December 21, 2011
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Here are Netscape co-founder Marc Andreessen's predictions for 2012: Be afraid, traditional retailers. Be very afraid.
And software startups, this may be your year. (As Andreessen wrote in The Wall Street Journal in August, "Software is eating the world.")
Andreessen (pictured), also a co-founder in Silicon Valley's powerful Andreessen Horowitz venture fund, told CNET that "2012 is the year that retail—retail stores—really starts to feel the pressure... If I own mall real estate or retail stores in cities, or if I own chains like electronics chains, I'd be concerned... I think electronics and clothes are going to be a real pressure point."
The pressure, of course, is from e-commerce—"as these category killers emerge in superverticals," he said. The retail store operates at low margins, and the model has a fundamental problem, which is that every store has to have its own inventory, and every store is also a warehouse: the economic dead weight that took down Borders.
This is good news for Amazon and other e-commerce giants, and could be for startups providing "a very differentiating customer experience that is much more like shopping as entertainment," he said.
Who's he thinking of? Companies such as daily deals site Fab.com [in which Andreessen is an investor], which present a "whole excitement element that the first generation of e-tailers were not very good at," he said. (He also gave props to eyeglass startup Warby Parker, which is not one of his investments.)
Startups that will do well will be those that are more appealing to "normal people" (his words) who like to go to the mall and try on clothes with friends and then come home and brag about what they bought on sale.
The pressure on traditional retailers also provides opportunity for software startups: those that help companies sell better, or keep better control of inventory—and those that help get more companies selling online.
Andreessen also defended Groupon, another investment of his.
"People have really underappreciated what Groupon has done, which is they've created a way for small businesses that aren't online to spend money online and be able to dial up customers on demand," he said. "That's a really big deal."
And another prediction: Feature phones are going the way of the dinosaur and the telegram.
“I think 2012 is the year when consumers all around the world start saying no to feature phones and start saying yes to smartphones,” Andreessen said. “Feature phones are going to vanish out of the developed world and over the course of five years they’ll vanish out of the developing world.”
Image credit: J.D. Lasica/SocialMedia.biz
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