A fledgling Palo Alto startup is trying to tackle a difficult 21st-century challenge: bridge the ever-widening gap between local brick-and-mortar businesses and the booming world of mobile commerce.
After purchasing, users can opt to have their goods delivered for free or to pick them up in the store the same day.
"There's so many advantages of physically going to a store or having something from a local store," said Downtown CEO and co-founder Phil Buckendorf, a German entrepreneur who came to the United States about a year ago. "Maybe we can reinvent how local commerce works so we can give the little guy from High Street a comeback, and he can catch up because he's (now) on a technology level (that's) competitive with Amazon and other online marketplaces."
Buckendorf explained his vision of the free, iPhone-only app as a virtual version of a physical downtown where stores congregate and share customers.
"We said, 'Well, what does the real world look like?' It's all these stores and they try to be centered somewhere, which in this case is University Avenue, because they share customers. So this coffee shop is sharing customers maybe with Keen (Garage) or with Alegio Chocolate or with Apple. There's a reason why in the real world they bundle with each other and locate around one street."
Downtown aims to be a reflection of Palo Alto's real downtown, with a small list of local stores that rotate depending on the time of day (and at some later date, the user's location). Open the app in the morning, and there will be breakfast-centric places like Coupa or La Boulange; later in the afternoon Keen Garage, Whole Foods or macaron boutique Chantal Guillon might pop up. Photos accompany each store and item. The prices are the same as they would be in the brick and mortars (though they might look different because they include normal taxes); there are no delivery fees, taxes or tips.
As is, the app mostly draws from the downtown area, but California Avenue Italian restaurant Terun often shows up at mealtimes. Downtown currently operates Monday through Friday, 11:30 a.m. to 9:30 p.m. in the 94301, 94303, 94304, 94305 and 94306 zip codes, but hopes to expand in the future.
With the user in mind, there aren't more than 10 or so items available for purchase (or even less) from any store, Buckendorf said.
"The things we have learned is that there's a significant difference between mobile commerce and e-commerce," he said. "When we see consumers shopping from mobile applications, they do not like to search for things or scroll through a lot of content. This is a step which has to be done by us or by the store before the customer starts shopping. Because if there's just too much content, which is not appealing to the customer, he will just close the app. It's not in the interest of the store nor the customer."
Robbin Everson, owner of the Bryant Street boutique chocolate store Alegio Chocolate, said Downtown has particular appeal for her as a small-business owner who struggles to compete with e-commerce giants like Amazon.
"I was intrigued by it because (mobile exposure) is an area that small-business people have a need for," she said.
The delivery option is also a huge boon for small companies. She said Alegio tried doing deliveries from its Berkeley store and gave up because it took time and resources the company simply didn't have.
As the Downtown startup is a small team, Buckendorf and another team member are currently doing the deliveries themselves. He said their delivery time is an average of 30 minutes.
"In general, retail is kind of at an inflection point right now," said Brad Fuerst, retail director for Keen Garage, which also operates stores in Portland, Prague and Tokyo.
"What Downtown really enables us to do is to integrate our mobile (and) our online to our brick and mortar, which is going to be more so the case as more people, especially in Palo Alto, will be shopping on their mobile phones. The ability for Downtown to satisfy same-day delivery is a pretty large competitor advantage for us."
Downtown is also sales-based, so the companies who list their products on the app do not have to pay any fee to do so. Downtown has partnered with some of the stores not all of them and from those partnerships, collects a small commission fee, already included in the credit-card fee.
"This is excellent too because small-business people struggle financially and most other venues charge a monthly fee," Everson said. "It's all based on sales. That's why promotions such as Groupon have an appeal too, because there's not an outlay of capital, which none of us have. It's all going into product, people and stores. So this is something that could do very well for small-business people."
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