An AI-powered open commerce network could disrupt online retail

Red101, a network for retailers based on a new concept of open commerce with artificial intelligence, is set to launch in the US this fall.

Developed by UK-based RedCloud Technology, Red101 could revolutionize e-commerce for millions of distributors and other small businesses across the US. The platform will also provide online retailers with an alternative to Amazon, according to Justin Floyd, the company’s CEO. Marketplace.

RedCloud is a business-to-business platform, unlike business-to-consumer marketplaces – such as Amazon. Red101 is already available in Africa and Latin America.

Floyd originally announced Red101’s debut last October, but transactions have yet to go live. However, he told the E-Commerce Times that the RedCloud platform has been launched in the sense that more than 100 brands have already signed up and will be fully operational from September.

The intelligent platform differs from the first generation of e-commerce by using AI technology to mitigate supply chain inefficiencies. Floyd said this allows for fairer, more transparent and safer trading for smaller retailers.

It also protects against counterfeit goods, ultimately mitigating the challenges small and medium-sized businesses (SMBs) face when competing with e-commerce giants like Amazon. This open commerce platform connects brands, distributors and local merchants in emerging fast moving consumer goods (FMCG) markets.

The open store approach allows retailers to do business instantly with any distributor, whether in or out of their area, he explained. Retailers can buy inventory and quality products at the right price and time.

“It’s like a big online cash and carry,” he added.

Overcoming traditional e-commerce platforms

Floyd shared that RedCloud’s goal is to democratize online commerce and ensure that every player, big and small, gets a fair chance. Red101 will introduce a transformational tool to the US market to support this mission of making commerce more transparent and accessible.

“We are harnessing the power of artificial intelligence to overcome traditional challenges in commerce and ensure smoother interactions between sellers and buyers, regardless of location or language,” he said.

In addition to facilitating online commerce, the RedCloud Intelligent Open Commerce platform provides merchants with access to capital to grow their business, manage cash flow, and purchase equipment or inventory.

According to Floyd, a significant problem facing US retailers today is the inability to connect conveniently with supply chain resources in their area. Open trade makes it very easy for them to trade with each other, with financial transactions being settled through take rates. Merchants using the platform pay up to 1.5% of the order value. This is lower than credit card fees.

“We currently have close to a million sellers on our platform with around 6,000 brands. They do it because we gave them back two-thirds of their time. Second, we give them back very clear visibility into their prices,” he offered.

The trading platform solves supply chain problems. SMEs spend half their time negotiating with different distributors trying to get the best price. Then they find out that the distributor can’t deliver for the next two weeks.

Sourcing inventory and managing deliveries becomes even more challenging because not everyone is connected. Traders who register on the platform handle all their arrangements in the Red101 app for iOS or Android, which is available where the platform is active.

An alternative to Amazon

RedCloud is ready to tackle the big branding challenges that make selling online for moms and SMEs increasingly challenging. Floyd argues that traditional e-commerce is crippling small and medium-sized businesses and sole traders.

Third-party sellers, who make up 8% of all Amazon sellers, are facing increasing pressure from various fee changes Amazon has implemented this year. Over 33% of small businesses are concerned about rising shipping costs, advertising fees, storage fees and low inventory fees.

In 2023, Amazon generated $140 billion from fees charged to sellers for hosting products and handling storage and shipping, a substantial 25% of its total revenue. Earlier this year, Amazon raised sales fees and shifted more operating costs to small businesses. In addition to inflation, these fees make small businesses more expensive.

For many businesses, raising prices is not a viable solution. Cost-conscious shoppers are resorting to spending less, so brands are cutting back on spending to maintain their prices.

Floyd says Amazon’s new fee structure is too complicated, especially for inventory management. Due to higher inbound placement fees, businesses are limiting product listings on Amazon.

Last year, ModernRetail reported that the number of single-product sellers on Amazon grew by more than 300% compared to 2022. The Verge noted that Amazon’s Nessie project deployed an algorithm to control prices by identifying profitable products and raising prices, forcing other online retailers to do the same.

“This centralized model is killing small businesses by limiting access to the tools needed to support growth,” Floyd reasoned.

Strengthening the position of small and medium-sized enterprises in online commerce

Floyd wants to expand its platform to US retailers to expand its open store concept. This opportunity could attract a significant number of adopters from Amazon’s two million third-party sellers.

“Open Trade gives SMEs more autonomy and freedom to deal with trusted trading partners who provide authentic products of the highest quality, leveling the playing field for online trade,” Floyd said.

Its operations in Africa and Latin America show a 99.8% retention rate of member retailers. The trade network allows member retailers to connect with wholesalers and distribution brands. In addition, Floyd noted that the open store platform offers marketing and financing options, so everything goes through one platform.

Floyd spent eight years building the supply chain and technology components and spent significant time working with retailers and distributors to understand their challenges. He found much in common because their problems were consistently similar. They didn’t know each other and needed a way to market to each other and streamline their operations.

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