New technologies allow entrepreneurs to scale up quickly and easily - and without prohibitive cost, notes Mark Hopwood
The last 10 years have seen a great deal of change in ecommerce and its offering, and yet a large percentage of smaller retailers in grocery haven't yet grasped that they, too, could have an online offering good enough to compete with the retail giants.
With the development of Open Source and Cloud Computing things are changing rapidly, and for the better if you're a smaller retailer.
In the past the technology available was extremely complicated, which of course had an effect on what you could get for your money. The cost implications for smaller companies to be able to enter ecommerce could be prohibitive: £200k to £300k was not unusual as a year-one budget.
Cloud Computing was too "bleeding edge" and insufficiently robust, and Open Source ecommerce lacked a credible, scaleable offering.
But that has all changed in the past 12 months. Many businesses are now based almost exclusively in Cloud, and Magento is going from strength to strength as a solid and functional ecommerce solution.
The two obvious areas of online fmcg that could benefit from these new technologies are start-ups such as graze.com, which delivers high-quality snacks on a subscription model, and smaller retailers who have the potential to be picked up suddenly when they become fashionable an independent wine retailer mentioned in an article in The Observer, or an organic producer, for example.
The key thing is that these technologies allow people to scale up quickly, with limited effort, and with costs in proportion to their level of business. The retailer can concentrate on scaling up production and distribution without having to worry the website can't keep up.
Retailers and their business consultants have a good idea how much of their turnover they are able to commit online, but it is crucial to align this budget to actual costs such as the set up, ongoing and marketing costs. Now companies are able to save on infrastructure (Cloud) and licensing costs (Open Source) while getting better quality (Open Source), which ultimately means they can get a lot more for their money.
Mark Hopwood is technology and operations director at Pod1.