Sunday, May 01, 2005

Selling Local Services on the Web

Say you want to open a store to sell widgets, and pretend you have a choice. You can either open a bricks and mortar retail store on Main Street, or you can open a web store and ship widgets from your garage.

Some of the differences seem obvious. At first blush, it would seem that your bricks and mortar store would probably cater to a local market with walk-in traffic, whereas your web store would focus on a broader, non-local market.

In turn, this would have an influence on how you define your service. Perhaps your physical store would focus on low prices and speedy installation, whereas your cyber-store would carve out a relatively narrow niche catering to a specialty market.

What this clearly suggests is that you do NOT try to reach local markets online. You use more traditional marketing strategies. This gets us thinking in terms of these two alternative models:

Bricks and Mortar Store
Local Market
Products have local appeal
Delivery is either manageable because customers pick up goods, or because they are close enough to deliver goods to

Online Store
Non-local market
Products tend to be more specialized
catering to a "niche" market spread out geographically.
Goods are either digital or can be delivered economically "at a distance".

Clearly, a web store selling to a non-local market will have to address various shipping issues. For instance, selling fast food to a non-local market looks like a non-starter. You can't ship pizzas more than about 15 or 20 minutes from their point of origin. Or trying to sell bulky or very fragile items "at a distance" would result in excessive cost and/or damage.

You need a product that will ship without too much trouble or cost, and one that doesn't have to be shipped inside a restrictive time frame (like pizzas or fried chicken). The ultimate is the digital item that can be downloaded. But things like books, CDs, bottles of pills, clothing, jewelry, computer parts, electronic components, etc., etc. all qualify as well.

Online Stores and Local Markets

Might it be possible to have an online store catering primarily to a local market? In other words, can we reach local markets online?

I think we have trouble with this concept because of promotional or marketing considerations. We assume that either there are not enough local prospects to build a viable business, or promotional efforts can't be adequately focused on a local market without the use of other very expensive advertising media (traditional media).

But why is this? Why couldn't we open a pizza restaurant, or chain of pizza restaurants and build our marketing and communication systems (promotion, order taking, payment taking) and reach our local markets online. In other words, instead of people looking up phone numbers in the "yellow pages", they would go to a local online source (search engine, online mall or community directory) find their restaurant of choice, order via email or web-based forms, make their payment online, etc.

In fact, this model doesn't even require online ordering. In my world, a store would be reaching its local markets online as long as it has a web site that generates leads and inquiries, and that serves as the focal point for its product information. Take your pizza restaurant, for instance. Imagine that it generates its leads from a search engine, online mall or directory, and it has no yellow pages ad(s) at all. People look up the website, find what they want, and then call a local number to place their order. That would clearly be an online store — a store reaching local markets online.

The local web store model

With the current state of the web, the online pizza restaurant is an unlikely candidate for success. The fact is, there are very few reliable, up-to-date online directories you can trust — especially at the local level. This is compounded by the tendency for web businesses to pop up as experiments and quickly fade away. Yesterday's community web directory is full of businesses that no longer exist.

In the world of traditional media, this problem is overcome by the relatively steep entry costs, and the relatively long lead times — you don't buy a yellow pages ad unless you have something worth selling, have a few dollars to invest in it, and are likely to be around in six months when it eventually gets printed in the book. None of these things apply to websites -- you can have a website up almost over night for almost no cost at all.

Local services which might work online

But there may be other services which have a better chance of online success — services which don't require instant "findability", which would not require up-to-the-minute directories or listings, but rather could survive off of something more "traditional" like good search engine ranking.

Let's say, for instance, you are interested in finding a real estate agent in your local community, or a dentist, or a swimming pool maintenance company. Being able to find local suppliers like this online would be a tremendous advantage. You do a search for "Dentists Cambridge", and up pops a list of websites for dentists in Cambridge.

Of course the yellow pages people want you to think they will continue to be the definitive source for this kind of information. That's why we have "". But in fact they have a built-in reason NOT to supply information of this sort online — because it cuts into their lucrative printed book advertising. As with so many older technologies, you cannot rely on the providers of those older technologies to provide you with more efficient, less costly alternatives, because that would cut into their real business.

In fact they usually put up these services to slow down the development of alternatives and keep their old businesses alive longer. The less efficient the alternatives are, the better they do with their "must have" print ads, and clunky old environmentally unfriendly 20 pound books.


Online business ideas that do not conform to the web-store-catering-to-non-local-market model seem likely to have serious problems. But for some types of business, the model of the "local web store" may already be feasible. It depends on many things, including the development of comprehensive and up-to-date locally-oriented business directories.

Once we have better online search and online local directory services, and once web use among both local consumers and local businesses reaches a specific critical mass, the range of local businesses able to use the web profitably will increase greatly.