October Focus: Is Local Commerce Vertically Challenged?

This post is the latest in our “Vertical Challenge” series. It’s our editorial focus for the month of October, including topics like vertical-specific strategies and the pros and cons of zeroing in on local business categories. See the rest of the series here


Local media, advertising, and commerce have long been referred to as a monolithic thing that we in the biz all simply call “local.” You know the shorthand if you read Street Fight. But it’s a bit of a misnomer because the local commerce universe is really made up of several galaxies.

That includes various products that help local businesses, both SMBs and multi-location brands, acquire and keep customers. It’s everything from SEO to listings management to point-of-sale systems. Beyond product function, there’s also vertical segmentation, which encompasses diverse industries from pizza shops to plumbers.

This will be Street Fight’s editorial focus for the month of October. You may have realized we’ve been assigning themes to each month — September being about mapping, August about the connected car, and so on. These are all tentpole issues in local media, advertising, and commerce.

Back to vertical segmentation and strategies, we’re seeing it all over the place. As specialized verticals like cannabis continue to emerge, so too do the vendors that help them operate and get customers. But verticalization isn’t limited to new industries, as longstanding vertical players like MindBody and OpenTable demonstrate.

Verticalization is also a tenet of the on-demand economy. On-demand networks connect buyer and seller for a cut of the transaction, as opposed to the traditional customer acquisition model (advertising). But either way, these services have vertical focal points such as ride-hailing (e.g., Uber) and food delivery (e.g., DoorDash).

When it comes to verticalization, there’s a bit of a tradeoff. The pros in vertical specialization include having an edge in product focus. Zeroing in on a vertical, such as what Slice does with pizza shops, brings a certain intimate knowledge and set of nuanced best practices that continue to evolve.

Left to right, Angus Davis, CEO, Upserve, Ilir Sela, CEO, Slice

But verticalization reduces market size by fragmenting a total addressable market into smaller chunks. A counter example of successful “horizontal” players are companies like Google, Yelp, and Square. The services they offer to local businesses are basic needs (like payments) that cut across verticals.

So, to the question of whether tech providers should achieve category depth or breadth, the answer is yes. In all seriousness, it could depend on the vertical. In highly specialized operations, or anything with regulatory oversight like healthcare, legal or finance, vertically-focused players like Avvo tend to shine.

And sometimes there can be sub-verticals. Here we’ll once again invoke our friends at Slice. Though broadly within the QSR category, local pizza shops have a certain degree of nuance that Slice has been able to address with a highly specialized set of marketing and operational functions it calls “Slice OS.”

“Today we solve mostly for the demand component of the business, but also some back-office stuff,” Slice CEO Ilir Sela told me on the Heard on the Street Podcast. “As we go deeper into that relationship, we’re now launching some supply-side marketplace economics for the owners. They’re all buying pizza boxes individually. Why not buy them together?”

This question of verticalization also maps to various business functions. Companies selling booking platforms may do so for salons or spas versus doctor’s offices. But in advertising, Google serves all verticals. Then again, advertising can go vertical, Brandify Product Lead Damian Rollison tells me.*

“The basic idea of local search marketing is to create a compelling presence for your brand in the channels consumers use to look up local businesses. But these channels may differ by vertical. To take two prominent examples, businesses whose products or services have a particular visual appeal, such as clothing or jewelry designers, home decorators, home furnishings brands, hairdressers, tattoo artists, and even restaurants, will do well to market themselves on visual platforms like Pinterest and Instagram, whereas professionals like attorneys and doctors might put emphasis on professional directories like Avvo or Vitals that offer deeper information about professional backgrounds and specializations.” 

We’ll be unpacking these themes throughout the month. Beyond the monthly thematic focus, we’ll still cover the entire location technology and media sectors that you’ve come to expect. We’ll continue to do that daily in the pages of Street Fight as well as Street Fight Daily, and our biweekly podcast.

Also look forward to more structural developments at Street Fight, and contact us with any questions or opportunities to participate.

*Brandify is Street Fight’s owner, though it operates with editorial independence.

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Mike Boland is Street Fight's lead analyst, author of the Road Map column and producer of the Heard on the Street podcast. He has been an analyst in the local space since 2005, covering mobile, social and emerging tech. More biographical information can be seen at www.mikebo.land
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