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February 02 2012

Commerce Weekly: The return of iPhone NFC rumors

Here are some things that caught my eye in the news this week.

When will Apple mainstream mobile payments?

AppleNow that everyone's iPhone 4S has a few dings on it and we've all grown bored flirting with Siri, our curiosity naturally turns to iPhone 5 and what gifts it will bequeath on mankind. Rumors of NFC (near-field communication, which lets phones pay with wireless technology), are at the forefront again, just as they were before the 4S arrived. As far back as August 2010, when Apple hired NFC expert Benjamin Vigier as its product manager for mobile commerce, expectations have been high that the next iPhone would include wireless payment. That was two versions ago; we must be getting close.

Seth Weintraub wrote this week on 9to5mac that a developer he met at MacWorld was building NFC into the next version of his app because Apple's iOS engineers are "heavy into NFC." Over on Fast Company, Austin Carr looked for clues in his conversation with Ed McLaughlin, who leads emerging payments at MasterCard. When Carr pressed McLaughlin for details on which handset makers were developing phones that work with MasterCard's contactless payment system, he didn't mention Apple by name but said he "didn't know of any handset maker out there who wasn't working to make their phones PayPass ready."

Why do we read these tea leaves? There are a few other NFC phones out there already, pushing the far end of the envelope. But Apple is much more significant, as Carr points out, thanks to its:

"... magical ability to transform whole industries. No one paid for music digitally before Apple unveiled iTunes; virtually no one listened to MP3 players, or carried smartphones, or played with tablets before Apple entered the markets."

Even more so than with previous trends, an enormous captive audience awaits the moment when Apple will introduce it to mobile payments. Scot Wingo notes, in a very good summary of the state of mobile commerce on Seeking Alpha, that Apple has "something like 250 million credit cards on file" in the iTunes store. Although only a fraction of those will buy the iPhone 5 in its first months out, they are sure to be customers who are already comfortable buying things through Apple's interface.

I think the biggest and best surprise will be more than just the date when iPhones ship with NFC, but rather how Apple presents a mobile wallet interface. When you think of how iTunes presented a better way to buy digital music, and when you compare the customer experience in Apple's retail stores with what you find almost anywhere else, you have to acknowledge Apple's genius in what we might call the transaction interface. Its programming efforts up front seem as likely to mainstream mobile commerce as any programming that it does behind the scenes to make those transactions occur.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.


What PayPal is learning at the point of sale

PayPal's point-of-sale (POS) trial with 51 Home Depot stores is rolling out to Office Depot stores, too — cautiously, according to this Reuters story, which quotes an Office Depot executive saying "there are still some rough spots in that experience." The executive didn't say whether those rough spots had to do with the technology, the way customers are using it, or just the basic unfamiliarity with it. Regardless, the novelty presents something of an opportunity for PayPal, says Anuj Nayar, PayPal's chief spokesperson. "Retailers are not technologists by nature," Nayar told me in a conversation last week. "They have to work and sell in this multi-channel environment, where increasingly the differentiator is based on technology." But keeping up with the evolving technology shouldn't be the retailer's job, Nayar says. PayPal, of course, wants to provide a commercial ecosystem — as Nayar calls it, "a one-stop tech partner for retail."

PayPal at a HomeDepot point of sale terminalPayPal had those capabilities on display at the National Retail Federation show last month, showing the various ways it is enabling payment at the point of sale. PayPal aspires to go beyond the concept of a mobile wallet in a phone; it wants to offer a "wallet in the cloud" that lets consumers make purchases with just their mobile number and a PIN — no card or phone needed. No doubt, the trials at Home Depot will shed light on just how comfortable consumers are with this idea. So far, Nayar says, it's too early in the trial to share any of those learnings.

Nayar did share a finding from PayPal's conversations with consumers and retailers about how they want to use mobile commerce: You need to get beyond not only the friction that keeps people from using technology, but also guard against any social stigma that could arise. "For example, when I go to get coffee in the morning, if I get there and see there is a 20-minute wait, I can't wait for that. That retailer has lost a customer because of a friction point. So how do you reduce that friction? Maybe it's giving people the ability to order the coffee over their mobile before they get there? ... But we tested that, and you know what we found? People don't like to jump the line. They didn't like the idea of coming in and looking to everyone in line like they were getting to skip the line. So, maybe you need a separate line and register, a PayPal Express line or something."

In other words, we want convenience, but not at the expense of looking like we're getting special treatment. No doubt, PayPal will learn more in the coming trials, which are ramping up quickly: The company wants to be at 2,000 points of sale by the end of March.

Square hits the hustings

Square picked up a fresh round of publicity this week when word broke that staffers from both the Obama and Romney campaigns were using its plug-in dongle card reader to collect political donations for their candidates.

Obama campaign spokesperson Katie Hogan told Nick Bilton of The New York Times that the dongles were being shipped out to campaign workers across the country. The Obama campaign also hopes to create a donation app that works in conjunction with Square dongles so that any supporter can collect contributions with or without the support of the local campaign organization. All donations would obviously go to the campaign — minus the 2.75% transaction fee that Square keeps from every transaction.

The Romney campaign's digital director Zac Moffatt said the Republicans would also begin using Square as soon as this week, but he cautioned they want to make sure that using Square doesn't break any rules. "The challenge on this sort of thing is never with the technology, it's with the compliance. We're making sure everything we're doing follows fund-raising rules and is compliant with the FEC."

Although DC is generally slow to embrace new technologies, I have a hunch that tech that makes it easier for candidates to collect money will find a swift and warm welcome.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out DevZone on x.com, a collaboration between O'Reilly and X.commerce.


Related:

January 26 2012

Commerce Weekly: Target doesn't want to be the showroom for online retailers

Here are a few things going on in the world of online commerce this week.

Target wants to fight "scan and scram"

TargetRemember all that talk before the holidays about the blissful union between brick-and-mortar retailers and mobile users? Retailers seemed to have accepted that many of their customers shop with smartphones in hand — and retailers even appeared to be embracing it. A Deloitte consultant who follows these things, Kasey Lobaugh, told Internet Retailer that retailers:

... need to invest in providing customer connectivity in the store, including in-store Wi-Fi, ... building functionality that best serves the customer at the 'point of need' and thinking about the capabilities that align with the customer's location and context, as the customer may be in the store with a smartphone in hand or in a variety of other locations and scenarios.

Indeed, Macy's, Sears, and Nordstrom boasted about their in-store free Wi-Fi. Personally, I realized this meant I no longer had to chase after the Home Depot staff whose "Ask Me" shirts always seem to be disappearing just around the far end of the aisle. I could now ask my iPhone.

But a report in The Wall Street Journal this week about Target fighting back against "showrooming" has everyone wondering if all that goodwill is gone with the swept-up tinsel and empty See's Candies boxes. The Journal reported that Target wrote a letter to suppliers asking for their help avoiding the fate of becoming physical showrooms for online retailers. They're asking vendors to make unique products that can be sold only at Target, so there's no option to find them cheaper online. "What we aren't willing to do," the Journal quoted the letter as saying, "is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands."

The letter certainly points out the missing logic in the equation: upbeat stories about free Wi-Fi in stores all seemed to suggest that those smartphone-enabled shoppers would be checking in at the retailers' own online site for reviews and availability. Who would have guessed that these ungrateful shoppers would stoop so low as to compare prices at other sites? Is all harmony lost? Will our favorite stores try to block our signals or ask their suppliers to come up with unique brick-and-mortar-only SKUs to confuse Red Laser?

There are still some voices calling for reconciliation. Will Reese on CMO.com offers seven ways retailers can combat "scan and scram", including beefing up a store's own mobile presence and being clear to customers about the value the store provides. No one could accuse Target of failing to invest in its online and mobile stores, but I suppose one could make the argument that a little more investment in the customer service aspect of Target's staff could help turn the tide. After all, as Reese describes in his story, Apple Stores aren't afraid of customers with smartphones, possibly because they know the people working those stores — and in particular, their expertise — are one of the company's biggest retail assets.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

iTunes also had a monster year

The huge numbers in Apple's latest earnings report caught all the attention, but if you dig in, you'll also find some pretty impressive stats for iTunes. Apple's online content store sold about $6 billion worth of music, movies, TV shows, and apps in 2011, up 55% from $4.2 billion in 2010. Billboard reported that iTunes moved nearly $1.7 billion of content in the holiday quarter of 2011. It's interesting to compare that with Amazon's $43 billion in sales last year and then realize that Apple didn't need to ship any physical products to hit its iTunes number.


Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out DevZone on x.com, a collaboration between O'Reilly and X.commerce.


Related:

January 12 2012

Commerce Weekly: Report criticizes "feeble" mobile strategies of posh retailers

Here are a few of the items that caught my eye this week.

Report says 44% of prestigious retailers have "feeble" mobile strategies

Few high-end retailers are moving as quickly as they should on mobile commerce, according to a new report from research firm L2. In its first survey of premium brands' mobile strategies, L2 looked at the mobile and tablet platforms of 100 prestigious retailers — names like Dolce & Gabbana, Clinique and Cartier. In spite of their high margins, L2 found that most were taking a wait-and-see approach to mobile commerce, even though U.S. m-commerce sales are expected to grow from $6 billion in 2011 to $31 billion by 2016, according to Forrester.

In its report (and accompanying video, below) L2 scolds the laggards, reporting that:

  • 30% of brands haven't developed a mobile app
  • 33% don't have a mobile-optimized site
  • 16% have no mobile strategy at all

L2 placed 44 of the 100 brands it surveyed in the "feeble" category. At the other end of the spectrum, only four companies seemed to be doing enough right to earn a place in L2's "genius" category. Sephora topped the list, thanks to solid mobile and tablet apps, and successful cross-promotion of its mobile offerings across the rest of its digital platform. Nordstrom, Macy's and Net-a-Porter rounded out the top four.

It may look like a dismal showing, but as Lauren Indvik pointed out at Mashable, it may be enough to lead the rest of the retail competition. Indvik cited figures from Jesse Haines, group marketing manager for Google Mobile Ads, who told Mashable that a survey of major advertisers in early 2011 found only 21% had launched a mobile site at the time.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Sprint triples your chances to use Google Wallet

Samsung Galaxy Nexus with Google WalletIf you're like me, you've begun to see point-of-sale devices promoting the capability to pay with Google Wallet around town — for example at Whole Foods, Radio Shack, and CVS. Google has a nifty little map app that shows you where in your zip code you can wave your NFC-enabled Sprint Nexus S 4G phone to pay for — oh, you don't have a Nexus S 4G phone? Yeah, that's the problem: I've yet to see anyone actually making a purchase in the wild.

Sprint said this week it will do what it can to help by introducing two more phones that support Google Wallet: Samsung's Galaxy Nexus and LG's Viper. That brings the total number of phones that support Google Wallet to three. Both of the new phones store the payment applications on a secure embedded chip. Buyers will need to use either Google's Prepaid Card or a Citi Mastercard. The secure chips can also store coupons, points and offers.

Google will need all the help it can get from Sprint to spread the base of Wallet users, at least until the other carriers, all of whom are founding members of Isis, decide to let Wallet onto their phones. Verizon's decision in early December not to allow Google Wallet on its Android phones has cast a shadow of doubt on the whole business.

Meanwhile, all the players in the mobile payment system continue to run trials and tests to see where the soft points are. Visa said this week that it has certified six mobile devices to handle NFC payments using its PayWave system, a point-of-sale device that can process Visa payments wirelessly from a mobile device or a PayWave fob or card. On ZDNet, Zack Whittaker reported that in the U.K., Visa is hoping to roll the technology out as far as it can in time for this summer's Olympic games.

PayPal's mobile volume exceeds its own expectations

The volume of mobile payments is rising faster than expected, as shown by PayPal's announcement that it processed nearly $4 billion worth of mobile payments in 2011. That's up from $750 million in 2010 and $141 million in 2009. David Marcus, vice president of PayPal Mobile, made the announcement at the Consumer Electronics Show in Las Vegas. A year ago, Marcus told VentureBeat, the company predicted it would process $1.5 billion in 2011, a figure it later revised upward to $2 billion. Marcus credited, among other things, Starbucks customers using PayPal to top off their cards and the rise of iPad-based e-commerce.

Next stop: moving offline to point-of-sale devices. PayPal announced a trial using PayPal at the register in Home Depot stores, with no NFC required. For now, it's a limited test with a handful of PayPal employees who can use a PayPal card or just enter their mobile numbers in a point-of-sale terminal to pay for their DIY supplies. PayPal expects to roll it out to a wider audience later this year.

Got news?

News tips and suggestions are always welcome, so please send them along.


Related:


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