Greg: Welcome to Episode #7 of the Near Memo, where we talk about search social and commerce and why it matters, and the implications for local and joining me as always are Mike Blumenthal and David Mihm. And I'm Greg Sterling. And David Mihm was the celebrity answer in a word search today.
David: I guess it would be a word search. Isn't it? It, wasn't a crossword. It's a word search Yeah.
Greg: . It's a mark of celebrity. That a person that doesn't know you who just grabbed your name from the ether. So you should be very flattered by that.
David: As I said on Twitter, it's a very, very smart and creative ego bait for yours truly. So I duly retweeted it.
Mike: I was in first grade and learning to write my name. My name was always too long to fit in the space. I think that may have been the situation here.
Greg: Why they didn't choose you. We could, you know, if you were a jazz musician, just shorten your surname to Blue. Mike Blue.
Mike: There you go. But then I am not.
Do you want to introduce the whole session here, Greg?
Greg: We decided last week that we would take this session and really reflect on the past year, since it's been a year of coronavirus and how that's changed things in the digital economy and local and the world at large.
So we've each picked a topic and we're going to talk about our reflections on each of those topics. And we're going to start with you, Mike.
Mike: So over the past several weeks since Texas removed the mask mandate, and was criticized by both the president and many Texas residents, there were several stories that caught my eye.
One was a story in the Washington Post, a very highly prominent paper of record, or one of the papers of record about a Mexican restaurant that decided to keep the mask rule and received threats that visitors would call ICE on their employee. You know, the kind of reprehensible behavior that. It seems to exist.
Greg: It's very common in this country.
Mike: Yes. And simultaneously though, there was an article, I think I found this one in Culture Map Austin about H-E-B, the very popular regional grocery store that decided to originally not require masks and then quickly reversed course after a public outcry.
And it begged the question for me of what it really is happening.
Is there an equivalency between these two positions or not? And about nine months ago, I started surveying consumers on this question: If a business strictly enforces mass squaring for employees and customers, are you more or less likely to do business with them?
I did two surveys, one where I just gave a choice of more likely, less likely.
And an open-ended opportunity. And in that one 73% said they were more likely to do business. 21% were less likely. And a 6% just about said they were indifferent and they didn't really care. And they actually had to make that choice to fill in the space.
But I wanted to also understand in more granular detail that the negatives, the less likely.
And so I gave a slightly different take on that. So I asked the same question: If a business strictly enforces mass scoring from employees and customers, are you more or less likely? And I gave them four choices:
- More likely to do business
- Neutral - will not affect my spending,
- Less likely to do business.
- And now I'll never shop there again.
Less likely to do business was 8.7%. And the never shop there again was just under 8%.
And I've been doing that survey for, so for nine months now every month. And interestingly the answer, I will never shop there again, this was 8% originally when I started this survey.
I hypothesized that as the degrees of separation to the ravages of COVID became clear, fewer people would take the position of objecting to a business enforcing mask.
I turned out to be totally wrong. That 16, 17% of less likely or never shop. And the 8% that says I'll never shop there again has been consistent month in and month out from the beginning. So there's this core of 8% from last July that has made this decision.
It appears from the survey data, the survey had 2,500 responses. It trended male, there was 62% of those never do business where male and trended to the demographic of 25 to 44, the bulk of them as well.
But it's a false equivalency as often happens in our society to think that the people who object to masking, who attacked the Mexican restaurant are of equal importance to those that are more likely to do business.
And moral questions and ethical questions aside about the need for business to protect their employees and their customers. And in Texas not getting any legal protection. Obviously they have a legal obligation as well.
73% said they're more likely to do business. And only 21% said less likely. And when we broke that out, 8% are hardcore won't shop there. So it's not equivalent.
The public has largely spoken. They said the same month in and month out. And I think that positioning them as equivalent is fake news. Your thoughts?
Greg: I think that, you know, it's unfortunate that this became a political issue rather than a health issue. So, so early on, and that has, I think, carried through, you know, you see, in other surveys consistently party affiliation is one of the defining factors of attitudes toward, uh, you know, many of these safety protocols. And it's really, it's really unfortunate, but what's interesting about the HEB. Survey, if I'm correctly pronouncing that, and this is another invitation to a blog post for you, Mike. Cause there's a lot of great data, right?
Mike: I have it...60% done, so...
Greg: You know that these businesses are going to have to make choices among their customers in many instances, who are they going to support?
