The night before Cyber Monday, Amazon CEO Jeff Bezos pulled some marketing wizardry when he announced on “60 Minutes” his Seattle-based company’s plan to someday use drones to deliver packages to customers’ homes all over the United States. Whether a mere publicity stunt, or one day a reality, Bezos’s claim spoke to the astonishing growth potential of e-commerce, as sales migrate online. But Seattle isn’t the only region with a growing retail-tech industry. Boston may not have Bezos’s flying “octocopters,” but it is quietly establishing itself as a center of retail tech. Policy makers should take note, because this industry is vital to Massachusetts’ future growth.
All technology companies lionize their humble origins: garage, dorm room, basement — the grittier the better. But the founders of Wayfair.com, the home furnishings retailer that is Boston’s largest e-commerce outlet, have a more propitious claim: Their big idea was hatched in a baby’s nursery. Today, Wayfair’s founders, Niraj Shah and Steve Conine, each live in the South End with their respective families. And yes, they do shop in actual stores. Shah admitted he recently browsed in the Tannery — take that Zappos.com!
Wayfair may have only a fraction of Amazon’s sales today, but it is the number one retailer in the home furnishings niche. It ranks 10th in the country for web-only retail sales, according to Internet Retailer, and is rapidly gaining market share. Its world headquarters is located on Huntington Avenue, where the firm employs nearly 1,000 full time employees.
Wayfair is not alone. Boston-based Rue La La is the number one fashion flash sale site, where registered users shop sales for a designated period of time. Likewise, Karmaloop is the number one online streetwear retailer. In all, Boston-area online retailers brought in over $2.7 billion in sales last year. Adjusted for population, Massachusetts sales are third only to Amazon’s home state of Washington, and Utah, where Overstock.com is located. And that’s not even counting Staples, which came in second to Amazon, with sales of over $10 billion, more than half online.
But what is perhaps most impressive about this emerging footprint of Boston-based startups is the wider ripples these companies are having on local manufacturers. Karmaloop’s CEO Greg Selkoe, whose company began in his parent’s Jamaica Plain basement and now employs 300, makes a point of promoting local clothing designers like Society Original Products and will be soon be selling Tonya Mezrich’s new line.
Companies like Cambridge-based The Grommet, which markets unique artisan products, pride themselves on showcasing local “makers.” The Grommet holds a pitch event at Fenway Park so that local businesses can compete in the everyday global online marketplace.
Nonetheless, much of the attention given to e-commerce is negative, about the competition these online outlets present to traditional brick-and-mortar businesses and the potential loss of Main Street-style stores. But doing business online and helping traditional retailers are not mutually exclusive. Even Jon Hurst of the Retailers Association of Massachusetts — the lobbying group that is trying to prevent an increase in the minimum wage — agreed, recently telling Paul Guzzi on NECN that traditional retailers need to be online and able to connect to smartphone apps.
It’s easy to lump e-commerce into monolithic entities like Amazon and declare that they are hurting mom-and-pop stores. But locally, those clicks are translating into jobs. And more are coming. Recently, Framingham-based TJX Companies, which owns Marshalls, T.J. Maxx, and HomeGoods, recently announced an aggressive online strategy. With double-digit yearly increases in online sales, this is an industry that will be here for a long, long time. And in Massachusetts, that is a very good thing.
Mike Ross is a former Boston city councilor.