The Convenience Economy Is Forever Changing The Way SMEs Operate – For The Better
As the convenience economy continues to evolve, what seemed impossible just 10 or even 5 years ago is now not only possible — it’s expected.
Armed with powerful mobile devices, and almost unlimited internet access, consumers in Canada and around the world expect the ability to purchase virtually any good or service, anywhere, within just a few clicks or taps of the finger.
Moreover, what began with predominantly product-focused transactions has increasingly moved toward services, accelerating the rise to what’s been called the “convenience economy.” In addition to clothes, home goods, or electronics, consumers today can order a ride downtown, get a hot meal delivered from their favorite restaurant, or even schedule a haircut in the comfort of their own home.
This has revolutionized the ways in which Canadians consume goods—and how small-to-medium sized businesses service their customers.
Today, “convenience” means digital
Whether product- or service-oriented, the convenience economy is accelerating the transition from physical forms of money to digitally-enabled transactions. It is rapidly consolidating all points of purchasing to a single source: a consumer’s mobile phone.
In reducing traditional barriers to purchasing, the convenience economy is amplifying the rate at which people purchase and consume goods. This strong shift toward digitally-enabled offerings is something I’ve closely experienced—first with my ecommerce site Toothbrush Subscriptions and now with my most recent startup Cribcut.
With my first business, digital offerings were well under way but far from the norm; today, they’ve become non-negotiable. Businesses must offer their services and products digitally or get swept under the rug by those that do.
For businesses, this has reduced barriers to entry and driven an entirely new business model. It has acted as a great equalizer for small-to-medium-sized enterprises, empowering them to compete with much larger brands on relatively even terms.
Anyone who hosts a service or a product on an app—whether it’s a local diner on Uber Eats or an independent mobile stylist on Cribcut—has an equal chance of enticing prospects. Essentially, the convenience economy gives businesses of all sizes the opportunity to convert customers based largely on the quality and value of their offerings. It’s no longer all about how much you can spend on marketing.
Through P2B apps for instance, SMEs are now able to tap into large markets that would have previously been out of reach. By digitally offering products to consumers, a significant market shift has occurred: companies can now seamlessly attract consumers who are actively searching for their delivery-based services with very few resources needed.
Also important is the way in which the convenience economy has streamlined business operations. Digital payments simplify accounting for SMEs, allowing them to seamlessly track and manage their value chain and cash flow. Even as consumers spend more, businesses can maintain accurate accounts and projections without increasing personnel costs.
In turn, better data on real-world consumer behavior leads to smarter and more targeted marketing. Because companies that collect digital payments know exactly which customers spend how much on what, it’s not hard to see why a company like Uber has a clear marketing advantage over traditional taxis.
What’s next for the convenience economy?
According to research from the IMF and World Bank, more than 81 million CAD will be processed through digital transactions in 2019 alone, a figure that is projected to grow to more than 107 million CAD by 2023. Another report by the UN points out that worldwide credit and debit card use have declined since 2014—but not because consumers are going back to cash. Instead, more people, especially in China, are turning to e-wallets, mobile money, and alternative forms of digital payment for quick and seamless consumption.
Across virtually all indicators, it’s clear that the move toward digital will only gain momentum from here. And from my experience, it’s not just millennials who are digitally ordering toothbrush subscriptions or getting at-home haircuts, but Generations X and Z as well.
That’s why marketplace businesses like Cribcut are so valuable: they’re bringing the offline world online—to everyone. It already happened with innovative industries, but now the more antiquated service areas like hair and massage are primed to be disrupted because the one who has the power, the consumer, is demanding it.
When even the late majority begins to expect faster, safer, and more convenient service, a wallet-less, service-driven world predicated on quality no longer seems so far-fetched.
It’s hard to overstate how revolutionary the emergence and expansion of the convenience economy have been for the status quo. From mom-and-pop shops to multinationals, from established SMEs to growing startups like Cribcut, the message is clear: it’s no longer business as usual.
David Howe is CEO and Co-Founder of Cribcut – a marketplace startup connecting clients and stylists for at-home and office hair services. Cribcut has raised over $1 million in funding and has stylists in over 25 cities across Canada and the U.S.