Can P2P Retail Be A Thing?

Starting a store, even a digital store, can be an awful lot of work. While the digital economy is full of firms like Square, Stripe, Shopify and the like that can make it easy to accept cards and get a digital storefront up and running — and there is no shortage of marketplaces like Amazon and eBay to set up shop — it still isn’t easy work, just work that requires somewhat less technical skill at the outset to undertake.

But for the first-time potential digital entrepreneur, that is only where the challenges start. There are also the not-so-small matters of deciding what to sell, whether to sell on one’s own site or on someone else’s marketplace or via a mixture of both, how to price, how to deliver the goods to the customer’s door in a timely manner and — most importantly — how to get the customer to the shop and ready to convert.

“The barriers for entry are just too high,” Eric Senn, CEO at Storr, told PYMNTS in a recent conversation — especially for the most digitally-connected and primed group of consumers and potential digital entrepreneurs out there, young millennials and older Gen Z members.  People who are 17,18,19, or even 22 or 23, he noted, more likely than not don’t have the wherewithal to start a full-fledged digital commerce shop. Very likely they might be a little preoccupied with attending college, or in some cases high school.

Senn sees that as a lost opportunity, especially in an era where larger and more familiar retail channels with storied names like Sears and Macy’s are struggling and failing.  They aren’t reaching consumers, he noted, particularly young ones. But, he believes, their peers can — and in a way that would be difficult for any brand-led marketing effort to match. The trick, he said, is finding a way to tap into that potential.

Storr, he noted, is taking a shot at doing that by building a P2P retail platform that makes it easy for literally anyone to get an online shop up, running and functional with no more than a few clicks.

How P2P Commerce Works

To get started, users download the Storr iOS and Android App, go through the registration process to create their store — and then choose inventory to stock it with.  That inventory comes care of affiliate brands — 175 brands, to be specific. Available brands include Birdies, Jonathan Simkhai, RE/DONE, Rosie Assoulin, Solid & Striped and Spiritual Gangster. Brands set the rate for seller commissions — that must fall between 15 percent and 30 percent — and the seller picks the items from the inventory catalog they wish to offer.

Once the good is sold, the seller’s work is done — the brand is responsible for managing inventory, shipping and returns while Storr manages all the payments details on the backend.

Affiliate programs with brands exist of course, and Storr’s model resembles them.  The difference, he noted, is ease of access, as brand affiliate programs tend to come with a lot of hoops to jump through and restrictions.  There is also, of course, the wide world of influencer marketing with outsized followings on YouTube and Instagram — but that is only an option for people who have follower counts in the millions and tens of millions.  Other than that, brands aren’t interested.

But they should be, Senn said, because aggregated across all those social media users with follower counts in the hundreds and thousands, there is a lot of retail potential waiting to be unlocked.

“We see these massive channels that are failing, because they are out of step with consumer needs.  Brands may not think they need that kid with a few thousand followers in Minnesota, but if at the end of the day he can convert more purchases than a massive national campaign that people see but that doesn’t register, he is the better investment.”

Moreover, he noted, trust and personalization is the currency of the realm in a lot of digital purchases — it is why influencers can build these massive follower counts. Everyone has been on a site like Amazon and seen a collection of ads and projects targeted to them that they can’t understand.  Storr merchants who are running these up-and-coming micro shops for their small but close following, he noted, have that trust relationship going in and can tailor that experience.

“In a world where personalization is everything in commerce, P2P take that to the logical conclusion of commerce with a personal relationship.”

The Complex Landscape

For a brand, Senn said, the appeal of the signal boost is obvious.  Storr is designed to take the pressure out of managing these affiliate relationships so that what they are being given a chance to do is help carve a P2P niche into the expanding world of social commerce with very little risk or downside.

But little risk is not no risk.  We wondered about the situations where brands perhaps don’t want certain people to be sellers associated with them.  It was less than a year ago, for example, that companies like Lexus and Nabisco were demanding Google not place their ads on sites for hate groups and conspiracy theorists. PayPal CEO Dan Shulman has been an outspoken advocate about why PayPal won’t process payments for hate groups, and Amazon has long since banned certain groups from selling on its marketplace and is one of several entities (along with Visa and Mastercard, among others) that work hard to ferret out transaction laundering by groups that pretend to be selling one type of merchandise but are really selling far more toxic stuff.

Brands don’t want to be associated with certain types of endorsements — not all endorsements are those that brands want to accept. A site that makes it easy for anyone to get up and running means there is a risk of stores with sketchy associations accessing an easy fundraising tool.

That is a risk, Senn noted, and one they screen for and allow brands to have discretion over.  Merchants can be blocked or banned for violating Terms of Service that ban hate groups.

“But we think the right starting point is openness, and then peeling out the exceptions — not starting with a lot of locked doors and hoops to screen out the relatively small number of bad actors.”