Vertical Markets, Mobile Transactions and the ‘Unbundling of Local’

Earlier this week BloomNation, an online marketplace for florists, announced $5.6 million in funding on top of an earlier seed round of just over $1.6 million. In one sense this is just one more startup entering an already crowded e-commerce segment.

But viewed from a slightly broader perspective, it’s the potential appearance of another vertical brand that connects buyers and sellers (locally) and offers SaaS-based tools and services to help independent florists better market and manage their businesses. Call it the “unbundling of local” 2.0.

The 1.0 version was characterized by the emergence of online competitors to local traditional media, which were mostly, though not exclusively, horizontal directories and local search sites. The new wave consists of “platforms” that typically offer consumer transactions and core business services such as scheduling, CRM and/or payments for local merchants.

There have always been verticals (e.g., and e-commerce with offline fulfillment (e.g., Orbitz). But there’s something new going on here, driven in part by the the maturity of the internet and critical-mass mobile adoption.

From the outside BloomNation doesn’t look very different from 800-Flowers or FTD. But it’s a different animal and representative of larger trends in the market. BloomNation is differentiating by, among other things, letting local florists keep more money than the bigger services. It also provides florists with a free website and a host of tools including a POS system, CRM, inventory management and email marketing.

According to TechCrunch a consumer app is coming and, of course, that app will feature mobile ordering and in-app payments. In-app payments is a key feature of this 2.0 trend. One of the main benefits of Uber, the exemplar of much this, is the in-app transaction that happens automatically in the background.

Clustrix food ordering

E-commerce database provider Clustrix recently surveyed 500 US adults about online shopping behaviors. One of the interesting findings is that nearly two-thirds of consumer-respondents said they had used mobile food ordering and delivery services.

Among other high profile apps such as Starbucks, Groupon and Uber, in-app food ordering is educating and acclimating people to e-commerce for local services. Over time more consumers will want the convenience of paying for real world services or goods with apps or their phones  — NFC payments will follow in-app payments for offline services — and not dealing with the tedium and inefficiency of the typical register interaction. Grab and go is the new model.

Most of the newer local-vertical marketplaces include consumer payments and are not simply directories of local business listings — they’re “platforms.” Yelp is in the process of making this transition. OpenTable had scheduling and is adding payments for a more holistic mobile-user experience.

Another thing that these local-vertical marketplaces do is simplify marketing for SMBs. While they don’t substitute for business listings syndication, website development, blogging, SEO and reputation management, they offer that prospect over time. However, the vertical marketplace or app executes the potentially costly and complex online marketing, develops the consumer brand — and the SMB rides its coattails. (This is double-edged in that without a brand of any kind the SMB may be reduced to a commodity provider of XYZ service.)

It’s not a foregone conclusion that BloomNation will succeed. If you build it they don’t always come, especially in a noisy competitive market. Indeed, most of these vertical marketplaces will probably fail. However they’re very different than most of their 1.0 predecessors because of both their consumer and merchant features and propositions.

Analysts like to discuss the “bundling” or “unbundling” of some horizontal segment or portal. Indeed, people have been talking about the “unbundling of Craigslist” for several years — long enough for many of the startups mentioned in that discussion to have failed. Yet mobile apps in particular offer the opportunity to introduce new local-vertical marketplaces and attract consumer usage and loyalty, while online services for merchants offer new models and value on the B2B side of the equation.

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