206.7 billion, while total retail sales reached $1.4 trillion during the fourth quarter of 2020. Thus, in-person retail sales account for 86% of total retail sales. As a result, driving online demand to their physical stores has become a marketing priority for many retailers, an approach that has been labeled online-to-offline (O2O).

O2O marketplaces — accessible through mobile apps — offer advantages to both consumers and merchants. Since they segregate businesses by geography, shoppers can easily search for retailers in a specific locality. This allows customers to avoid the disappointment of learning that their beautifully crafted bracelets’ shipping price is more than the bracelet itself. Moreover, being able to virtually “window shop” beforehand makes it simpler to plan an in-person shopping expedition. In addition, consumers prefer a multifaceted approach that offers the option to switch shopping methods at their convenience. A survey by Accenture found that 49% of consumers believe that the best improvement to the shopping experience would be better integration of in-store, online, and mobile channels.

O2O online shopping platforms are also a boon to retailers. Most importantly, they make hyperlocal businesses easier to find. A major hurdle faced by online businesses is acquiring enough exposure and visibility to draw visitors. In order to have any meaningful visibility, businesses must show up on the first page. It’s getting increasingly harder to do so. While the number of commercial websites is increasing continuously, the typical search result page remains at just around 25 products. This implies even fewer businesses since two or more products on display may come from the same store.

A hyperlocal marketplace frees small business owners from having to choose between going it alone, with the attendant costs, or listing on a large marketplace and risk being crowded out. These platforms give retailers a way to display their ware to local consumers, who can either visit a store in person or shop online. Naturally, there’s no need to have a physical store. Pure ecommerce businesses can also use a hyperlocal marketplace, which will usually incorporate a payment processor and handle shipping to facilitate online sales. However, consumers buy more when they shop in person. Locally.com founder Mike Massey says that where an online shopper may only purchase one item per transaction, an in-store shopper may purchase five.

7 Apps and Marketplaces for Small Business O2O

Here are seven apps and marketplaces that are helping local businesses capitalize on the online-to-offline (O2O) business.

Locally

Founded in 2014, Locally.com is an O2O marketplace that facilitates local shopping. The platform is one of the new breeds of ecommerce sites designed specifically to level the playing field for small businesses. The company claims its service helps “thousands of stores present their selection to nearby shoppers using ecommerce tactics.” The platform also provides support functions, including “last-mile fulfillment options like in-store pickup and same-day delivery.”

Walk.by

Walk.by is a free mobile app that connects local merchants with shoppers everywhere. The shopping app allows consumers to browse and order products offered by offline retailers as well as track very specific items, for example, “ladies brown faux leather knee-high boots.” If a merchant in the Walk.by network has the item, the app releases a push notification to alert the consumer, who can then place an order for online delivery.

When the order is received, the merchant attaches a Walk.by shipping label then calls UPS to pick the package up. Alternatively, if the consumer wants to see the item in person, perhaps try on an item of apparel, they can place a reservation to keep the item on hold for a short period of time.

Retailigence

Retailigence is another O2O marketing platform. The company provides in-store product data and location services to encourage consumers to shop in brick-and-mortar stores. Product data is quite extensive as more than 200,000 physical stores have joined the Retailigence network. In 2016, Retailigence was acquired by ShopAdvisor, a provider of retail proximity marketing, analytics, and mobile shopping services.

ShopSavvy

ShopSavvy is a mobile shopping marketplace that offers a wide range of product display options. Merchants can publish product titles, descriptions, and images using 14 different formats. The service, which is free for retailers, serves both online and local stores by offering a product in response to a search query. The app has a unique feature that shoppers find irresistibly appealing. Users can scan items at home or in a store and then use the image to find similar products either in nearby physical stores or online. This feature also allows prices to be compared. Searches can also be performed by product name or description.

Milo

Milo is a product search platform meant to help local sellers attract online customers. It comes with software, named Fetch, which is free for small and medium-size retailers. Retailers with physical stores share their product availability data with Milo using Fetch. Fetch links to the retailer’s system and uploads inventory information, in real-time, into Milo’s local search platform. When a shopper searches for a product, a list of nearby businesses that have the product will appear. Using Milo, consumers can rule out those trips to stores that end in disappointment because the item is out of stock.

Local Harvest

Localharvest.org contains a comprehensive listing of local farms, community-supported agriculture (CSA) enterprises, farmers markets, and restaurants that serve dishes sourced locally. The platform offers a chance to get produce directly from local producers, which means it’s fresher, healthier, and probably tastes better. Local Harvest is just the thing for consumers who opt for organic and natural grown foods. It’s the space to find a range of healthy foods, from locally produced yogurt to milk produced by grass-fed cows.

The nature of retail commerce is changing rapidly, mostly driven by advances in digital technologies. Ecommerce now accounts for about 14% of total retail sales, so most sales transactions are still completed in person. Nonetheless, the boundary between the two categories — online and offline sales — is fading. Consumers increasingly expect to be able to switch from online to offline or vice versa as is convenient. Retailers that fail to accommodate this risk being overlooked.

About the Author


Headshot of Anthony de Freitas

Anthony is the owner of Kip Art Gifts, an ecommerce store that specializes in art-inspired jewelry, fashion accessories, and other objects. Previously, he worked as an accountant and financial analyst. He enjoys writing on small business, financial intermediation, and economics. Anthony was educated at Wilson’s School and the London School of Economics and Political Science.

Related Articles