Move over eCommerce, there's a new game in town that promises to position small businesses at the top of the cybershopping food chain—Open Commerce. Justin Floyd, Founder and CEO of RedCloud®, encourages FMCG brands, distributors, and local merchants to break free from the bonds of being a third-party seller beholden to the rules of a self-serving landlord. Open Commerce amasses the strength of SMBs to shift the balance of power in the online trade battle from the eCommerce Goliaths to the slingshot-wielding Davids of retail.
LONDON, May 13, 2024 /PRNewswire-PRWeb/ -- Retail has come a long way since early civilizations traded animal skins for food. The art of commerce has evolved from The Flintstones to The Jetsons, and Electronic Commerce has gone supersonic. But, like all things, eCommerce must evolve to accommodate the needs of 99.9% of businesses in the US, wholly comprised of small and medium-sized businesses (SMBs). Justin Floyd, Founder and CEO of RedCloud, says, "The first generation of eCommerce has failed small businesses, especially those that rely on quality inventory to serve their local and global communities with the world's most in-demand products, FMCGs. First-generation eCommerce is sleepwalking its way into economic oblivion. Open Commerce is the second generation of eCommerce that gives small businesses limitless buying power."
The first generation of eCommerce was an effort to use the internet to centralize the way that products are bought and sold. Amazon has become the de facto purveyor of online retail by creating its own eCommerce ecosystem where small businesses are bound by the whims of this eCommerce giant. Rather than contribute to the profitability of their third-party sellers, these brands are being suffocated.
The earth's largest commercial inventory is fast-moving consumer goods (FMCG): high-volume, low-margin, repeat-cycle products like groceries, cleaning supplies, and health and beauty products. In 2021, 63.8% of retail revenue came from FMCG sales. (1) In 2023, the global FMCG market was valued at over $11 trillion and is projected to increase. (2) It's the biggest purchasing flywheel on the planet.
Redefining eCommerce: From Monopolistic to Open Trade
Approximately two million SMBs are operating on Amazon, and their top sales category is health and personal care products. (3) The failure rate for third-party sellers on Amazon is a staggering 95%. (4) Floyd asserts, "When a brand goes on Amazon, they must play by Amazon's rules. It's a dystopian eCommerce world. The internet wasn't built for that. The internet was built to create choice, it was built for freedom, and it was built for trading autonomy, and all those principles have gone completely out of the window in the last decade."
Open Commerce creates an environment that facilitates free trade and competition. Consumers want to buy from trusted sellers and breakthrough brands. They don't want a one-platform choice; they want to be able to choose for themselves. And that's not how it works today in the first generation of eCommerce.
In the ungoverned, Wild West terrain of eCommerce, businesses and consumers can't be certain that a product is what it says. The supply chain is polluted with counterfeit items. A business lives or dies by its ability to find and sell quality merchandise. They need a trusted platform that supplies premium inventory where they know they can get the right price and the right delivery terms.
The fundamental challenge is that technology and platforms were never built that way. The second generation of eCommerce platforms is built for this kind of open-source thinking, enabling anybody to connect in a trusted environment and trade with each other more effectively and efficiently. Today many businesses are still trading completely offline and not using technology to trade more efficiently. It's an antiquated system where retailers buy from distributors, distributors buy from wholesalers, and wholesalers buy from manufacturers.
Floyd explains, "With Open Commerce, SMBs achieve an aggregate buying superpower that can eclipse the behemoths of eCommerce and democratize the way trading is done. When you harness the power of a million retailers across America, that's when the magic happens." RedCloud is building the world's largest platform that enables businesses to trade from the suppliers they need to buy inventory, such as high-volume, low-margin products.
AI and Open Commerce: Tackling Inefficiencies in FMCG Trading
Businesses are looking critically for things that are not right about what's going on inside their trading environment. Why are they paying too much or too little for this or that? How did they miscalculate their inventory? A lot goes wrong when trading in the world's largest inventory of FMCG products.
