Technology's Daydream Is Becoming the Nightmare of Brick-and-Mortar Retail
Old-school retail has been slow to adapt online marketing but online retailers are quickly moving into physical stores.
Recently, Amazon announced that it would be buying Whole Foods for an astounding $13.7 billion. To those who have followed Amazon’s trajectory for a while now, this was an obvious next step in parallel with their grocery delivery service, AmazonFresh. To those who still see Amazon as nothing more than a technology company overextending itself, let me explain what this deal means.
We’re past the point of offline businesses looking to understand how to get online -- a pain point from the mid 2000s -- and we’re now entering an age where companies that started online are bringing their business offline. They’re jumping out of the computer screen and into real life.
For big retail, and age-old companies that were behemoths before the internet, this is a nightmare. For tech companies and .com disruptors, this is a daydream come true. The internet is big. But when an internet company can move from the computer and into the real, physical world, suddenly that world just got exponentially bigger. Amazon buying Whole Foods is yet another step in this direction.
Some see this sort of development as terrifying, threatening, even unfair. As someone who not only watched the first .com boom in 1999, but was building my business, Interline Brands, I can tell you that this sort of rampant growth isn’t new. It just looks bigger, faster and stronger because of the size of the companies. The internet expanded everything in its sight, but the underlying principles, changes, twists and turns are all familiar.
This is why, if you are an entrepreneur in today’s day and age, this is the one thing you need to do in order to survive, thrive and not get swept up in the tide of the changing landscapes. You have to go all in and commit to being a “business bachelor” in the sense that you can’t be married to the way your business has always done things. You have to be willing to pivot and adjust as new trends reveal themselves and rules bend.
In the past year, top retailers have closed hundreds of store fronts across the U.S. When Amazon announced its acquisition of Whole Foods, Kroger’s stock plummeted 13 percent. Along with it, shares of other retailers with grocery sections such as Target, Costco, SuperValu and Sprouts all plunged as well. You can see this as a looming cloud for your business, especially if you are in retail. Or, you can see this sort of behavior as an opportunity.
I have been building businesses for a long time. Build long enough, and each decade you’ll start to realize that while the variables may change, the underlying principles remain the same. My most recent company, LendingOne, provides real estate bridge and rental loans to non-owner occupied real estate investment property owners. Now, when I started down this road, I very well could have looked at what had been done already in these markets, followed a similar blueprint and been on my merry way. But any aware entrepreneur in today’s day and age knows that the waves are moving fast, and you can’t base decisions on where the ball was. You have to look hard for where the ball is going to be.
Instead, I decided to structure the company with the same fundamental principles that are leading today’s booming startups. Our technology at LendingOne works similar to Uber. They don’t own any cars, and we don’t own any loans. If you’re interested, I tell the full story about how we came up with the idea for LendingOne in my book ALL IN: 101 Real Life Business Lessons For Emerging Entrepreneurs.
So, the takeaway for today’s entrepreneurs is this: Don’t become blinded by the big numbers of today’s hottest companies.
As the internet enters its next stage of maturity and begins bringing its online successes offline and into the real world, a lot is going to change. Acquisitions are going to be rampant, and they are going to be publicized accordingly. News is going to spread fast because of the internet, and shockwaves are going to be felt through parallel industries, as seen by Kroger’s stock price after Amazon’s announcement about acquiring Whole Foods.
These things are important to take note of, but they should also be kept in proportion to your own business. What matters is that you keep your focus on what your business needs, where the trends are moving and remaining unmarried to the “way things have always been done” so that you can pivot accordingly.
If you spend too much time wrestling with the fear of change, you’ll miss the wave. You need to know when to pivot, and do so quickly and effectively.