Online retail

As people move their purchases online, people wonder what opportunities for online businesses are out there.

I believe there's 3 positions, a number of opportunities, and a few extra points worth mentioning:

Positions

  • The best in class.
    • Example: Build the next Tommi Burger and take it online. Tommi is one of the best burgers out there, and it was part of my routine in Berlin. 180g, organic beef, great French fries or sweet potatoes fries. At a certain point, Tommi was 30% of the daily number of orders of an online marketplace with hundreds of restaurants.
    • Investment: Low. It requires more experimentation and kind of being an expert in your area, but once you get it, you have a very streamlined operation and customers who think you're god. Note that investment is low for a single product. If you want to develop a line of cosmetics, you may need to multiply this low cost x 50 different products.
    • Scaling: slow. you're mono-product, so it takes a while for the word to get out and to get volume.
    • Gross margin: Big, 50-80%. You are focused and will be producing non-stop.
  • The Best assortment.
    • Example: The Spatis (Späti or Spätkauf) from Berlin. High-quality neighbourhood convenience stores. Have a selection of first-need items, foods, a couple of great wines and a nice assortment of beers and ice-creams. It's one of the big untapped opportunities.
    • Investment: Medium. You'll need stock for maybe 100-500 items. But that's it.
    • Scaling: Medium. You have a decent catalogue and people can go there every week or even twice per week.
    • Gross margin: Medium, 30-50%.
  • Marketplace.
    • Example: Amazon the shit out of your industry.
    • Investment: big. Store, product, operations, brand. Mostly, you'll need people!
    • Scaling: big. With a true marketplace, you represent all the market, so people go there more frequently.
    • Gross margin: varies. As you scale, you'll be able to hit 50%+ margins on many products. In the beginning though, pressure will mean you are price-competitive, and your gross margin will be closer to 20-30%.

Businesses where you can create something special

The following are, to me, unsolved or every-changing opportunities.

  • cosmetics
  • restaurants
  • convenience stores
  • butchers and fish shops
  • ice-creams, chocolates, etc
  • waters, wines, beers and spirits
  • toys

Other distinctive factors

  • Build the fastest delivery you can offer. This is a unique selling point for... almost any business. We went from a world where Amazon delivered in more than a week a few years ago to many items being delivered in 2 hours or less now. An ambitious delivery promise will get you stuck in operations and tie you to a restricted geography. But it also wins the hearts and minds of your customers. Keep in mind that delivery costs vary wildly per country, with hourly wages in the US, UK and Germany above $10 while in southern Europe you'll be <$5.
  • Mobile. With the Uber Eats generation, people are buying increasingly on their mobile phones. Offer an app, or at the very least a website that behaves like one. You should also be aware of new platforms, like selling on social (instagram) or via chat apps (WhatsApp).