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December 01 2011

Commerce Weekly: Cyber Monday lives up to hype

Here's what caught my attention in the commerce space this week.

US online shoppers spent $1.25 billion on Cyber Monday

Screenshot from Amazon's iOS appWe knew we were going to spend a lot of money over the four days from Black Friday through Cyber Monday; all the TV commercials, digital ads, and forecasters told us so. But no one knew just how much until it was over — and no one saw how much of the spending was going to happen online. After it was over, when the purchase buttons had been clicked and the UPS trucks were rolling, Cyber Monday (Nov. 28) turned out to be the heaviest U.S. online spending day in history, according to ComScore. Shoppers spent $1.25 billion online, 22% more than on Cyber Monday 2010, the only other billion-dollar-plus day in online spending history. This year's Cyber Monday splurge capped a month of intensifying sales: more than $15 billion spent online since the beginning of the month.

If online sales growth was healthy, the growth in mobile sales was practically supernatural. PayPal Mobile reported a 552% increase in global mobile payment volume on Cyber Monday 2011 compared to the same day a year earlier. Of course, percentages are bound to look big when the baseline starts out low, and mobile payments have come a long way in the past 12 months. Claudia Lombana, PayPal shopping specialist, wrote on the company's blog that mobile sales volumes were 17% above those on Black Friday and volume was heaviest between 2pm and 3pm PST — suggesting that, on the East Coast at least, shoppers waited until the workday was (mostly) done.

So, does all this activity mean that consumer confidence has returned and we're about to buy our way out of the economic doldrums? Not exactly, writes Sheyna Steiner on Bankrate's November Financial Security Index reports that 42% of Americans say they plan to spend less this holiday season while only 10% expect to spend more. Black Friday and Cyber Monday mania may be less about kicking off an orgy of spending than they are about seeking the best bargains to stretch limited funds.

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

A chat with a Groupon Now merchant

GrouponGroupon saw a big boost over the Black Friday-Cyber Monday weekend, too, reporting a 500% increase over last year for those four days. It's a little hard to keep track of whether Groupon is hot or not. Its Nov. 4 IPO blew past critics, raking in $700 million to become the biggest initial public offer since Google's in 2004. But within a few weeks, it saw its share price drop from its $26.10 opening-day closing price to $15.24 earlier this week. A boost in holiday sales could improve its standing, but many analysts are still saying the shares should be priced lower.

Whether Groupon's share price rises or falls, investors would do well to focus not on on its over-hyped daily deals, but on Groupon Now, the company's real-time discount service that lets merchants control when and how to offer deals. To find out more about it, I spoke with Dennis Cavanaugh the owner of 5 & Diner in Mesa, Ariz. Cavanaugh, who started out with a daily deal earlier this year, says he likes the flexibility of Groupon Now better. For example, he was able to increase one coupon offer of $10 for $20 worth of food up to $12 for the same offer and noted that there was no drop-off in uptake — so, he kept it there. "I can pause it, unpause it, change the hours of redemption, all the do-it-yourself things," he says, "and I don't have to call someone in Chicago. It's all in real time. There's no lead-time required on the decisions."

Cavanaugh says that Groupon Now customers are also more likely to spend over the coupon amount than customers who bring in coupons clipped from a newspaper — $6 to $8 more on average. He suspects it has something to do with the fact that they're affluent enough to afford a smartphone. And he notices that the Groupon Now offers bring in customers from further afield than the 3- to 5-mile radius that most of his customers come from.

Cavanaugh says he probably wouldn't make another daily deal offer: "I like Groupon Now better. Groupon gave us a huge surge in its booking period, but you can't control any aspect of it once it's out there. It was my first try, and I didn't know if the coupon was priced right. I know a lot more now. I think [Groupon Now] is a better tool for me to draw people in."

RIM pursues a mobile wallet

BlackBerry Curve 9380Research in Motion announced two more Blackberry devices that support near field communication (NFC) and RIM's small mobile-wallet trial with Telefónica, the Spanish telecom.

