There has long been tension between technology companies and small business, but as Covid-19 threatens economies across the globe these tensions have been on display as never before. Amazon, Uber, Grubhub, and Doordash promise their retail and food service partners expanded markets and new customers, but at great cost to small businesses that already operate on minimal margins. But the real problem isn’t this initial marketing cost, it’s the reality that each new customer these platforms attract is likely to purchase through the platform moving forward, making a one-time marketing cost permanent. And at the same time, the convenience of using a single online ordering system pushes existing restaurant customers, even the most loyal ones, to migrate to these platforms, further undercutting margins and threatening the sustainability of the business.
Tech platforms depend on scale – density is required to make their models profitable, which is why new tech is almost always rolled out in cities first before eventually migrating to suburbs, exurbs, and rural communities. Scale allows customers to negotiate more favorable rates, so big companies consistently get a better deal on tech services, while the smallest customers lack the leverage to strike similar deals. Nothing here is surprising, but it all adds up to a huge burden on small businesses, especially in more rural communities.
What tech companies can (and should) do