335: E-commerce, Now or Never, with Greg Sterling

Consumers want to support their favorite local businesses. For this to happen, local businesses need to embrace e-commerce and go online.

Greg Sterling, VP of Market Insights at Uberall, joins the conversation to give us the data on local business pivoting to e-commerce. Many local businesses have been able to embrace the digital shift, most fall into three groups: Successful in shifting to online, meeting expectations to stay open, and those who are struggling and may disappear.  The successful cohort are businesses who have diversification online, a robust online component, and tighter integration between online and offline.  To all the agencies and salespeople, now more than ever need to be the trusted local expert, and help the local business go through a digital transformation. There is an importance of communicating with customers, and strengthen relationships. Steers away from the sales pitch, and focus on doing right by them.

Greg Sterling is a recognized expert on a range of digital marketing topics and a contributing editor for Search Engine Land. Previously, Sterling was VP of Strategy for LSA (now Localogy). Before that, he had various analyst and executive positions at Opus Research, The Kelsey Group, Allbusiness.com, and TechTV. Sterling is also a former attorney.

Join the conversation in the Conquer Local Community. 

Introduction

George: It’s another edition of the Conquer Local podcast. My name is George Leith, your host and been trying to figure out how I could get one of my friends that, I look back at all the panels I’ve been on at conferences over the years and there’s one guy, Greg Sterling, who has been the moderator of more of those panels than anyone else and you know, I’ve saw Greg speak, I’ve read a lot of his content, ran into him last fall in Portugal at a convention, he’s like, “Hey, you haven’t had me “on the Conquer Local podcast yet.” And we found the perfect time to have Greg on the podcast because he is a wealth of insights when it comes to data around local business and local business trends. And if you’ve been following Greg at all over the years, you know that he’s just got great insight and information. So we’re gonna dig into that big brain in a few moments and find out how local might transform as we go back to business at the end of the COVID-19. So Mr. Greg Sterling, coming up in a moment right here on the Conquer Local podcast. 

George: Welcome to this edition of the Conquer Local podcast, Greg Sterling, joining us. Greg is the Contributing Editor for Search Engine Land. And Greg, you’re doing a bunch of work for our friends over at Uberall right now and the last time you and I saw each other we were in Lisbon, Portugal for an event and we talked about getting you as a guest here on the podcast, so thanks for joining us and I’m gonna ask you a whole bunch of questions about local today, so I hope you’re ready, we’re putting you in the hot seats.

Greg: Yes and I sincerely hope I’m able to answer them with the appropriate level of detail and humility, so we’ll see.

George: Great, and you joined the Uberall folks in the last year, and your position there?

Greg: So I’m the VP of Market Insights for Uberall and I joined formally in January. And my role is really a content role, although I do a bunch of stuff, strategy, and I help out in different areas, but it’s primarily about content.

George: Great, and let’s talk about the long standing relationship that you’ve had as the Contributing Editor to Search Engine Land because I think anybody that has subscribed to Search Engine Land have been online, you see a story and this is where a lot of that great information about local tactics and trends is coming from, you’ve been at this for a long time.

Greg: Yeah, but probably about 14 or 15 years since actually, I was writing for the Precursor Publication and so I’ve been around for a long time working with them and writing about local and small business and other stuff, mobile marketing, location intelligence, and really a long time. Great. 

George: Well, you know, it’s not as long as well, I’m probably way older, so I’ll just go with that.

Greg: I don’t think so, I don’t think so. We don’t wanna do, we don’t wanna go into that publicly but I don’t think that’s right.

 

Small Businesses Are Important

George: All right, well, we’ll maybe we get to that one day, over some bourbon. So let’s talk a little bit, I was trying to think back prepping for this episode, I think you are the person that has moderated more panels that I’ve been on than anyone else in the space. And I love the fact that you shoot from the hip, and you ask very probing questions and challenging questions, so I’m gonna try and turn the tables and do that to you during this episode. So first off, who would have thought it took a global pandemic for people to understand how bloody important local businesses, not only our economy but our culture and our well being.

Greg: Yeah, it’s kinda crazy. I mean, I’ve been making a version of that argument for as long as I’ve been around in this space, and people kinda get it intuitively, but they don’t get the magnitude of it. I’ll speak about U.S. and North America where possible, I don’t know the Canadian data so well, but basically half of the jobs in the U.S. are attributable, in one way or another to small business, job creation, just it’s a massive and important component of the economy throughout North America. And it’s the way that most people live in the real world and interact with other human beings in the real world. And now when we’re in our kind of quarantine sequestered bunkers, we really feel the absence of that, the human contact, the ability to sort of go out and go to restaurants and interact with business owners.

George: No and I you know, restaurants easy, local pub is easy to think about but I miss Gord at my clothing store, like he’s the guy who tells me what’s gonna look good and what’s not and I need a pair of brown shoes and Gord isn’t open and I could go get it at Walmart but then I’d look awful. So, you’d miss, it’s not just that, you miss the camaraderie, you miss the community because there’d be a bunch of business people in there when I go into see Gord at the clothing store and we really did take it for granted. And how, you’ve been covering this area for a long time, you know the data, what’s the casualty rate gonna look like when this is all done? Because we know there’s gonna be winners and losers, of course, it depends on the timing, but how many business people had a war chest of, able to pay a couple months of their bills, if things were to have shut down, which they did.

Greg: Well, there are a couple of surveys out there, one by Chase and one by, I’m blanking on the other one, it’s another bank, 2016 and 2019. And they basically come to the same conclusion based on survey and transaction data, that business owners, for the most part, don’t have more than about a month to three months of the outside of cash reserves. And so, as this kind of stretches on, we’re gonna be looking at more and more casualties. And I’ve been having conversations with people, sort of, just purely speculatively about what will the business mortality rate look like, I mean, we’ve been talking a lot about the infection versus mortality rate among people, there’s gonna be a comparable thing among businesses and we may lose 10, 15%, more than 15% of these businesses. I don’t wanna put a specific number on it because I haven’t sat down to really look at it carefully, but a lot of businesses will simply not reopen or will fail. I mean, I’m getting a little bit ahead of myself when I say those businesses that survive the quarantine period, will need to do a bunch of stuff in order to survive the next phase, but we’ll get into that.

George: Yeah, I definitely wanna go there but listen, when we worked on these podcast episodes and I remember we were sitting in the studio a month ago and this thing was just starting in our jurisdiction and I did a couple episodes and I really lamented it, the people were just getting eviscerated online, if they posted anything around, there’s an opportunity and how are you gonna look at, but I think after the shock of this was really a thing that was impacting our race and it was a medical issue, people started to realize that there’s another component to this, you put your life into a business, your life savings, your effort, and to have that ripped away from you there, there is a mental component there and there’s a physical component. I talked to a business owner the other day, they said they have been physically sick because of what this has meaning to them. So I think that the sheer weight of it is coming to bear and we’re gonna go back to business and it’s going to happen and there’s some people and I’ve been very vocal about this, talking about the bounce that’s going to occur but we can’t stress enough that there are going to be casualties. And it’ll really be interesting when we analyze that, what was it that lead to that? And let’s take the money out of the equation, was it, they weren’t prepared to pivot to an online transaction, because I know a bunch of businesses that are doing quite well right now. They’re not paying the bills, maybe for some of their costs on premise, but they’ve been able to conduct business digitally and whether the storm, I had one friend who owns a carpet store, that they said, we’re doing really well. In fact, we might be ahead of where we were, when we were employing a bunch of people. Are you hearing stories like that as well in your research?

Greg: Yeah, there are some isolated examples of that, where people have been creative and been able to shift to online delivery of services or shift into e-commerce. I don’t think that, that’s the norm, I think that the real success stories where people are ahead of their projections, are not the minority but I do think, there’s probably three groups, there’s probably the group that you described where people are really having great success. And there’s certain categories obviously, now where people search behaviors change, purchase behaviors change, people shifted from discretionary purchases, to need base things, health, safety, well being, entertainment at home, like, I think computer hardware and office supplies and home fitness stuff, that’s doing very well. So there are some categories doing very, very well. And then you’ve got like the middle, the sort of, it’s a bell curve, of businesses that are kind of hanging on and maybe doing some business but sales are down and then you’ve got a group that’s just absolutely tanking because they just either in an industry which is really, you know, everybody in travel and hospitality right now is kind of underwater. They were in an industry that’s people aren’t paying attention to or they just haven’t been able to make some sort of shift that they need to make, so I don’t know what that distribution looks like in terms of absolute numbers, but I think that there are success stories out there and those are very encouraging and we should expose those as models for other people. But I think a lot of people are just kind of hanging on right now, in this sort of middle category.

George: And thanks to some government intervention there where the government’s got out ahead of this and said, we’re trying to help out, we’ll maybe fund the banks to allow you to miss your loan payments or just pay interest, like that, it’s been, that’s actually been very surprising to me how quickly some of those came out and were available, because usually you put government involved, red tape bogs everything down, somebody gets all the money, it doesn’t really get to where it’s supposed to get to, what are you seeing in the U.S. markets around this as far as the  PPP loans and the government getting out in front of this or trying to get out in front of it?

Greg: Well, I was gonna say you’re not in the United States, I think in Europe and maybe in Canada, that there’s some differences from what’s been going on here. I mean, in Europe, they’re subsidizing employee salaries. And I’m less familiar with the Canadian market, but in the U.S. they did come out of the gate relatively quickly, I think that’s based on the lessons of the financial crisis in 2008 and so I think they recognized the immediate need for stimulus and the market was tanking and so the Fed got involved. So there was this recognition that they needed to intervene pretty quickly and that was kind of a global consensus and based on the past experience. Now, in terms of the money getting directly to small businesses, the PPP round one, I mean, we’ve got round two now that’s gonna pass in the U.S. . Round one was kind of a disaster for most traditional small businesses. People couldn’t get money, they got loan applications in, there was a lot of confusion, a lot of bigger entities got, I mean, there’s been a lot of publicity around this lately. Restaurant chains, hotel chains, were getting money that was supposed to go to true small businesses, independent businesses. And so, some businesses did get money, a lot of them didn’t and hopefully this next round will rectify some of the mistakes of the first one.

George: Well, I would say that, we’re in an interesting situation in Canada, because we have a minority government and we’ve been through a number of those in the last 20 years, they’re the best government, ’cause nobody can do crazy shit, ’cause you need all the other votes. But, so we’ve had a little more balanced approach but there’s been the same complaint that has come out where you’re not really helping tech companies that burn money to grow because you had to prove that your revenue had went down dramatically and there were these proof points, but what they’re trying to do is get the money in the hands of people who needed it, so they could keep the economy running for a period of time till we get back to business. And, depending on who you talk to, some of those programs are successful, some are, we have a lot of listeners in South Africa. Their president released a program 48 hours ago, that I’ve talked to a few business people there that say it’s actually quite good, we’ll see if it actually gets distributed, that seems to be the common theme, right? Does the money actually get to who needs it? So let’s now talk about the winners and losers. And unfortunately, there’s gonna be winners, and there’s gonna be losers. Who do you believe will be the model that we’ll look at and go, okay, those were the ones, they did the right things and this is why they’re winners? What do you think some of those tenants are going to be of the people we’ll see as winners?

 

Who Will Stand out From the Others?

Greg: Well, I think there are gonna be businesses that have some diversification online. I mean, I think the vast majority of small businesses who have historically sold offline, some of them have online businesses, but they have not developed those as aggressively as maybe they could have in the past, where there’s a healthy online component or a product or service that can be delivered online, I think that, that’s an obvious one. I think overall, they’ll need to be tighter integration between online and offline, online booking, offline fulfillment, online payments, and so on and so forth. I think that, I don’t wanna say anything that is to be construed as an ageist remark, because I’m now in the upper tiers of that, but I think a lot of the newer businesses, this doesn’t immediately or automatically correlate with business owner age, but some of the businesses that have been founded in the last decade have been much, much more tech savvy, deploy technology much more efficiently than some of the more traditional businesses that have been around for a long time, for obvious reasons. So businesses that use technology for their infrastructure, SaaS platforms, are gonna be much more nimble, those that can support a remote workforce. Obviously, people now have to consider how to do that. So that depends, that’s industry specific but I think those that can use, can leverage remote workers, have a SaaS infrastructure, can sell stuff online, that are more nimble and that are more oriented and less intimidated by technology are gonna be the ones that ultimately survive and thrive in sort of, this post apocalyptic period that we’re gonna enter into.

George: It’s a great statement that you made and I wanna dissect one piece there and I think it’s the key component, is the businesses that were more inclined to move to a digital transformation are going to win. And the reason that I wanted to touch on this, I kind of assumed the answer but I don’t think that everybody gets what’s about to occur here. I think that people have been caught up in survival, and dealing with the fact that you’ve been, maybe staring at the same face for the last month, and you haven’t got outside your four walls. But when you look at great moments that have shifted our society, and I mean on this entire planet, ’cause it’s never felt smaller than it does right now because everybody’s experiencing the same thing, there has been some catalyst that drove them to this. Now the reason I bring it up is because, you and I have been professing for a number of years about why you need to make a digital transformation but this could just be the moment where it’s the push that businesses needed to get over that hump and to make that transformation. Do you agree with that?

Greg: Absolutely, I mean, I think there’s been this kind of rhetoric around digital transformation for the better part of a decade, intensifying in the more recent past but you’re exactly right. I mean, I think this is, when we look back on this, this will be a sort of a bright line, separating what was before, what came before from what came after. And I think, many, many things will change but with respect to these digital transformation and marketing and business infrastructure, I’m in complete agreement with it. I mean, it’s just absolutely, it’s a matter of survival now, it’s not a nice to have, it’s not a efficiency thing, it’s really about survival going forward and being able to compete.

George: Right and that’s the message that I was hoping to get out to our audience, so that they can translate it to their customer base. You’ve now been punched in the face, and you have to do something about it because the bruise will go away and then we’ll get complacent, and we’ll forget and then it might happen again. I’m not sure if you’re familiar, about a quarter movie here, “The Day After Tomorrow,” 2004 Blockbuster, Roland Emmerich the guy who did like “Independence Day” when they blew up the White House,

Greg: “Godzilla”

George: And I remember, yeah, “Godzilla,” and I remember a scene in that movie where you’ve got, I think it was Randy Quaid or somebody like that, or maybe was Dennis Quaid, he is giving them the warning and they don’t wanna hear it. And I kind of feel like our health professionals were warning and warning, and warning and we didn’t wanna hear it and then we get, again, I’m gonna use the term punch in the face because I think there’s been a punch in the face for a lot of people. So, I think what will happen is if we even get a sniff Something like this again, it’s just gonna boom, lock down. Do you agree?

Greg: Well, I think yes, I think there’s gonna be a lot of sensitivity. I mean, I’m trying to envision what is the next, period of time look like in terms of actual business operations and customer interactions with businesses but yeah, I agree. They’re talking about like a W recovery, possibly, where you get a balance, and then you get another episode and another lockdown kind of scenario where businesses have to close, whether that happens immediately or not, there will be future similar scenarios that business owners have to contend with, degrees of severity will be uncertain, but it’s absolutely certain that something will happen that is sweeping and impactful.

 

What to Do When We Start Going Back to Work

George: So as the trusted local expert and that’s what we profess that the listeners of this podcast need to position themselves as, we’re gonna go back to business or maybe we’re still at business, and we’re doing remote, like we are doing today, we’re doing a screen share, and we’re having conversation, we’re not face to face. And you’ve been talking to your business clientele, and they’ve expressed that, okay, I get it I know that I’m gonna need to make a transformation but what are some of the things, Greg, that you think that businesses should do first as part of their digital transformation? So we’re heading back to work, what are the things they need to get done first?

Greg: Well, I mean, again, I think this varies a little bit by industry, but at the highest level, hopefully they’ve done a bunch of stuff already. Hopefully, they’ve done all the customer communication, done the Google My Business updates, done the email outreach, done the website modifications, hopefully they’ve done those things. They’re gonna have to do another round of them when they start opening up because opening up, will be in many ways messier than shutting down ’cause it won’t be uniform but I think, they need to take care of employees, they need to ensure the health and safety of employees, they need to figure out how they’re gonna go forward in terms of on premise versus remote work protocols, technology that enables all that stuff. So there’s probably a checklist that is industry specific, if you’re a restaurant, then you’re gonna have to do certain things. If you’re a tree trimmer, an arborist or something, then you’ll have to do different things. And so I think, it will be specific to those businesses, but they have to take care of their employees fundamentally and then they have to really start pushing into the sort of digital tools arena. But I wanna sort of step back for a second because I think all this digital technology and digital channels are about really, communicating with customers and servicing customers. And the fundamental point here is that these businesses really need to solidify and strengthen their relationships with their customers, digital technology can be an efficient delivery mechanism for all of that, but it really is about the customer and making sure those relationships are solid and doing right by the customer because those businesses that do those kinds of things will come out on the other side, and then hopefully, they’ve got the infrastructure in place to succeed, going forward. Kind of the bottom line here, is the customer, connecting with the customer and nurturing, maintaining that customer relationship. One of the critical pieces of advice is, don’t focus on new customer acquisition at this time, focus on your existing customer, that holds true for the business owner, and for the SaaS company or the marketing firm or the agency that’s working with those folks, maintain those relationships. Much easier to work with an existing customer than it is to acquire a new customer. So that’s kind of a core principle that independent of technology needs to be observed and hopefully, the technology facilitates that or enables that.

George: Yeah, you know, technology agnostic, you’re gonna need tech because what we’re facing, and I’m looking at a phased reopen plan right now, it doesn’t matter where it’s from, but it’s got five phases to it and a bunch of businesses are in phases three, four, and five that don’t have a date. So my point is, and you brought it up very clearly there where you were talking about the website needs to articulate that information and now we go back to our data of how many businesses in North America have a bad website, but I digress. Then you also talked about communicating with that customer base, who are going to be pent up to come do things with you, like that pair of shoes that I’m buying as soon as Gord opens the clothing store.

Greg: Or haircuts.

George: And haircuts, but the question will be, are you open or not? And there are a number of ways to communicate that information, again, that’s why I come back to this whole thing, this is the catalyst for digital transformation because as you and I both know, there’s easy ways to be able to transfer that information.

Greg: Yeah.

 

What Industries Can Shift to Being Online Only?

George: So, let’s do one other item that I wanted to make sure we covered off before our time was up and that is, in your experience and when you look at all the data, are we going to see any industries just not exist at the end of this, where it’s just like, no, it’s just gonna go all online, that thing that you were used to doing is just gone?

Greg: I’m sure the answer is yes but you put me on the spot, you promised to do this and now I’m really, I’m on the spot. I mean, I think, so I have a kind of, not an exact answer for you but I think retail is one area where we’re gonna see really radical transformation. So, the big department stores and a lot of the traditional retail chains have been suffering, closing stores, going out of business because e-commerce, direct to consumer brands and other phenomena have been kind of nipping at their heels and encroaching and eroding their business and I think that this accelerates that dramatically. I mean, I think, you’re seeing Neiman Marcus, enter into bankruptcy and you’re seeing other, Macy’s, just laying off all their employees, furloughing their employees and other chains that are really under financial stress. So that industry is gonna be radically transformed. And I think a lot of people have learned to shop for things online that they never would have shopped for, before your carpet guy, perhaps, as an example. And so I think a lot of that e-commerce behavior, we’re gonna see a real bump in e-commerce and many things that were offline before will be online. I don’t know if I would say, an entire industry will completely disappear. I mean, I think this is an accelerant to exist, to pre existing trends. And retail is the one that I think, is gonna be radically transformed.

George: Now, that was what I was trying to get to, is there were already things happening and this now is the catalyst pushed over the top. The other one is, I’ve heard that there are just business people just saying, I’m done. And they were on their way to some sort of retirement exit, something like that, maybe they got some money set aside, and they’re like, I’m probably not gonna get my equity out, just close the doors and be done. Are you hearing any of that?

Greg: Yeah, I was trying to sort of look for the number, there’s a huge number of baby boomers who are business owners, and those folks are on the cusp of retirement in many cases or have retired, but there is this sort of handover from boomers to Millennials, as we all know, Gen X, no business owners in that category, never hear about Gen X in businesses. I’m kidding about that but anyway, there was this generational shift that was going, well, you never do, you hear about Millennials, you hear about boomers.

George: I know, I’m in the forgotten generation, my friend, T bone is the same, we’re forgotten.

Greg: Yeah. So, there’s this sort of generational shift that was going on and this and as you say, I think that a lot of people who are kind of approaching retirement are on the cusp for whatever it was, are gonna say, are gonna throw in the towel and say, I don’t have the energy, I don’t have the wherewithal to go back to this and I’m just not gonna do what it takes to do the total digital transformation. So we’ll see that kind of thing. And I don’t know how many millions that represents, there are millions and millions of these businesses, business owners who are on the cusp of retirement over the next handful of years. And so, that will, those folks will drop out, I think.