I mean, again, putting aside sort of the ethical and moral obligations about protecting your employees and your customers, they'll have to choose a side. Do we do what we think is right? Do we do what we think is in our economic self-interest because invariably, there's going to be some percentage of people who continue to object. That'll be a minority in many cases, but you'll have to, you'll have to make a conscious choice.
And it's kind of consistent with the pop political questions that now brands have to face at every turn. You know, as of 2016, everything turned more political and brands are sort of compelled by their customers to take positions. You see all the data about, “I want the brands that I buy to reflect my social values”.
So increasingly they're in a position where they have to say, we stand for this. And we stand against that, you know, in the past, you didn't have to do those kinds of take those positions. So I sort of abstracted it out, but yeah, I was going to say that again.
David: I think you're exactly right. And you've been, I can remember conversations even back when I lived in Oakland and the sort of late odds you and I were talking about ethical scores for businesses and increasing awareness, I think by consumers of how businesses, what kind of corporate citizens, uh, various businesses were.
And I think that this is, that the mask issue is sort of the, the absolute, most existential corporate citizenry question for a lot of customers because it dramatically impacts their health personally, um, based on which direction the business goes. So I think it does fit in with the larger narrative.
And even though this shouldn't be a political issue, it hasn't helped that so many people have politicized it over the, over the course of the pandemic in this country in the way.
Mike: It's fascinating to me that, you know, for the past few months, many States have had mask mandates, which largely removes the question from the business to make that decision.
Interestingly, Mississippi and Texas, both removed mask mandates and then shifted the responsibility back to the business. So even though they proclaim to be business friendly, in this particular instance, it's the antithesis of business friendly and really repositioning the business directly in the line of fire, both legally, morally, and just on a pure customer relations basis.
It seems it's a bit of political calculus that doesn't make sense to me.
Greg: Okay. Well, so David, why don't we, why don't we move to you? What are your thoughts about how this past year has changed things in the world we live in?
David: Sure thing. I'm going to take a slightly wider, frame and just talk a little bit about the changing nature of e-commerce.
I think for most businesses, E-commerce was essentially a function of, for a traditional retail business, if you had somebody young enough who could figure out a way to set up a Squarespace website or a Shopify website or whatever where you could sell your goods online.
And I think increasingly that it's become, not just a nice to have for the average local business, but really table stakes. Your website has become your physical front door in so many ways. Even if you're not offering a true e-commerce experience in terms of an online checkout process, giving customers the ability to see what you're offering online so that they can call ahead is critical.
For example, in placing an order for pickup has really become essential. Uh, and Greg, you highlighted an article this past week or a study, I guess, that square published, uh, in, at least as it relates to Canadian businesses that now, uh, they say almost, uh, two thirds of Canadian businesses are selling online.
Uh, post pandemic. Now that is, I think if I'm reading their methodology properly, a little bit of a self-selected sample, because these are square merchants already advanced. Exactly. But it's still a very substantial segment of businesses that have made the transition. It's gone up by 50% in the last year, according to square zone numbers.
Mike: Oh, the other thing that went up 50% was the transition from cash to credit. And it just speaks to this acceleration of the change from a cash society. The United States has been a laggard compared to worldwide, but I think this has pushed credit, you know, and digital payments to the fore and it will accelerate it.
Greg: So the last time, the last time I went to the grocery store. Um, physically, I completely forgot my wallet because I never had my wallet in my pocket. I'm the nurse. I never, I never leave the house and I forgot my wallet. And it was like, I was halfway there in my car before I realized that. And I thought, yeah, I'm not going to go back.
I got my phone. Right. And so I went, I bought the groceries. I came home, no big deal. You know, in the past I would have had to turn around.
Mike: This time, I went to the grocery store, which is on vacation here. It was an incredible experience because it was Wegmans, which has a great reputation, which we don't typically get to go to, but they used Instacart's infrastructure to build their own curbside pickup.
So no tipping, no extraneous stuff.You go and they just load it into your car and it just works. Which coming from where I come from, that's pretty amazing.
Greg: Let me ask both of you a question, cause I know to varying degrees, both of you have made the argument that Google is your new homepage.
And, you know, are small businesses websites going to become less and less significant over time, which I think from a certain point of view, everybody agrees with.
But do you think that this new e-commerce imperative or digital imperative shines a spotlight again on websites and forces people to upgrade their websites and add functionality that you, that you wouldn't have directly on Google?
Do you think that that's going to mean a change for people?
