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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”

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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July 19 2012

Commerce Weekly: Amazon chases immediate gratification

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

Same-day delivery could be the Holy Grail for Amazon, kiss of death for physical retailers

Farhad Manjoo at Slate took a look this week at Amazon’s change of heart in its tax war with US states and what it might mean. Manjoo notes the company dropped its sales tax fight with California last fall and began signing tax agreements with many states, including California, New Jersey, Indiana and Nevada.

Looking at an investigative series the Financial Times is conducting on Amazon (subscription only), Manjoo reports that this move plays into Amazon’s new game strategy: to set up distributions centers all over the country in order to achieve same-day delivery speeds in as many locations as possible. Manjoo says the implications of this for brick-and-mortar retailers are hard to overstate:

“Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.”

Christopher Matthews at Time Business took a look at the Amazon situation as part of a series on the future of retail. He cites analyst Aaron Kessler’s estimation that “e-commerce represents roughly 12% of retail sales overall and that that figure could double in the next 10 years,” and he notes that Amazon isn’t just growing along with the market: “It’s actually gaining market share in that category — by growing at three times the rate of e-commerce overall.” Matthews addresses Manjoo’s piece at Slate as well, and doesn’t necessarily agree that brick-and-mortar retailers will be “hosed.” Matthews argues that Amazon is strong, but competition is fierce:

“Indeed, traditional retailers do not see their obsolescence as inevitable and are doing all they can to leverage their main strength: their brick-and-mortar stores. And there is reason to believe that many will have success with this strategy. Consumers still want the social experience of in-store shopping. They want knowledgeable and attentive service, and they want to test, touch and try on products before they buy them.”

Both posts are well worth the read: You can find Manjoo’s piece here and Matthews’ piece here.

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

JC Penney to launch mobile checkout

Though some predict Amazon and e-commerce will wipe out brick-and-mortar retailing, JC Penney CEO Ron Johnson is certain this will not come to pass. During an interview with CNN Money’s Miguel Helft at Fortune’s Brainstorm Tech conference this week, Johnson defended the position of the physical store. Helft reports: “[Johnson] said he is bullish on physical retailing, and predicted that online retailing, just like catalog shopping a few decades ago, will eventually reach a plateau. He said different categories of retailing will level off at different points, and that ‘the physical store will have a permanent place.’”

Johnson also dropped something of a retail-strategy bomb. Helft writes:

“He announced that JC Penney had scrapped an outdated technology infrastructure and replaced it with an Oracle-based system. The new technology will allow the company to improve the in-store experience with mobile checkouts, self checkouts and tags based on RFID instead of bar codes, which would speed up purchases.”

Kim Bhasin at Business Insider highlighted tweets posted during Johnson’s talk at the Brainstorm Tech conference that indicated the mobile self-checkout system would be in place by the end of 2013. During his interview with Helft, Johnson, who formerly was the Senior Vice President of Retail Operations at Apple and pioneered Apple’s Genius Bar and retail store concepts, compared JC Penney’s situation to Apple’s renaissance. He said Apple had “much tougher years” than what JC Penney is experiencing and noted that “[t]ransformation takes time.”

PayPal buys

PayPal announced this week that it has acquired, a startup that allows developers to scan credit card data using a smartphone camera. Hill Ferguson, PayPal’s VP of global product, wrote on the company blog that the acquisition will allow the team “to work on projects that will accelerate innovation at a scale that’s just not possible at a startup.” Hill also noted the technology will still be available to outside developers, which could point to a licensing strategy down the road, but Hill didn’t elaborate.

PayPal already had integrated’s technology into its PayPal Here product to better compete against Square, but Ryan Kim at GigaOm notes the technology opens other doors as well, allowing “PayPal to not only facilitate more payments but also potentially help with other visual scanning uses such verifying identification cards.” Kim also points out that the acquisition “keeps out of the hands of Square or other competitors.” This acquisition is PayPal’s second in the mobile payment arena, having acquired Zong last year.

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