Brooklyn Shopkeepers Test a Service to Fill in Amazon's Gaps
(Bloomberg) -- With Amazon.com Inc. hitting a trillion-dollar valuation earlier this week, the company’s shadow looms over the entire retail industry.
But there are still sizable gaps that Amazon and other online giants don’t address, and that’s where Peter Price looks to build a business. The 78-year-old entrepreneur is seeking out mom-and-pop shops -- like the local butcher, toy store or pharmacy -- and trying to outfit them with e-commerce capabilities, including next-day delivery.
The endeavor is called EMain, and he’s been laying the groundwork in the Park Slope neighborhood of Brooklyn in recent months. The former media executive has been visiting shops, shaking hands with store owners and pitching his idea. On Sept. 20, he aims to roll out a 12-week trial of the service for Park Slope with 60 businesses.
If that goes well, a nationwide debut could follow.
“I really believe it will resonate on main streets around the country,” said Price, whose career has spanned advertising, newspapers and television. He previously served as president of Liberty Cable, where he fought a similar block-to-block fight to encourage New Yorkers to adopt the service.
He also was chief executive officer of the National Academy of Television Arts & Sciences and helped then-New York Mayor Michael Bloomberg map out the city’s digital media strategy. (Bloomberg is the founder and majority owner of Bloomberg LP, which owns Bloomberg News.)
With EMain, local shops will be able to showcase their offers online, with the promise of free next-day delivery for local customers. The shops would eventually pay a small weekly subscription fee of $50 to $100 for the service. With 30 million small businesses in the U.S. as potential customers, Price thinks he can build a $6 billion business.
The ace up Price’s sleeve is an agreement with the Postal Service, which will pick up goods from the shops and deliver them to local consumers the next day. EMain also plans to work with local chambers of commerce to encourage small businesses to join his effort.
“If successful, EMain’s model will not only help small businesses to better connect with their communities, but also help to support local post offices across the country,” said Stephen Schwarzman, CEO of Blackstone Group LP, who isn’t an investor in the project but has been briefed on it.
The idea is that shops will use the service -- not just to generate e-commerce orders -- but to drive store traffic.
It’s not a slam-dunk proposition. Groupon Inc. has tried to carve out a niche in local e-commerce -- with mixed results. The once-hot coupon service has struggled to maintain sales growth in recent years. After years of adjusting its business model, the company is now the subject of takeover speculation.
Small businesses often face tight margins and the threat of rent increases, so there’s not much money to go around. There’s also the problem of getting the attention of consumers, said Peter Krasilovsky, a consultant whose firm helps small businesses handle e-commerce.
“The challenge with building local marketplaces is to get enough people to look -- local is incredibly fragmented,” he said. “That’s why Amazon, Facebook have such strong built-in advantages. People look at them all the time.”
It’s also not clear how much shoppers will value next-day delivery if they already live close by to a business.
“People can often just swing by and pick something up,” Krasilovsky said.
Demise of Malls
Price hopes EMain can capitalize on the decline of America’s malls, which could drive traffic back to the main streets of towns. Real estate professionals should support the proposition, he said. Price also is going after businesses that don’t have a storefront at all -- say, local knitters.
“Ironically, the collapse of big boxes and luxury boutiques in the malls may revive the main streets of America,” he said.
Price has some high-profile supporters. Ivan Seidenberg, the former chairman and CEO of Verizon Communications Inc., is on EMain’s board. Other directors include investment-banking veteran Barry Friedberg and Nick Nicholas, former co-CEO of Time Warner Inc.
The test in Brooklyn should give a good sense of whether Price has found a winning formula, Seidenberg said.
“This trial will prove that getting it right in one market will work across all communities,” he said in an email.
As part of his pitch, Price looks to appeal to consumers’ guilt. Sure, Amazon is extremely popular -- but shoppers feel a tinge of regret about using it, he said.
“People are guilty about abandoning Main Street and going to Amazon,” Price said. “This is something new: Shop local, support your community.”
©2018 Bloomberg L.P.