Justin Floyd of RedCloud Technology On The Future Of Retail Over The Next Few Years
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As part of our series about the future of retail, we had the pleasure of interviewing Justin Floyd.
Justin Floyd is an award-winning entrepreneur with a 25-year track record of founding and investing in pioneering technology companies solving the world’s biggest economic and social challenges. He founded RedCloud to address fundamental issues with the global supply of consumer goods that prevent brands, distributors and retailers in fast-growth economies from trading efficiently, transparently and cost-effectively with one another. Floyd’s previous experience includes founding and running cloud intelligence company Vecta and co-founding transatlantic fintech company CC. He is twice a regional Ernst and Young Entrepreneur of the Year finalist, four times a Red Herring 100 winner, a Finalist Codie award winner, and a Fast Track 100 finalist.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
As an entrepreneur, I came from a family of entrepreneurs. My mother had a small shop in North London, and I saw firsthand the enormous difficulties she faced with supplies, inventory, and getting the right products at the right price. It was really about barely making ends meet. I saw her struggles, and I saw these struggles magnified many times over for other small businesses. When I started my first small business at 17, I faced the same difficulties.
This experience set me on the path of entrepreneurship. I decided at a very early age that I wanted to create products that had a real positive impact on the world. I knew the only way to do that was not by working for someone else but by building my own business.
I got to Red Cloud because I had been working on technology to solve the supply and demand problem worldwide. There is either too much demand and not enough supply, or too much supply and not enough demand, and the economic impact of that is terrible for everyone. It hurts everyone from consumers to manufacturers. I wanted to do something about that.
I’ve been fortunate to build several successful businesses in this space and exit them successfully. Red Cloud became almost my life’s work, combining everything I had learned. I started on this journey 10 years ago, literally from one bedroom in my house with a laptop, a phone, and an idea.
Can you share the most interesting story that happened to you since you started your career?
I think the most interesting story for me was learning how powerful women are in entrepreneurship, particularly in small businesses. I should have known this from my background, but I was surprised by how extensive the thread of entrepreneurship runs through women.
For example, there are almost 3 million women globally who sell Avon cosmetics door to door. In Nigeria, almost 80% of all small businesses are run by women. The influence of women in the small business sector is strong, particularly in terms of attention to detail and the feel-good factor you get when you walk into a locally-owned store, whether it’s a beauty salon, coffee shop, convenience store, or food shop.
It’s interesting that almost all of these businesses are either founded or run by women. The challenge and opportunity for me is figuring out how to embed that feel-good factor into technology.
Are you working on any new exciting projects now? How do you think that might help people?
Yes, the big topic now is AI. We are working on a concept called embodied AI, which uses similar technologies to those in self-driving cars, where AI is hardware-driven. I was recently in a driverless cab and was impressed by how smooth the experience was.
We are incorporating this technology into handsets for small businesses to help them buy, sell, and trade their inventory more effectively. Small retailers, both in the U.S. (around 5 million) and globally (over 500 million), play a significant role in the global economy. Their success depends on their ability to trade inventory quickly and at the right price, quantity, and quality.
By building embodied AI into handsets, we aim to provide small retailers with an AI companion that can figure out their buying preferences and quickly source quality, well-priced inventory from various sources. This AI will deliver instant purchasing results on their handsets.
This project has the potential to replicate the best practices of small businesses across millions of retailers, creating an incredibly powerful purchasing network. This is beneficial for consumers, brands, and everyone involved in the buying and selling of FMCG products.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?
Yes, my wife, definitely. She is my backbone, my most loyal supporter, and my most forgiving ally. She tolerates both the worst and best parts of me. Importantly, she gives me perspective. As an entrepreneur, having perspective is crucial. You emotionally ride high and low constantly, with everything either being great or a complete disaster. There’s no middle ground. She gives me balance and perspective on some of the biggest decisions I have to make, which can mean the difference between success and failure in entrepreneurship.
She travels with me, which is the only way I can maintain that perspective. I travel about 300 days a year, and I’m home maybe 20–30 days. This is probably the hardest and loneliest part of the role. Her support is massively important.
How have you used your success to bring goodness to the world?
There is a huge social impact around what we do and the economic value we bring. We have leveled the playing field for small businesses that were previously stuck in a technology wilderness. They couldn’t afford the high-quality technology investments that companies like Amazon make. For example, Amazon spends billions on technology every year, but small businesses haven’t had that opportunity until now.
We have built the world’s first platform that takes billions of dollars worth of technology investment and gives it to small businesses at no charge. This enables them to compete on the same playing field as Amazon.
Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
Yes, several new ideas have emerged in response to the pandemic, significantly reshaping retail. Here are three notable examples:
- Click and Collect: This concept was a game-changer for Walmart. They realized they could leverage their extensive retail and parking space for something more than just traditional shopping. With click and collect, customers can order online, pick up their items at the store, and even check the products in their car. This way, if there’s an issue, they can return the item immediately, avoiding the hassle of returns.
- Research Online, Buy Locally: This idea allows customers to do all their research online but still make purchases from local stores. For example, people can use Amazon to check out products and then find where to buy them locally. This shift helps maintain the connection between customers and local businesses.
