Networks: Let's Tango 💃🏽🕺🏼
It takes a lot of people to build a bridge, but just two to tango. This applies to the analog world as well as the digital one. In the digital space, I'm using tango to refer to messaging between two people. I believe messaging is a service we can add to our offering to diversify how our company Shop Local grows.Different Networks Require a Different Number of Users in a Group
Andrew Chen in The Cold Start Problem states that a key difference among network models is the required minimum number of members. Some networks require few users while others need thousands or millions. A telephone call (or WhatsApp) can occur with just two people, while a credit card network or Amazon Marketplace often require a much larger base.
Shop Local is currently a product network. It takes tens (or hundreds) of members on each side (the retailer side and the brand side) to make it work. In contrast, messaging networks often require just a person or two on each side. For this reason, there are many messaging apps and messaging is a competitive space. As a reference, this page lists 28 Slack alternatives: https://www.proofhub.com/articles/slack-alternatives.
When we started Shop Local’s Product Syncing service in December of 2007, we had just two stores and eight brands. In 2015, we had 100 stores and 70 brands. Today, we have 1,100 stores and 100 brands. We want to jump start our growth with brands.
I believe a messaging service could get our foot in the door with brands (as well retailers and reps). We can offer brands a live chat feature that lets them communicate about orders, products, and events. This can be supported by an app, and be built into the Shop Local Store. This messaging feature will allow businesses to communicate in real time.
Features:
- Integrated into the Shop Local Store platform.
- Goal: more convenient than texting and email. (Email is the current default for business communication.)
- Most businesses don’t have live chat on their websites, especially their B2B websites.
A Messaging Service Is Easy to Understand and Try
Product networks often have to be large to attract members and that slows their growth. Since messaging networks require fewer members (and less tech integration by the user), we may be able to grow more quickly with messaging. While a brand may only wish to join our Product Syncing service if it can sync with 70 stores, it may join our messaging service if it can just message 20 stores. The 20 stores threshold is much smaller than 70. That’s good for our growth.
Messaging is sticky. While I just message a handful of people, I’d likely never close my Google Chat or WhatsApp account. If we can get retail professionals to open messaging accounts, it’s likely we’ll be getting customers for life.
We’ll allow individuals at companies to join and not require an entire company to join.
We’ll be allowing a Shop Local member to invite an individual at a company—but not require the entire invited company to join. A staff member at Ivy House, a retailer in Dallas, TX, could invite a staff person at Bernardaud, a tableware brand, and that Bernardaud person could join the Shop Local platform as an individual just for messaging. The Bernardaud person is not having Bernardaud join Product Syncing or the Wholesale service. It’s the equivalent of giving someone at Bernardaud a phone to accept calls from The Ivy House. It requires little approval to join and is a quick setup.
Messaging Is Part of the Marketing Budget
Offering messaging is a marketing strategy to get more businesses to sign up for Shop Local. As a reference, Salesforce bought Slack for $27b with this goal in mind. Salesforce wants to sell Slack users Salesforce services and opens the door by offering free intra-company messaging.
Industry Players and Competitors
Faire made a big name for itself in the retail industry with online wholesale ordering. We could do the same by bringing Slack-like messaging to the wholesale retail space. If Faire is the Amazon of wholesale, then Shop Local could be the Slack of retail.
Imagine if Faire announced it was launching a free Slack-like service for retail. That would be smart. Let’s beat Fair and Slack to retail messaging.
One may say, “Can’t the retail industry just use Slack?“ I’m not sure. There are benefits to having a product database tied to a messaging system. For example, one could more easily see products and look up POs.
Cost
Ideally, messaging would allow us to acquire customers at a lower cost, but building the app may be expensive. Regardless of the customer acquisition costs, it does offer a new course to acquiring and keeping customers.
Shop Local Messaging goals:
- Increase stickiness for existing members.
- Give value to members.
- Expand awareness about our services.
- Build ‘Slack for retail.’
Homework:
- Open a Slack account.
- Connect with other business friends.
- Imagine how you can build Slack for your business space or industry.
Tags:
Andrew Chen cold start problem networks
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