Increasing the “digital quality of stay” in our cities and regions starts with optimising the online visibility of available goods in local retailers. None of this has anything to do with the current trend vocabulary Smart City or even artificial intelligence. Local or regional online marketplaces are a basic infrastructural service for commercial locations — no more, but also no less.

What sounds simple, however, is in practice a tough struggle for funding, customer acceptance, technical interfaces in inventory management systems, political authority, conceptual coherence and — last but not least — the ability of urban and entrepreneurial actors to cooperate. From a technical point of view, local digital initiatives are not rocket science, but the necessary change management by individual actors is sometimes criminally neglected. This becomes apparent at the latest during the sales phase of an infrastructure provider, when retailers do not flock in in droves to be part of the generally well-intentioned online project.

The following points should therefore be given particular attention when establishing cooperative digital sales infrastructures:

Due to the chicken and egg problem (initially few products and retailers), staying power is required when establishing a local or regional online marketplace. This can only grow organically through the continuous acquisition of participants from retail and service sectors and through cooperation between the infrastructure provider and network groups, manufacturers, suppliers and wholesalers.

Ultimately, the lack of consistent product data, its preparation and provision, and the lack of technical data

Equipping owner-managed retail is a key obstacle to growth. A business owner willing to participate should therefore invest in technical systems (electronic inventory management, ERP, CRM) with which he can operate efficiently on the local/regional online marketplace. This system investment gives him further leeway to shape his own digital future — whether by participating in wide-reaching global online marketplaces (interfaces), through more customer knowledge (customer data) or more efficient business processes (e.g. preparatory accounting, warehouse management and order management).

Advertising measures based on larger media services (print ads, radio commercials, etc.), which go beyond information flyers, merchandise, Facebook, newsletters or search engine optimization, only make sense when a relevant breadth and depth of the product range has been achieved.

Chain stores can make a valuable contribution here due to fundamentally better system requirements, but the project management of a digital city initiative must be able to build a bridge between owner-managed specialist retailers on the one hand and branch retailers on the other. Many measures to tie up local purchasing power can only be implemented in the future with strong local partners such as financial service providers or energy suppliers, with charitable institutions (local supply function) and, of course, with municipal institutions.

“In the future, however, it is clear that a digital city initiative must not remain a marketing model subsidized by funding, but must be self-sustaining in the long term.”

It is helpful to also attract local celebrities from politics, culture and business as advocates (Local Celebrity Endorsement) in order to give the local online brand the necessary support even with a limited advertising budget.

Digital umbrella marketing for the retail location (including management and operation of a local online marketplace) could be set up as part of a cooperative organization of stakeholders — not least to avoid international corporations in the digital industry acting as gatekeepers of any digital infrastructure of the quasi-public “online-local” space with a local supply function in the medium term. In other words, the city should not jeopardize its gatekeeper function for infrastructure services in the digital sector either. eBay is currently only managing to establish its “eBay City” program with moderate success, but Amazon could be more relevant to owner-managed businesses in the long term with “storefronts” from one day to the next. Even the up-and-coming online grocer from the Netherlands picnic will certainly not continue its venture-capital-driven expansion in this country against the backdrop of the milkman romance.

Recourse to an established local commerce infrastructure provider is recommended for IT cost reasons alone. A white label solution, an online marketplace to be managed by a city administrator or operating company, and a coherent logistics concept are minimum requirements for the infrastructure provider.

Local (IT) service providers — assuming competence — are available as sparring partners for the initiative for a wide range of accompanying measures (preparation of product data, photo work, company-specific social media marketing, installation of inventory management systems, etc.).

Without Kümmerer, nothing works at all. Continuous support and moderation through project management and the professional know-how offered are just as crucial to success as financing this “Kümmerer 2.0”, for example as part of a public-private partnership.

Conclusion:

Digitalization and its protagonists from the Internet economy — above all Google and Amazon — are changing our cities and regions more fundamentally than we would like. As a counterpoint, local commerce initiatives form a digital sales and communication network, including an institutional framework and experts, so that local companies can develop cooperatively within it. This requires courageous decision makers in the town hall, trade ready for change and appropriate digital and moderation skills on the part of carers in city marketing organizations, city management, trade associations or economic development agencies. The most important cooperation partner, however, is the customer. You won't be able to keep it with outrageous window dressing and perpetual merchant lament — but with technical-conceptual excellence, which is always a valuable investment in the future of regional value creation.

About the author:

Andreas Haderlein, born in 1973, is a business journalist, book author and independent innovation consultant. Among other things, he was the driving force and co-project manager of the national pilot project “Online City Wuppertal” from 2013 to 2016 and is considered the most prominent thought leader on digital strategies for cities, regions and municipalities. His latest book “Local Commerce: How Cities and Inner-City Retail Master the Digital Transformation” was published in 2018.

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