The Blackberry Bold 9790 and Curve 9380 join a few existing models that support NFC wireless communication, the leading contender for tap-and-pay wireless technology in mobiles. The RIM trial isn't at the scale of what Isis is planning in the coming year, let alone the real-world capabilities of Google Wallet on Sprint's Nexus S phones. At Telefónica's headquarters in Madrid, 350 employees will get Blackberries that let them make purchases and gain access to the company's buildings.

It's not exactly tap-and-pay on the Metro, but it's a start — one that RIM is hoping will slow its sliding market share to Android and Apple.

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, a collaboration between O'Reilly and X.commerce.


November 03 2011

Commerce Weekly: Square upgrades Card Case with geofences

Here's what caught my eye in the commerce space this week.

Card Case can reach out and touch someone

Square Card CaseIf you're among those who downloaded Square's Card Case digital wallet app back in May and haven't opened it since, there's something new in the latest upgrade that may inspire a return visit to the app: geofencing. Card Case's latest version takes advantage of new capabilities in iOS 5 to trigger alerts when a user enters a geofenced area. Users have to opt into the feature. Once they do, when they pass within 100 meters of a retailer who uses Square, the app will automatically load a card in Card Case. If you visit the shop and opt to buy something, you can complete the transaction by giving your name at the register and confirming the purchase through a text message that arrives on your mobile.

The process still sounds a little less convenient than paying for coffee with a five-dollar bill — and I must confess I wasn't able to demo this today, though I will follow up here once I do. But in theory, this makes Card Case a far more interesting app to parties on both sides of the transaction. Here's why:

  • First, for those of us who buy stuff — Card Case is an early form of the mobile wallet, one that isn't waiting for phones or merchants to adopt NFC wireless. Unfortunately, few merchants use it. It's no doubt more interesting downtown (isn't everything?). But I live in a medium-sized suburb where most of the nearby Square-enabled merchants offer services I don't use much: film editing, spa services, wine-country tours. It's not going to be much help in keeping track of my expenses unless Square makes some deal with a larger network of merchants.
  • Second, for those who sell things, the value is clearer — You can reach out and tap customers who may be close and ready to buy. As I noted this summer, Placecast is another player developing this service. Its ShopAlerts send out texts (for other merchants, not under its brand) when opted-in customers wander into a retailer's geofenced area. Groupon Now has also entered this game, giving merchants the ability to manage offers in real time. Undoubtedly, Square will want to offer similar capabilities to its merchants so they can clear the shelves or fill the tables in real time.

The back-end data and analysis that retailers get from these services is valuable, but the real-time customer management seems like the key feature of these apps. Placecast CEO Alistar Goodman offered a prediction about location and real-time at the recent Street Fight Summit:

Location and time are far more predictive of intent than any other past behavior ... We're fast approaching a time where you're going to be able to bid on a user on a street corner at a particular point in time in real time.

The age of virtual barkers is upon us.

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

Survey: Mobile users say take my location but not my money

Oracle released results of a global survey of 3,000 mobile phone users, which highlights a few key trends:

  • Customers are becoming more comfortable sharing location data about themselves, but most still don't trust mobile security enough to buy stuff on them.
  • While tablet ownership remains fairly low, lots of people are planning to buy them and they want apps that work well on them.

It's no surprise that the survey found subscribers downloading more data and apps this year than last. But I was surprised at the timidity around mobile apps: still only 55% of users had downloaded a mobile app, and only one in four had paid for an app. (I'm guessing their iOS 5 upgrade went quicker than mine.)

Where consumers want to use popular types of apps (Source: Oracle Communications survey, "Opportunity Calling: The Future of Mobile Communications — Take Two.")

Shopping is obviously becoming more important, but for most the mobile shopping experience is still limited to pre-purchase research. Depending on the region, the survey found between a third and a quarter of survey respondents used their mobile phones for comparison shopping and reading customer reviews. But only one third believed their phone was secure enough to make a purchase on. In a related note, 84% bought their phone in a retail store, though most said they did their research online.

Smartphone ownership is rising quickly, but I wonder if the survey overstates it at 70% globally. According to Oracle's research, the U.S. and Europe have 56% and 57% smartphone ownership, respectively. That sounds in line with other reports. But the survey attributed 95% smartphone ownership in the Middle East. (The survey appears to have taken its entire Middle East sample in the United Arab Emirates, which may not be representative of the region as a whole.)