- Enhanced Digital Relationships: Retailers are increasingly creating digital relationships with their customers, focusing on helping them find what’s in the store before visiting. While Amazon’s search engine can be messy and unreliable, local stores can now aggregate their inventories into one app. This allows consumers to browse local store inventories online and decide what to purchase or pick up, integrating the convenience of digital shopping with the reliability of local stores.
By combining successful strategies from Amazon’s search and discovery experience with Walmart’s click and collect concept, we’re bringing these innovations to local stores everywhere.
The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?
The supply chain crisis has led to an influx of counterfeit, inferior, and poor-quality products sourced from areas outside the U.S. Retailers have pivoted to address this issue by sourcing inventory more carefully and addressing the challenges around supply and demand.
The pandemic exposed the weaknesses of the existing supply chain, which was adequate 100 years ago, less so 50 years ago, and barely functional 30 years ago. Today, it is no longer fit for purpose. Retailers are now looking for ways to modernize and streamline their supply chains to adapt to the current demands and ensure better quality control.
How do you think we should reimagine our supply chain to prevent this from happening again in the future?
To reimagine our supply chain, we should integrate it into an all-in-one platform using smart technology, particularly AI. This technology should simplify the entire supply chain experience by answering key questions: Where is the inventory? How quickly can it get here? What are the best routes to take? Is it of good quality? Who manufactured it? At what price? Is the discount correct? Is it something my consumers want? Is it authentic? Does it have authoritative labels? Can the people bringing it to me be trusted?
This is the future vision for the supply chain, and while it doesn’t look like that at the moment, it is starting to move in that direction.
In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?
Yes, I believe retail stores and malls will continue to exist, especially outside of major metropolitan areas, where 80% of people live. Physical retail spaces will remain important because people want quality products at low prices, and they love to support their local businesses.
For example, in San Francisco, I visited a farmers market on Saturday that was packed with about 10,000 people and around 100 stores. This demonstrates the demand for authentic, local quality products.
One of the most successful parts of Meta is their marketplace, where people discover new local stores and businesses with great quality products. If you need a charger for your phone, you might go to Amazon or Target, but if you want a quality sheepskin or a cashmere scarf for Mother’s Day, there are plenty of local options to consider.
So, there will be a significant rise in local retail spaces because people appreciate the value and authenticity they offer.
The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?
The successful retailers have clear and focused business models. For example, Costco does one thing really well: they stack merchandise high and sell it cheap. Customers know exactly what to expect.
Amazon, originally a retailer, has transformed into a super logistics company, which is a different business model from where they started. However, some of their initial strengths seem less emphasized now.
Kroger, as a grocery company, excels at delivering quality products at convenient prices with simple delivery terms. They stick to their core strengths.
Retailers that have suffered often had chaotic business models or were in the “excluded middle,” like some department stores. The appeal of going to a department store and navigating multiple floors has diminished when customers can get what they need quickly online.
The key lesson for retailers is to do one thing and do it exceptionally well. Whether it’s offering the highest quality beauty products in a beautiful environment or being the go-to convenience store with the lowest prices, focus on that one thing and get it right. Trying to do a bit of everything often leads to failure.
Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?
The key is to get your distribution right and align with the right retailers. Companies like Shein and other direct-to-consumer brands from China have succeeded because they have mastered distribution. As a consumer, I can order from them and have the product delivered within 24 hours.
In the U.S., we have great quality manufacturers, but they are not tied into any efficient distribution network, and the distributors are not well-connected to retailers. The opportunity to connect these digitally is enormous. There are over half a million wholesalers and distributors in the U.S. alone, 5 million small retailers, and over 200,000 manufacturers. Yet, hardly any of them communicate effectively with each other. This represents an incredible opportunity.
Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.
- Offer the Best Choice: Provide a high-quality selection and deliver it on the most convenient terms.
- Compelling Pricing: Offer compelling pricing, not necessarily the best pricing. The difference lies in creating value rather than just focusing on the lowest price.
- Product Grouping: Implement smart product grouping. For example, when selling flip flops, group them with nail varnish and foot ointment. Avoid spreading related products across different aisles. This minimizes the “forget game,” which results in significant lost sales.
- Build One-on-One Relationships: Use technology to create a personalized experience for each customer. Amazon used to excel at this, but it can be done effectively by any retailer without high costs or difficulty.
- Support Local Manufacturers: Buy from local manufacturers and recognize the high-quality manufacturing around you, whether in your home country or region. Supporting local manufacturing helps solve supply chain problems and strengthens the local economy.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
That’s a great question. Actually, I think what I’m doing at the moment is exactly that. I’m building an open commerce movement that democratizes e-commerce for hundreds of millions of businesses around the world. It allows them to use e-commerce on their terms to build powerful relationships with their customers, relationships they have worked hard to develop over 10–15 years.
At the same time, this technology allows them to buy smarter and work with many more suppliers than they currently do. The balance in retail is to buy smart and sell well. That’s the essence of what I’m working on.
How can our readers further follow your work?
LinkedIn — https://www.linkedin.com/in/justinfloyd1/
RedCloud Technology — https://redcloudtechnology.com/
Thank you for these really excellent insights, and we greatly appreciate the time you spent with this. We wish you continued success
