Startups

Iterations: Swords and Shields in the Merchant Economy

Comment

“The American Dream,” loosely defined, is made up of a few building blocks. The right to life, liberty, and to pursue happiness. The opportunity to advance, whether through education, sport, entertainment, or enterprise. Perhaps have a family, live in a house, run your own business.

Over the past ten years, for a variety of factors, the pursuit of the American dream got significantly harder. Home values have depreciated. It’s more competitive to get into schools. Pinks slips are flying off the copying machine. For many, the dream currently seems elusive.

I’d like to focus on one slice of the dream: The ability to run one’s own business. Let’s leave aside venture-style businesses for a minute to focus on local merchants. Enterprising individuals and families across the country typically raise funds from friends, family members, and local banks to open their own local businesses, in part motivated by the opportunity to hold equity, reap profits, and exert more control over their lives. Perhaps household income takes a little hit, but the family can vacation when they want to and make more of the kids’ soccer games.

I don’t mean to suggest this all happened smoothly. The local bookstore got squashed by the mega-bookstores, which in turn got served by the endless reach of web retail, which is now currently under threat by social and interest networks. We all know what happened to the small, medium, and large merchants here. No matter how many gimmicks each type of store could experiment with, the fact is that many of them couldn’t compete against the scale and price sensitivity of the Internet. They didn’t have tools to learn more about their customers. And, as a result of these external forces, the transformation of the economy, and the emergence of the “daily deals economy,” many merchants were put on the defensive, scurrying to survive.

Mercifully, within the last few years, networks and tools have emerged that offer great hope to small, medium and large physical businesses alike. This is often referred to the as online-to-offline redemption loop, broadly speaking, the idea that networks, new media, and targeted offers can motivate customers surfing the web or playing with their phones to visit a store nearby. The race to grab and close valuable parts of this loop has been staggering, with Groupon finally set to go public in November, with LivingSocial gaining more and more steam, and services like Square and Foursquare focusing on very narrow yet valuable, strategic pieces of the loop.

It’s infamously debatable whether or not the daily deals craze is worth it for local merchants, but we’ll have to sit tight and just see what happens. What is not in dispute, however, is that the consumer web, social media, and mobile devices evolved at a rate faster than most local merchants could keep up with. The majority of local businesses are not typically very high margin ones and, therefore, have smaller appetites for risk, so the day-to-day focus in large part is on maintaining inventory and increasing foot traffic through advertising. Therefore, today, even though running a daily deal may place acute stress on a business not prepared for it, new media companies can simply drive foot traffic, and that prospect alone will likely make any merchant in a competitive situation seriously consider it.

In a local context, we are smack dab in the middle of a “daily deals economy” that’s here to stay, whether we like it or not. And, offers are going to get more and more targeted, based on a variety of customer and merchant inputs, such as time of day, inventory, and repetition.

Now that we are beginning to understand this world a bit better, I’ve noticed an interesting class of new products and services from startups nationwide have emerged to help local merchants better manage their businesses. This is what I refer to as the “merchant-side economy,” where new companies are developing suites of offensive and defensive solutions to help merchants capture more information, optimize traffic, and manage inventory.

In this “merchant-side economy,” entrepreneurs are building products and services as “shields” and “swords” to help arm merchants to defend against fights from competition and their customers and get stronger by using new tools. New companies such as Local Response, BizeeBee, RushRez, and ZapHour provide software solutions to help merchants manage inventory, CRM systems, and targeted offers. Startups like E la Carte offer a hardware solution, LocBox allows merchants to create and manage deals, Skipola offers digital ordering, Onepager helps businesses build dead simple websites, and Merchant Button helps merchants manage the deals they want, inverting the model entirely. (There are so many companies sprouting up, it’s impossible to list them all, but please add to the list here.)

Larger companies are, of course, keenly aware of the importance of this trend. Google attempted to buy Groupon last year, Facebook dropped into and then out of the daily deals space, LivingSocial has been catching up quickly, eBay acquired Milo, Square built Card Case, and even one of the biggest retail chains in the world, Walmart, got into the game by acquiring Kosmix. As media attention shifts from television tubes to new media and mobile channels, retailers have more options to grab online traffic and convert it into real foot traffic, and once they are in the store, startups like Prism Skylabs and Shopkick can help create new in-store experiences.

These are the swords and shields in the new merchant-side economy, products and services that help store owners handle the daily deals economy, compete for foot traffic, capture more information about existing and potential customers, and leverage the scale and precision of new media companies to provide better consumer experiences and, hopefully, to keep that one very important slice of the American dream from fading forever into the darkest shadows cast by the growth of new Internet media, advancements in technologies, and the harsh realities of globalization.

More TechCrunch

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

1 day ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

1 day ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI