AI Is Already Changing Online Marketplaces
Platforms like eBay and Etsy are using artificial intelligence to make it easier for shoppers to discover things they didn’t even know they wanted.
Good Morning!
Here are today’s highlights:
Lou Mosca suggests breaking your fiscal year into 13 periods instead of 12 months.
Smallbiz tech is helping more businesses charge for no-shows.
Florida is banning lab-grown meat, because it’s “disgraceful.”
MANAGEMENT
In this week’s video, Lou Mosca talks about financial reporting: In my short tenure as an accountant, I learned one thing that I never forgot: Manage by the numbers. If you've been following me, you know that managing by the numbers is one of my business-advice mantras, next to counting your pennies and KPIs. In our experience working with owners all across the country, we've noticed a common trend: frequently, financial reporting isn't a priority. This lack of attention often leads to a lack of discipline when it comes to managing cash flow, a crucial aspect of any business's survival and growth. When owners don't like their numbers, they don't manage it. Here's one way you could fix that.”
“I like having flash reports completed every week and cash flow reports every day. Micromanage your numbers.”
“Rather than breaking the year into months, break it into 13 four-week periods. When you break it down into 13 equal periods, you know payroll goes out twice within that span, making it less complicated with months that have three payrolls.” CONNECT WITH LOU
ECOMMERCE
AI is expected to supercharge ecommerce: “Shopping on online marketplaces such as eBay and Etsy, or even secondhand clothing seller ThredUp, can feel like treasure hunting at a giant flea market, except even more daunting as there are millions of unique listings to sort through. So it is no wonder that online marketplaces are eager to add artificial-intelligence functionality to their search bars. The technology has the potential to behave like a ChatGPT version of a personal shopper, acting on sentence commands to come up with relevant results and digging up products the consumer might not even have known existed on the platform.”
“Earlier this year, Etsy launched Gift Mode, an AI-powered feature that lets shoppers click a few details about the person they are shopping for. The marketplace could certainly do with some help sifting: Etsy has more than 100 million listings and the average search result yields upward of 10,000 items.”
“In April, eBay—which had about 2 billion live listings as of year-end 2023—introduced a generative AI-powered feature called ‘shop the look’ that gives users a selection of curated outfits based on their shopping history. eBay last year launched a feature called magical listing that allows sellers to instantly populate detailed product information through generative AI based on the product’s title, category and other items.”
“Jamie Iannone, CEO of eBay, said at an industry conference in March that more than 90 percent of the sellers accept the automatically generated content, some with edits. The company is working on a version that can spit out a product description based on the image of the product.” READ MORE
HUMAN RESOURCES
Hiring slowed in April: “U.S. employers added a seasonally adjusted 175,00 jobs in April, the Labor Department reported on Friday. That was far less than in March, when gains exceeded 300,000, and also below what economists had expected. The unemployment rate ticked up to 3.9 percent from March’s 3.8 percent Wages also rose less than anticipated, increasing 3.9 percent from a year earlier after rising 4.1 percent in March.”
“Friday’s report is sure to stir immediate debate among economists and investors about whether the labor market is merely cooling in a welcome fashion or starting to show more serious strains under the pressure of higher interest rates.” READ MORE
REGULATION
Florida Governor Ron DeSantis signed a bill banning lab-grown meat: “The bill, S.B. 1084, makes it ‘unlawful’ for people to ‘manufacture for sale, sell, hold or offer for sale, or distribute’ lab-grown meat in Florida. ‘Florida is taking a tremendous step in the right direction by signing first-in-the-nation legislation banning lab-grown meat,’ Florida Commissioner of Agriculture Wilton Simpson (R) said in the press release. ‘We must protect our incredible farmers and the integrity of American agriculture. Lab-grown meat is a disgraceful attempt to undermine our proud traditions and prosperity, and is in direct opposition to authentic agriculture,’ Simpson continued.”
“Good Meat, which describes itself on its website as ‘the first company in the world to sell cultivated meat,’ said it was ‘disappointed’ that DeSantis ‘signed into law the criminalization of cultivated meat in’ the Sunshine State.”
“‘In a state that purportedly prides itself on being a land of freedom and individual liberty, its government is now telling consumers what meat they can or cannot purchase,’ Good Meat said in a post on the social platform X.” READ MORE
Can reforestation be more profitable than ranching? “The residents of Maracaçumé, an impoverished town on the edge of the Amazon rainforest, are mystified by the company that recently bought the biggest ranch in the region. How can it possibly make money by planting trees, which executives say they’ll never cut down, on pastureland where cattle have been grazing for decades? ‘We are killing pasture that a lot of farmers need,’ said Josias Araújo, a former cowboy who now works in reforestation, as he stood on a patch of soil he was helping to fertilize. ‘It’s all strange.’ The new company, which is also Mr. Araújo’s new employer, is a forest restoration business called Re.green. Its aim, along with a handful of other companies, is to create a whole new industry that can make standing trees, which store planet-warming carbon, more lucrative than the world’s biggest driver of deforestation: cattle ranching.”
“Re.green plans to restore native trees in deforested areas and sell credits that correspond to the carbon they lock away. Those trees will be protected, not logged. Then, businesses will use those credits to offset their own greenhouse gases in emissions accounting.”
“The bet hinges on the success of a system that’s being built from scratch and comes with some big challenges. Measuring the carbon held in trees and soil is complex. And, many conservationists worry that carbon credits could easily be abused by companies that want to appear environmentally conscious while sticking with fossil fuels.”