David: Yeah. So and keep in mind, uh, Mike and I have never said, Google is your website.
Greg: Google is your homepage. Yeah. Yeah. Right. Fair enough. Fair enough.
Mike: And keep in mind that we see it as, as a critical component of the lead funnel. Yeah.
Greg: That's not trying to put you guys on the defensive.
Mike: It's not defensive. It's that Google is where you find new customers for your website. Social is one of the places you serve existing customers. So their role is different. That's really the bullet.
Greg: The, it really is about the websites. Do you now have to upgrade your website? Do you now need a better website as a small business because consumer expectations are higher and you've got to do more with that website.
David: Yes, I believe you do. Yes and I think we've seen quite a bit of news recently to at least that the financial markets at least believe that Square raising a huge $300 million round and Yotpo, raised something comparable. Excuse me, Squarespace. You know, Shopify's stock price has gone through the roof in the past year.
So I think that consumers are bringing businesses along with their expectations and the pandemic.
Greg: Yeah. Your favorite stories. I think from the other week, was this the Stripe valuation of 95 billion as a private company, you know, that's, that's part of the broader e-commerce discussion, right. That just.
But the emphasis on e-commerce.
Mike: I would add, I have this consumer survey panel of one, which is my wife, and when she hits a website, I can hear from a room away, the pain it causes when they don't even have their phone number readily available. So I would say absolutely yes to the need to upgrade the site, but we're still seeing sites literally caught in a time warp.
David: We're still, there's a, there's a broad spectrum of, of the definition of improvement.
Greg: Well, and, and so to sort of transition into my, into my discussion, you know, the small businesses that are doing really well and are meeting consumer expectations for convenience and all the functionality that we're talking about are going to be more successful. And those that are, the laggards are going to have a tougher time, unless they've got such a stellar reputation or word of mouth locally, that they can overcome that. But, um, but, but it's challenging certainly for new customers.
What I wanted to talk about is this sort of notion of winners and losers and you know, we can call it, it sort of the term popped into my head, digital inequality.
You know, we've got all this income inequality that's been exacerbated during the pandemic, I mean, Bezos and Elon Musk. And, you know, the wealthiest people have become the Waltons, you know, billions and billions and billions of dollars more wealthy during the last year, I mean, astounding accumulation of wealth in individual hands.
And that's also true for companies. I mean, Google, Facebook and Amazon in particular now in the Wall Street Journal today, they, they talked about the three of them having more than 50% of US digital ad dollars, which is even more significant when you consider that a lot of the traditional media spend has migrated online in the past year.
So they are controlling a massive amount of money. And, you know, in retail, we see that to a lesser degree, you know, the Walmarts and Targets and Costcos are winning. And then some of the other, you know, Lord and Taylor L brands and Macy's and H and M you know, are closing stores sort of contracting. Sears, et cetera.
So there's a real bifurcation. It's like the economy is supposed to grow at six and a half percent this year, but that's not going to flow equally to everybody.
It's really going to be flowing to the most wWell-positioned, the most successful. I know you've got some thoughts about that stuff.
Mike: I mean, there's multiple thoughts. One at the meta level, you know, we're in a new gilded age where accumulation is allowed to occur at massive scales, much like it did with Standard Oil and other industries around the turn of the 20th century.
Basically our government has walked away from enforcement and policy in this arena. So capitalism by its nature tends and it's exacerbated in the world of digital tends to cycle into very large entities. That's the way it is. And unless there is a clear and ever present regulatory environment, it will continue that way.
I don't know that I understand Anti-trust enough to suggest solutions, but if you want to start creating more opportunities, certainly it's a place where you have to have reasonable policy.
David: And as we've discussed in previous episodes of the Near Memo, the regulation to date has actually largely served to reinforce Google and Facebook and Amazon's position as third-party cookies go away that only benefits, you know, the people who actually still own the lion's share of the eyeballs, which are those three companies.
So these privacy regulations may end up having a sort of a backfiring effect on stimulating smaller players to have a chance in this market.
Greg: Yeah. I agree that the policy question is really the big question here, but, but this is really the conundrum, I think for policy makers, because GDPR and CCPA and, and Apple now with its opt in app tracking transparency.You know, that all of that stuff is in theory, good for consumers and consumers want privacy controls and we need to have more privacy control.
But at the same time it's doing exactly what you just said. You know, Facebook is going to benefit even though they sort of screamed about it. They're now realizing they're going to benefit from app tracking transparency and, and all the big players have the first party data and the smaller players don’t.
