AI-Powered Open Commerce Network Could Disrupt Online Retail

Red101, a network for retailers based on a new concept of AI-powered open commerce, is scheduled to go live in U.S. markets this fall.

Developed by RedCloud Technology, a U.K.-headquartered company, Red101 could revolutionize e-commerce for millions of distributors and other small businesses across the U.S. According to Justin Floyd, the firm’s CEO, the platform will also provide online retailers with an alternative to the Amazon Marketplace.

RedCloud is a business-to-business platform, unlike business-to-consumer-focused marketplaces — like Amazon. Red101 is already available across Africa and Latin America.

Floyd initially announced the debut of Red101 last October, but transactions have yet to go live. However, he told the E-Commerce Times that the RedCloud platform did launch in the sense that over 100 brands already signed up and are going full-scale starting in September.

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

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

An open commerce approach enables retailers to immediately trade with any distributor, either in their area or outside 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.

Surpassing Traditional E-Commerce Platforms

Floyd shared that RedCloud’s goal is to democratize online commerce, ensuring that every player, big or small, gets a fair chance. Red101 will introduce a transformative tool to the U.S. market to further this mission of making commerce more transparent and accessible.

“We are harnessing the power of AI to transcend the traditional challenges in commerce and ensure smoother interactions between sellers and buyers, irrespective of location or language,” he said.

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

According to Floyd, a significant problem U.S. retailers face today is the inability to network with supply chain resources in their area conveniently. Open commerce makes it much easier for them to trade with each other, with financing transactions handled through take rates. Merchants using the platform pay up to 1.5% on the order value. That’s lower than credit card fees.

“We have almost a million retailers on our platform at the moment with about 6,000 brands. They do that because we’ve given them back two-thirds of their time. Secondly, we give them back very clear visibility of their pricing,” he offered.

The merchant platform addresses supply chain issues. SMBs spend half their time dealing with different distributors, trying to get the best price. Then they discover that the distributor cannot deliver for the next two weeks.

Acquiring inventory and managing delivery becomes even more challenging because not everyone is connected. Merchants who sign up for the platform handle all their arrangements on the Red101 iOS or Android app, which is available where the platform is live.

Alternative to Amazon

RedCloud is poised to tackle big brand challenges that make selling online increasingly challenging for mom-and-pop outlets and SMBs. Floyd argues that traditional e-commerce cripples SMBs and individual entrepreneurs.

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

In 2023, Amazon generated $140 billion from fees charged to sellers for hosting products and handling storage and shipping, a significant 25% of its total revenue. Earlier this year, Amazon increased seller fees, shifting more operating costs to small businesses. In addition to inflation, these fees are forcing small businesses to raise prices.

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

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

Last year, ModernRetail reported that the number of sellers listing only one product on Amazon increased by over 300% compared to 2022. The Verge noted that Amazon’s Project Nessie deployed an algorithm to control pricing by identifying profitable products and raising prices, which forced other online retailers to do the same.

“This centralized model is eradicating small businesses by restricting access to the tools needed to drive growth,” Floyd reasoned.

Empowering SMBs in Online Trade

Floyd wants to expand his platform to U.S. retailers to grow his open commerce concept. That opportunity could attract a significant number of adopters from Amazon’s two million third-party sellers.

“Open commerce grants SMBs more autonomy and freedom to engage with trusted trading partners who provide authentic, top-quality products, leveling the playing field of online trade,” Floyd said.

His operation in Africa and Latin America shows a 99.8% retention rate of member retailers. The commerce network lets member retailers connect with wholesalers and distribution brands. Additionally, Floyd noted that the open commerce platform offers marketing and financing options, so everything flows through one platform.

Floyd spent eight years building the supply and technology components, dedicating significant time to working with retailers and distributors to understand their problems. He found much common ground, as their issues were consistently similar. They did not know each other and needed a way to market to each other and streamline their operations.