- AI plays a big part in this because it looks for data inconsistencies. AI is all about asking the "why" and then providing the answers. AI analyzes enormous data sets, such as the product SKUs of hundreds of millions of orders flowing through the supply chain, not every day but every minute. It's a vast, sprawling, complex, complicated, and often chaotic industry. AI looks for anomalies, oddities, idiosyncrasies, and things that just don't look right or match up. It then takes those data sets and brings them back into a world that people can understand, from the manufacturer to the retailer, distributor, and wholesaler.
- Inventory distortion is a huge problem plaguing SMBs, with out-of-stock and overstocks costing retailers $1.77 trillion worldwide. (5) Another costly phenomenon is when inventory is essentially invisible because no one knows where it is. The manufacturers don't know where it is, the distributors don't know where it is, and the retailers don't know where or what it is. It ends up stacked in warehouses or a landfill. Distributors want to be confident about the actual demand for a product in a particular retail channel. AI can identify potential sales opportunities, resolve inventory issues, prevent stockouts, and identify counterfeit products.
- The cost of payments is also a big problem. The fees that the credit card companies are charging small businesses border on extortion. Most small businesses operate on razor-thin margins, and 6% of that, perhaps 4%, margin goes to card companies. Open Commerce utilizes some of the world's best and smartest ways to pay for products without using the major credit card networks with options where payments can be made completely free of charge.
Lower FMCG Costs for Consumers
RedCloud disrupts established eCommerce norms to enhance fairness and efficiency and democratize emerging markets with trusted technology to connect trading partners that have never done business with each other before, confident that the technology has vetted every distributor, manufacturer, and wholesaler.
Open Commerce ensures businesses can buy authentic, quality products at a low price through a trusted supply chain and build a burgeoning, functioning ecosystem of small businesses. They can make good-value products, reducing the cost of consumer products. Floyd states, "What RedCloud has built is open, second-generation commerce, enabling diverse businesses to trade with each other electronically and efficiently using a platform experience that allows them to find the latest inventory they need for their stores or their shops at the best possible price, with instant-delivery capability, and with the confidence that they are getting high-quality products from trusted suppliers."
RedCloud epitomizes Open Commerce and is the world's largest and most trusted platform for safe trading. Its intelligent AI-powered technology improves supply chain efficiencies and defends against counterfeit goods. It cuts through the chaos, eliminates the barriers to achieving profitable trade, and provides equal opportunities for all businesses to grow and thrive in the next generation of digital commerce.
About RedCloud
RedCloud Technology, founded in 2012, stands as a "Rebel Alliance," leading a bold, second-generation e-commerce transformation. Rejecting the high fees of tech giants, RedCloud leverages AI-driven supply chain solutions to empower smaller businesses, giving them the tools to compete with major corporations. Their democratized, cloud-based platform provides real-time financial visibility, offering a level playing field that breaks free from the dominance of conventional marketplaces. RedCloud embodies a fairer, more inclusive digital commerce future where Davids can stand tall against Goliaths. For more about RedCloud Technology visit their website at https://redcloudtechnology.com/.
References:
- Smith, P. "Retail Sales Share of the World's Top Retailers by Product Sector." Statista, 22 Mar. 2023, statista.com/statistics/266415/revenue-share-of-the-leading-retailers-worldwide-by-product-sector/#:~:text=In%202021%2C%2063.8%20percent%20of,the%20apparel%20and%20accessories%20sector.
- "The 7 Most Profitable FMCGs for 2023 | Otter." Tryotter, 28 Sept. 2023, tryotter.com/blog/industry/most-profitable-fmcgs-2023#:~:text=As%20a%20result%20of%20these. Accessed 9 May 2024.
- Ayala, Nel. "The Impact of Amazon on Small and Medium-Sized Businesses: Is Amazon Killing Retail Industry?" Seller Snap, 23 Oct. 2023, sellersnap.io/amazon-impact-small-businesses/.
- Agency, The Mercato. "Why 95% of New Amazon Sellers Fail within the First Year – and How Not to Be One of Them." LinkedIn, 8 Apr. 2024, linkedin.com/pulse/why-95-new-amazon-sellers-fail-within-first-year-how-idlse/.
- Zulkosky, Christine. "Why Inventory Distortion Costs Retailers Trillions." The Food Institute, 14 Aug. 2023, foodinstitute.com/focus/why-inventory-distortion-costs-retailers-trillions/.
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