“Environmental disruptions, combined with growing interest in carbon credits, have created an opening to challenge the beef empire’s hold on vast stretches of the rainforest, experts say. According to a 2023 report by BloombergNEF, carbon markets could be valued at $1 trillion by 2037, double what the global beef market is worth now.” READ MORE
GOVERNMENT CONTRACTING
Some good news and some bad news: “The latest federal procurement scorecard is in and small-business contractors hit another record—nabbing the most federal contracting dollars yet. But an ongoing trend continues: the number of small-business owners themselves contracting with the federal government is still on the decline. First, the good news: federal agencies doled out $178.6 billion to small-businesses during fiscal year 2023, ending on Sept. 30. That's up $15.7 billion, or nearly a 10-percent increase from the record $162.9 billion seen during the prior fiscal year; and about 16 percent more than the $154.2 billion booked during fiscal year 2021, also a record year. Small businesses received about 28 percent of federal contracting dollars, surpassing the government's 23 percent goal.”
“This year's procurement scorecard arrived early, just in time for National Small Business Week. There were 61,298 small-businesses that secured prime government contracts in the past fiscal year, a 2.2 percent dip compared with the 62,670 that nabbed contracts in the prior year.”
“A confluence of factors contribute to the challenge of winning competitive federal contracts: Small businesses must go up against larger, more established players, for one, putting them at a disadvantage since they don't have the same resources to compete. Contract bundling also shoulders some of the blame—the phenomenon occurs when agencies consolidate contracts together, making the contracts too large for smaller enterprises to take them on.” READ MORE
CUSTOMER SERVICE
Technology is helping more businesses charge no-show fees: “Getting a haircut used to be a low-tech operation at Harbor Barber, where stylists prefer scissors to clippers and appointments were scheduled by pencil and paper. But owner Greg Krupa had to go digital to stop no-show customers from trimming his profits. These days, missing an appointment can cost customers up to $100—double the price of a normal haircut. Krupa doesn’t care if the new policy at his Huntington Beach, Calif., barbershop earns some negative reviews or costs him a few customers. ‘We’re not like Supercuts, where I have to worry about your corporate feelings,’ he said.”
“Once the domain of doctors’ offices and the occasional restaurant or hotel, fees for flaking on appointments are spreading to salons, personal trainers and beyond. More beauty professionals charge cancellation fees, reaching 16 percent on Square’s payment platform last year, up from 5 percent in 2021. Restaurants on reservation platform Resy that charged at least one cancellation fee more than quadrupled from 2019 to 2024.”
“Technology that streamlines booking and payments has made it easier to track late arrivals and no-shows. Many of the platforms are normalizing fees that help small businesses turn the tables on flakes. Square, which advertises these features, allows businesses to charge up to $500 for cancellations.”
“StyleSeat, a booking platform for cosmetologists, lets stylists and makeup artists choose flexible, moderate or strict cancellation policies, which can charge customers up to 100 percent of the service price for cancellations with less than 24 hours’ notice. Wyzant, a platform for tutors, asks users to set their cancellation policy as part of creating an account.” READ MORE
RESTAURANTS
Months after Keith Lee, the influential TikTok food critic, came to Dallas-Fort Worth, the restaurants he visited are still making sense of his impact: “In late January, TikTok star and food reviewer Keith Lee rolled into Dallas, bringing a maelstrom of social media fervor and millions of eyes to North Texas’ restaurant scene. Lee, who is known for highlighting small, minority-owned businesses, visited and critiqued nearly a dozen restaurants across Dallas-Fort Worth, sticking to his review format of anonymously ordering takeout, eating it in the privacy of a car, and posting a video of his real-time thoughts prefaced with his trademark exordium: ‘I got it. Let’s try it.’”
“To understand Lee’s impact, The Dallas Morning News talked with the owners of the 10 North Texas restaurants he reviewed. Their experiences — varied, but patterned — reveal a fascinating reality for independent restaurants in the era of social media criticism. It’s a reality in which a singular opinion, with enough traction, can save or vanquish a business overnight.”
“Of the 10 Dallas-Fort Worth restaurants that were paid a visit by Lee, half had lines out the door within hours of Lee posting a review. The uptick in business at every one of these restaurants has largely held steady. Sales at both locations of Hutchins BBQ, one in Frisco and the other in McKinney, are up 40 percent from last year since Lee called the food ‘goddamn delicious,’ said owner Tracy Hutchins. ‘It’s truly incredible,’ Hutchins said.” READ MORE
THE 21 HATS PODCAST
How Do You Make Innovation Happen? The wrong way to make innovation happen, Ty Hagler says in this week’s special bonus episode, is to have a great idea and then go all-in trying to create it. That, he says, is a really expensive way to find out if your idea works. The right way to pursue innovation, he says, is to take your idea to customers so you can assess the pain points and opportunity spaces before proceeding. Hagler, who is founder and CEO of Trig, an innovation and design firm in North Carolina, also says he’s learned that the problem with focus groups is that the more people you have in the room, the less valuable the conversation tends to be. In fact, he says, one-on-one is best.
He also says that brainstorming remotely can actually work better than brainstorming in-person. Oh, and by the way, if your Mom tells you she loves your idea and will definitely buy your product as soon as it’s available, she’s probably lying.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren