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March 07 2013

Commerce Weekly: Google may be prepping an Amazon Prime competitor

Is Google gearing up to battle Amazon head-on?

GoogleLogoGoogleLogoThe Google e-commerce rumor mill continued churning this week. Alexia Tsotsis reported at TechCrunch that Google is “stealthily preparing to launch an Amazon Prime competitor called ‘Google Shopping Express.’” Her sources indicated the service would undercut Amazon Prime’s annual fee of $79 by $10 to $15 and offer same-day delivery from local retail stores such as Target, Walgreens and Walmart. Tsotsis speculates that in launching this service, Google could make use of its recent purchases — BufferBox and Channel Intelligence — to corner the online-to-offline retail market.

Paulo Santos noted in a post at SeekingAlpha that if and when Google launches this service, Amazon will most likely match the annual price. He said estimates on the number of Amazon Prime members vary widely, but if the 7 to 10 million number is accurate, price matching would be a $70- to $150-million hit to Amazon’s bottom line. Santos concluded, “The move is a positive for Google, mild negative for eBay and strong negative for Amazon.com.”

Giving consumers what they want requires knowing what they want

Looking at how the race for same-day delivery is going to affect retail, Ad Age’s Lauren Sherman said the real threat is to the corner store and that indie retailers are going to have to change their marketing tactics to compete.

Sherman outlined three points made by Jeffrey Cole, director of the Center for the Digital Future at USC Annenberg, on how retailers are going to have to change their businesses to accommodate the change in consumer shopping behaviors. Cole highlighted mom and pop stores, arguing that local drugstores and convenience stores are going to have to offer the same convenient services as the major online retailers, such as same-day delivery, in order to survive. He also said universal free shipping will need to be offered by everyone and that retailers will need to offer more and bigger in-store deals, ala Black Friday door-buster deals.

In related news, results from a survey by The Boston Consulting Group (BCG) were released this week indicating same-day delivery might not be the holy grail online commerce giants think it is. Thad Rueter reported at Internet Retailer that only 9% of the 1,500 consumers surveyed said same-day delivery was “a top factor that would improve the online shopping experience,” compared to 74% who said free delivery was a top factor, 50% who cited lower prices, and 35% who cited free returns. Survey participants could select up to three “top factors”; same-day delivery didn’t come close to making the top three.

The press release summarizing the survey results stated that “[e]conomics dictate that retailers should offer same-day delivery for only a select number of products that are small and light and that carry high margins,” and pointed to electronics, office supplies and apparel as examples. In the release, BCG partner Rob Souza called same-day delivery a “niche service” and said it’s “unlikely to generate significant revenues for either retailers or carriers.”

The real mobile payments battle is to create a functional ecosystem

Mobile payments company PayOne filed a patent infringement lawsuit against Home Depot this week. The press release stated: “PayOne asserts that The Home Depot retail store deployment and use of PayPal’s in-store checkout infringes on multiple PayOne patents, including the use of a mobile phone number and a PIN (personal identification number) to complete the checkout process and payment at point of sale.”

In a post at The Motley Fool, Justin Loiseau quoted a statement PayOne president and CEO Joe Lynam made regarding the lawsuit:

“Since 2000, PayOne has invested significant time and money developing its proprietary mobile payment technologies designed to simplify the checkout process and the PayOne systems have been deployed by digital merchants across the globe. The ‘mobile wallet wars’ have moved beyond the digital world into point of sale, but now face adoption challenges and substantial friction with consumer setup requirements, security concerns and lack of merchant required NFC infrastructure. PayOne’s technology solves these challenges by enabling an ‘instant wallet’ capability that can be extended to the retail and physical world for billions of consumers worldwide, with no pre-registration or friction at point of sale, and no NFC infrastructure required.”

Lisa Ward noted at the Silicon Valley Business Journal that this isn’t PayOne’s first trip to court — in 2011, PayOne filed a lawsuit against PayPal that is still in court. Ward also reported that “PayOne has already sent patent infringement notices to several other retailers, including Jamba Juice, RadioShack and Barnes & Noble, but Home Depot is the only PayPal partner to have legal action taken against it so far.”

In a loosely related post at InformationWeek, Fritz Nelson shared some insights he gleaned last week at Mobile World Congress. Nelson noted that mobile payments discussions tend to “devolve into debates” about the efficacy of various mobile payments technologies — mobile wallets, NFC, QR codes, authentication systems — or on who will lead the way in setting payments standards or “run the payment rails.” He said he’s now convinced those are bits and pieces of the bigger picture — the race isn’t who can make the best digital wallet, but who can create the ecosystem that will allow for a “frictionless consumer experience.” You can read Nelson’s post at InformationWeek.

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December 06 2012

Commerce Weekly: Same-day delivery war heats up

Here are a few stories that caught my attention in the commerce space this week.

The high price of instant gratification

The Wall Street Journal’s Greg Bensinger took a look this week at the e-commerce same-day delivery trend, a service eBay, Wal-Mart and Google have been experimenting with in order to better compete with Amazon, which has offered same-day service in select locations since 2009.

The obvious benefit for e-commerce retailers is being able to improve the customer experience — providing the convenience of online shopping with the instant gratification of brick-and-mortar shopping. The biggest obstacle is cost. EBay, for example, has hired couriers, paying $12.50 per hour and 55 cents per mile, Bensinger reports, but only charges $5 to deliver a minimum $25 order. Industry analyst Kerry Rice told Bensinger, “Retailers are clearly subsidizing this service to improve the customer experience. Amazon created this monster and everyone has had to jump on board to compete.”

Amazon operating at a loss to draw consumers into its ecosystem is pretty par for its business model, and its deep pockets mean companies are going to have to get creative to successfully compete. Wal-Mart is perhaps in the best position not only to compete with Amazon on this front, but perhaps even overtake and lead the same-day delivery field. Walmart.com chief executive Joel Anderson highlighted for Bensinger Wal-Mart’s advantage: “We have 4,000 Wal-Mart stores and local goods within five miles of most customers.” Each store basically serves as an online distribution center, a scale that Amazon could be challenged to meet, even taking into account its aggressive distribution center expansion plans.

In related news, Google reportedly shelled out more than $17 million to buy Canadian locker storage startup BufferBox this week. As many outlets reported, Google may be positioning itself to compete against Amazon’s Locker delivery service, which allows customers to have goods delivered to secure pick-up stations rather than home addresses.

NFC payment innovation charges ahead, despite obstacles

Despite recent research indicating Apple’s decision to exclude NFC technology from the iPhone 5 has set the NFC payments market back by two years, NFC payment innovation continues. This week, mobile wallet platform Isis teamed up with USA Technologies (USAT) to bring mobile payment technology to vending machines in Salt Lake City and Austin, Texas.

Nick Summers reports at The Next Web the technology will be installed in 7,500 machines that “will accept credit using USAT’s ePort Connect service, which already supports NFC-enabled devices, as well as payments from PayPal and Google Wallet.” As Summers notes, however, the Isis Mobile Wallet app is available only for Android platforms at the moment.

In other NFC news, The Next Web’s Jon Russell reports that digital security company Gemalto announced major partners this week for its UpTeq NFC payment system for mobile SIM cards: American Express, MasterCard and Visa. Russell writes that the payment system uses NFC technology already present in mobile SIM cards, so customers won’t need to worry about external hardware or plug-ins to make payments, redeem coupons, or participate in loyalty programs. The technology is being customized for KDDI in Japan, Rogers in Canada, and Orange in France, according to Russell’s report.

Google aims to be information destination for holiday shoppers

AdAge’s Natalie Zmuda took a look this week at Google’s various holiday retail strategies and how its angling to “become shoppers’ information destination.” Zmuda highlights several newly launched tools that aim to service emerging consumer shopping behaviors that merge online and offline environments. Tools include its 3-D holiday toy collection, indoor maps for select malls and retailers, and its new Shortlists tool. Zmuda notes that “[by] consolidating all of the tools a shopper might want to use in one place, Google is cultivating loyalty and, ultimately, increasing activity into its paid product listing ads.”

Google Shopping VP Sameer Samat told Zmuda that Google’s vision focuses on the big picture: “If we’re helping consumers be more effective in shopping and more activities, they will find Google more relevant and valuable as a company. That’s a good thing for Google, long term.”

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October 18 2012

Commerce Weekly: Targeting Amazon

Here are a few stories that caught my attention in the commerce space this week.

Strategic maneuvers aimed at Amazon

Best Buy LogoBest Buy LogoRetail competition against Amazon is starting to heat up coming into the holiday shopping season. On the heels of Wal-Mart’s recent moves to square off against Amazon, two other big box brick-and-mortar retailers have announced strategies targeting the Internet retail giant.

Ann Zimmerman reports at The Wall Street Journal that Best Buy not only will price match with Amazon this holiday season, but will also offer free delivery for products that are out of stock. Target has its sights set against Amazon as well. In a report on Target’s planned holiday strategy, Natalie Zmuda at AgeAge notes that tactics include “a price-match guarantee against a group of competitors that includes popular online retailers such as Amazon.” Target also is using QR codes in its holiday campaign to combat “showrooming” on the top 20 selling toys.

In somewhat related news, the US Post Office also is making moves into the e-commerce market. Victoria Stilwell reports at Bloomberg that starting in November, the US Post Office will begin testing its same-day delivery program, called Metro Post, in the San Francisco market. The service is aimed at local physical retailers, which could in turn give them a leg up against Internet retailers like Amazon. Stilwell reports that to participate in the Metro Post test, retailers need 10 or more physical locations throughout the US, with one or more within the test market boundaries.

Square exits taxis

New York City’s Taxi & Limousine Commission (TLC) spokesman Allan Fromberg this week unequivocally dismissed rumors from last week that Square was negotiating an official partnership with TLC, alongside news that Square has ended its pilot payment program with the TLC.

Garett Sloane at The New York Post reports that a letter (PDF) sent by Square’s general counsel Dana Wagner to the TLC on Friday “indicated that [Square] needed to overhaul its payment system in light of new rules the commission is drafting to govern credit-card payments in cabs.” Wagner writes in the letter:

“Square has determined, in light of developments in prospective taxicab regulations in New York and other markets, and based on what we have learned conducting the Pilot Program to date, that we wish to pursue a different hardware and software solution for our TPEP [taxicab passenger enhancement project] offering. It would be commercially unreasonable for Square to pursue a new hardware and software solution for a future TPEP offering while at the same time continue to support the software and hardware solution we rolled out in the Pilot Program.”

Ryan Kim at GigaOm says it’s likely that Square will continue working on a taxi-payment product, quoting Wagner’s letter: “… Square looks forward to further improving our product and making commerce and transportation easier for millions of riders and drives in New York and around the country.”

In other Square news, company CEO Jack Dorsey announced that Square would no longer refer to its customers as “users” and appealed to others in the technology industry to follow suit. He writes in a blog post: “The word customer, given its history, immediately sets a high bar on the level of service we must provide, or risk losing their attention or business.” His post includes a letter he sent to his team that explained: “We don’t have users, we have customers we earn. They deserve our utmost respect, focus, and service.”

Isis is gearing up for launch

Google Wallet competitor Isis is finally gearing up to launch its wallet, after a series of delays this summer. The company confirmed it would officially launch in the Austin, Texas and Salt Lake City, Utah markets October 22.

Nathan Olivarez-Giles reports at Wired that the Isis mobile app has shown up in Google Play, but notes that the Wired team had yet to find a compatible phone. Isis head of marketing Jaymee Johnson told Olivarez-Giles, “By year end, as many as 20 Isis-ready handsets are expected to be in market …We look forward to sharing more details on Oct. 22.” Those details likely will include partnering retailers as well. Isis announced partners in May, but as Olivarez-Giles notes, it’s not yet clear which ones will be part of the initial launch.

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October 11 2012

Commerce Weekly: Will NYC taxis get Square?

Here are a few stories that caught my attention in the commerce space this week.

Square may be courting cabs

Square not only is gearing up to launch in Starbucks stores in November — it may also be looking to enter the New York City taxi cab market. Ryan Mac reports at Forbes this week that negotiations may be underway:

“Late Monday, private company expert PrivCo said that the San Francisco-based startup and the city of New York will be announcing an official partnership with the city of New York to implement Square’s payment systems across the city’s cabs. If negotiations are completed as expected, said New York City-based PrivCo, the partnership may be announced as early as this month.”

Mac reports that neither Square nor New York City’s Taxi & Limousine Commission (TLC) would confirm that a deal was in place, but he notes Square has been testing iPad credit card swipers with TLC since March.

As to its forthcoming foray into Starbucks, Lisa Baertlein at Reuters reports that further innovations are in the works even ahead of the launch. At launch, customers will be able to pay for a coffee by having a barcode scanned off a smartphone, but plans are already in the works to use Square’s GPS to identify a customer in a Starbucks location, who can then pay by giving his or her name to the cashier. Also, Cliff Burrows, president of Starbucks’ Americas region, told Baertlein that by summer 2013, customers will have the option and ability to tip using the technology.

Wal-Mart chases immediate gratification, further targeting Amazon

In recent months, Wal-Mart has been positioning itself to square off against Amazon: It announced it would discontinue its sales of Kindle devices, the gateway to Amazon’s retail ecosystem; it amped up its search engine; and it began testing mobile in-store checkout. Now, Wal-Mart again stepped up its competition strategy against Amazon and is testing same-day delivery. Jessica Wohl reports at Reuters:

“The test of the ‘Walmart To Go’ service began in Northern Virginia and Philadelphia earlier this month and is set to expand to Minneapolis on Tuesday, Walmart U.S. said. Walmart then plans to expand the test to California’s San Jose/San Francisco market in late October or early November.”

Wohl says there is a flat $10 fee for same-day delivery of general merchandise that is carried in the customer’s local store, with no limit to the number of items. The test will be limited to just the four markets during the holiday season, but as Wohl noted, the move is targeted not only at Amazon, but also at Target: Minneapolis happens to be Target’s hometown. Amazon has tested same-day delivery in the past, and it may be positioning itself for larger scale same-day capabilities.

The mobile payment war, major player edition

Kit Eaton at Fast Company took a look this week at the ongoing war to control mobile payments, focusing on the four major players who have the heft to effect real change: Google, Apple, Amazon, and Facebook.

Taking one company at a time, Eaton highlights each player’s advantages and innovations being brought to the table. Google, for instance, started tinkering with online micropayments last week, launching its Google Wallet for web content. Being touted as an “experiment,” the Internet giant is attempting to mainstream a pay-for-content model, wherein users pay for individual articles and web pages. Eaton writes, “It’s essentially Google enabling a micropayment paywall for online content providers, with a frictionless payments for users.”

In the Apple arena, Eaton focused on Passbook, which isn’t a mobile payments solution … yet. Eaton says Passbook may have the initial, basic wallet capabilities and the audience reach to serve as the gateway drug for mobile payments, easing consumers through the culture shock. He writes:

“But as soon as Apple gets everyone comfortable with using your iPhone like this — including passing it under a barcode scanner when you buy your venti Chai Tea Latte, for example — it’s not too much of a leap to imagine Passbook 2.0 offering a popup that says something along the lines of: ‘Would you like to pay for this now?’ And with a single tap — you’ve got a mobile payments system running on iOS.”

Eaton also looks at Facebook, which is perhaps one of the less obvious mobile payments space competitors, “[b]ut its decision to enable in-app frictionless payments via carrier billing hints at a different future,” he says. Amazon, too, isn’t an obvious contender, but Eaton points to rumors of an Amazon payments product to compete with Square. Eaton also reminds us of Amazon’s vast interconnected ecosystem: “If Amazon enabled mobile payments via an own-brand smartphone or its app, it would be able to leverage its hundreds of millions of registered customer credit details in the same way Apple could do with iTunes.” His post is well worth the read.

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