George: What I’ve always admired about Mr. Greg Sterling’s presentations at the conventions I’ve been at is he brings the data, he has the insights, and we’ve appreciated getting some of those insights from you today, I think that everyone that has been tuning into this podcast for a length of time will know that I’m a glass half full kind of guy. But I tried today to talk about some of the challenges and get Greg to dig into those so we could understand them. There is a flip side to this, where there’s sectors of business leaving, there’s opportunity that needs to be filled, where there are businesses that are not digitally transforming and they won’t make it, unfortunately, we know that, there are others that will transform and will be very, very successful and will reshape what will be our new economy and I don’t care if you are in Durban, South Africa, or Wichita, Kansas or one of my other favorites, Kutna Hora, Czech Republic, you are impacted by this thing. It’s something that’s just tying us all together and it’ll be interesting to see based upon geography, based upon where you are in your life cycle, if you’re a baby boomer Gen, well, we’re not to worry about Gen X, ’cause they don’t own businesses, and we got Millennials and Gen Z’s who are coming into that, what’s this gonna look like? And we’re just trying to get some insights as to what this might look like on the other side, when we go back to business. So Greg Sterling, thanks for joining us. And we appreciate the insights today here on the Conquer Local podcast.

 

Conclusion

Greg: Thanks for having me George, it was fun.

George: Some great information there from Mr. Greg Sterling. And he’s been on lots of podcasts. He writes on a regular basis, a contributor to many different blogs and content items like Search Engine Land for the last 14 years. So, Greg is bucketing local businesses into three different groups, the group that will be successful coming out of this, are the ones that have the proper search information online, that wasn’t, I knew he was gonna go there with that, because he’d been professing that for years. 

George:He’s absolutely right, by the way, and then the ones that are making purchase, are making commerce available in different ways. So, easiest one is talk about e-commerce, but even curbside pickup or you know, any it’s a little further down the service line, but it makes your experience, the purchase experience different. 

George: Number two, there’s a group in the middle. So businesses that are just kind of hanging on, and I believe that those businesses will now be faced with they have to move to a digital transformation, but we all know that some just won’t. 

George: And then we have the other category of businesses that we just don’t even know how the heck it’s gonna work out and one of those we’ve called travel. So what’s travel gonna look like? I think less people are going to travel, especially internationally. And then the hospitality space, as much as I would kill to go to my local pub and have a beer, actually don’t mind having a beer in my garage. But I do think that because we are a social, like we’re a society, we’re social, we’re still gonna have that, crave that social interaction. 

George: So it’ll be interesting to see how it all changes, because we’re gonna be social, but we’re gonna be sitting along with, “Hey, how you doing over there.” We’ll be a long ways apart. So we have to figure out what those are gonna look like, but I think it’s important to understand that, that I agree with him on those three categories. The successful businesses that will change and adapt, the other ones who don’t really know what they’re gonna do, and maybe they won’t figure it out and then the ones that we just don’t know if that industry is going to ever be the same. And then finally, the idea of what the numbers might look like and he talked about 10 to 15% of local businesses just not being around anymore and that’s just a staggering number. And then not workforce, they’re gonna go to work somewhere else. And so it’s interesting and I really appreciate Greg’s insights because he reads a lot, he’s involved in a lot of these surveys and he’s getting these details right from the street and able to distill it down and bring it to you here on the Conquer Local podcast. 

George: As always, we’re looking for feedback, you can give us feedback through the Conquer Local community and you also can reach out to us directly on LinkedIn. And we appreciate those comments that are coming in on LinkedIn. I had the privilege of hosting Think Tank, through the community in the past here just recently, and it was amazing, speaking to so many folks that are fighting the fight on the street, talking to their customers, listening to the comments that they were having, so if you’ve ever had a chance to attend one of the Think Tanks inside the community, I hope that you continue to come to those and we’re always looking for more first timers. Mr. Dennis Yu hosts those on a regular basis and sometimes they bring in old grizzled up sales veterans like me to be a host as well. Thank you for joining us this week on another edition of the Conquer Local podcast. My name is George Leith, I’ll see you when I see you.