Bloomberg has a story about the "large cohort of U.S. 'solopreneurs' who started online retail businesses in the midst of the Covid-19 crisis … Economic necessity, combined with numerous turnkey options for launching an e-commerce business and a social-media fueled American obsession with the side hustle. have created a new generation of small businesses and solo retailers who don’t need a physical space, at least yet. That shift suggests cities may need to rethink how they court and support retail jobs and small businesses in the coming years."
'The story points out while the pandemic was devastating for many legacy retail businesses, "amid this shellacking for storefronts, evidence suggests that small-scale e-commerce businesses may have boomed in 2020 beyond the expected growth tied to the global rise of online shopping. A February study by the Economic Innovation Group, an advocacy organization for entrepreneurs, found that business applications in the U.S. went up 24% overall in 2020, the highest on record. Applications fell off a cliff in the spring as the coronavirus arrived in the U.S., but then shot up in the summer, especially in the Southeast and in several Rust Belt states. The jump was buoyed by 77% year-over-year growth in “non-store retail” businesses, defined as companies that sell goods online or directly to clients. Shopify, one of the largest digital retail platforms, says that online store creation on its platform rose 79% in 2020 over 2019. "
The thing is, this growth is not necessarily the kind that will reinvigorate malls and shopping centers and the communities in which they are located. Bloomberg writes that "predictions and planning for the future of retail in cities recovering from Covid often address things like zoning reform, pop-up stores and rethinking commercial leases to promote more strategic locations and flexible terms for businesses. But the boom in online-only businesses, especially for first-time entrepreneurs, suggests that accommodating this sector must also be part of how cities make room for retail. It may mean even fewer new businesses will be looking for storefronts when the pandemic ends."
- KC's View:
One of the things that the Bloomberg story illustrates is the degree to which these solopreneurs were highly customer-focused; they started their businesses because they saw a specific customer need and addressed it. (Like the woman who noticed that her engagement ring was dirty, and started an online business selling non-toxic jewelry care products.) That's a lesson for every retailer - physical and digital. The moment you get in trouble will be the moment you stop being relentlessly customer-centric.
I do have one other thought, which is that it is not beyond the realm of possibility that many of these online solopreneurs may eventually find themselves considering the opening of physical locations, believing that it will help build their brands and connect them to customers in a different way. That's what happened with companies like Warby Parker, and it could easily happen again.