In France, Apple got sued for this policy and the French authorities sided with Apple on behalf of the consumer, but all these small publishers and all these small marketers and developers are really going to suffer, you know?
So how do you strike that balance? It's a real huge policy challenge that I certainly don't have the answer to. I mean, I wouldn't say I would navigate going backward in terms of privacy, but I think, you know, there are a lot of unintended consequences.
Mike: Yeah. We've seen a lot of acquisitions over the last six months because of this, of trying to create larger first party environments in the app world.
And I think you're absolutely right. It will lead to aggregation & consolidation because if you don't have enough first party data, you're out of the advertising game.
Greg: That's a depressing note to end. What can we say? That's a little more upbeat that reflects on what we've learned this year.
What we think, you know, we need hope --
David: I would say, and I don't have this data handy, but I think that there has been a mental shift among consumers to try to do more, to support small businesses. Uh, I think that we've seen at least in Portland, so many amazing restaurants and stores and concert venues and everything that makes Portland, Portland, or many things that make Portland, Portland have, have closed permanently.
And, uh, I think that there's, there's definitely an awareness of, "Hey, if we want to continue to have this local fabric, we need to do more with actually supporting them with our dollars." Even in my case, to the extent of supporting a few businesses who have not gotten on the digital e-commerce wave and, and, you know, I, people who you guys know, maybe our listeners don't know quite as well, but I absolutely hate talking on the phone.
It's the last thing I want to do is pick up a phone, call someone, but I will do it to support a couple of businesses that I love and that I hope can make it another few months. As we wind down the pandemic stuff.
Mike: For me as somebody who has actually closed a small business due to systemic problems in terms of being able to get fair pricing, et cetera I would contend that much of small business support tends towards virtue signaling as opposed to real concrete things.
And in the absence of policy changes, you know, small business, it doesn't allow a family to aggregate enough wealth, it's too time consuming. The work is too hard for the wealth generated.
So you need a combination of a shift in these attitudes and new government policies, even things like paid healthcare so that you're no longer competitive, because you can't afford it to pay healthcare for your employees. You're not competing on that. So healthcare to my mind would be one of the significant ways the government could intervene to create a more even playing field that would support small business.
And I do see that happening. I mean, for the first time we're actually having a real conversation about single payer healthcare, despite years and years and years the consuming public wanting it, it never rose to the level of political discourse, but now it is. And I think that that combined with the attitude could make a difference.
Greg: Well, and, and sort of back to the private sector, consistent with what David was saying about sort of e-commerce and digital proficiency.
You know, you have to make it, this is, this is kind of off of your comment about virtue signaling.
You want to support small business, but it's easy to shop on Amazon, right? It's just, it's just the inertia around. That is powerful.
So small businesses either need champions and enablers or they need to, they need to make it easy. Convenience is the key, you know, they need to make it somewhat more convenient to shop there.
Product pricing is a whole different discussion that's complicated, but they, but they have to, they have to rise up in terms of convenience and a utility for the consumer, because it's fine for me to say, yeah, I want to support small business, but unless that becomes easy or easier. I'm not going to do it.
Mike: I think in food, in restaurants, it's easier for it to happen than it is in products because, and because products, you can look and see that it's there. I can have it tomorrow. And here's the price at Amazon. And I see it much more difficult for businesses to work in that world of products because of the inequality of bottom line pricing and the T & C’s (terms and conditions).
Greg: Well, and, and globalization, right? I mean, globalization, you're competing against, low, low labor costs outside of the US.
David: So I do want to credit a couple of companies, a lot of companies actually in the SAAS world this year, though, who have really upped their games of their own products that enable this kind of digital experience, a Square's website builder is miles better this year than it was at this time last year. As a consumer in, in my experience.
And so businesses are picking up on the investments that some of these SAS companies are making. Shopify is another one, Squarespaces and you know, all of these sites now load so much faster and facilitate transactions and commerce so much better than they had previously.
So I think that the tech industry as a whole does get, in many cases, justified bad rap for, you know, building things that don't actually improve the lives of people, but in this case, I think we've seen in the pandemic that a lot of these innovations do help both businesses and consumers make it through a really difficult time.
So you wanted to end on a positive note, Greg, doing my best to keep us on the positive side.
Greg: Okay. All right. So that's all for this week. We went a little bit longer this week, but I think there was a lot of interesting stuff. So thanks. Thanks again and join us next week, um, on the Near Memo.