The survey also found that smartphones are outpacing owners' expectations of them.

  • In 2010, 52% thought their mobile phone would replace their digital camera; this year, 43% said it already has.
  • In 2010, 54% thought their mobile phone would replace their digital music player; this year, 34% said it already has.
  • In 2010, 54% thought their mobile phone would replace their GPS; this year, 24% said it already has.

Finally, the survey revealed rising enthusiasm for tablet usage. While only 16% said they have a tablet today, 41% plan to buy one over the next 12 months. Reading, watching television and movies, and banking ranked high on the list of things users wanted to use their tablets for, and in most cases they want these sorts of applications to work equally well on both tablets and their mobile phones.

You can download the report's executive summary here.

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 PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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October 27 2011

Commerce Weekly: Groupon's long and winding road to an IPO

Here's what caught my eye in the commerce space this week.

At last, Groupon's investor show hits the road

GrouponIt hasn't been an easy road to the NASDAQ for Groupon. Since it announced plans to go public last June, the leader in daily deals has lost its second COO in a year, endured an inquiry by the Securities and Exchange Commission, and had to make the embarrassing revelation that it was reporting revenues before paying merchants their cut. After delaying its investor roadshow in early September, Groupon launched it this week with an eye toward going public and raising $540 million on November 4. It's seeking a valuation of $11.4 billion, which is pricey compared to other tech leaders (5 times projected 2012 sales) but less than half the $25 billion it was said to be considering earlier this year. Investor enthusiasm, it seems, has waned.

No sooner did Groupon pack up its PowerPoint and hit the road than Yipit, which aggregates daily deals, reported that Groupon's most promising new service, Groupon Now, is off to a disappointing start. Groupon is promoting Now as "Groupon 2.0." The hope is that strong growth in Now will offset its original product, the daily deal, as that method plateaus in popularity. On the Yipit blog, David Sinsky writes that since its May launch, Groupon Now has drawn in less than $1 million per month, less than 1% of the company's revenue. Sales are strongest in Chicago, Groupon's home market, but even in that locale, Now is only on pace to generate $1.5 million annually.

Slow start aside, I can't help thinking there's tremendous potential for Groupon Now because it puts the control in the retailers' hands. As Groupon's Now video shows (below), local merchants can offer deals whenever they have available inventory they want to move, whether that's empty tables or merchandise on the shelves. They can define the deals, start them when they want, and end them when they've hit their limit. Whenever online companies have offered this level of control to sellers, the response has proved tremendous — think of eBay or ads on Google and Facebook. Groupon Now's value proposition to merchants is far greater than the daily deals, where merchants must get in a queue and wait for their special day, on which they're likely to be overwhelmed. What's more, Groupon Now will allow for much lighter-weight, coupon-like deals. Frequent readers of this blog could have guessed that I'm pleased the narrator of the video passes up offers of discounts for a yoga class, Segway tour, and glamour makeover, choosing instead the more mundane but useful discount on a hamburger for lunch.

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

Square and Walmart

SquareMobile payments company Square moved a step closer to mainstream ubiquity this week when Walmart agreed to sell its iconic card-swiping device at more than 9,000 stores. You can already buy the Square at Target, BestBuy, RadioShack or Apple stores — or you can get it for free online. The device remains targeted squarely at small- and medium-sized business, companies that don't process enough volume to justify their own merchant accounts and use Square's service to process credit card payments. Square's marketing aims mostly at these small merchants, but in May it also launched its own mobile wallet, Card Case, which aims to let users run something like a tab at their favorite stores and pay by confirming the purchase on their mobiles — it's similar to direct billing.

Square's COO Keith Rabois has recently been positioning Square as a mobile payment alternative that doesn't rely on an NFC-powered future. "I've never met a single merchant in the U.S. who says I want this NFC thing," Rabois said in an interview with GigaOM founder Om Malik at last month's GigaOM Mobilize Conference. Indeed, consumers don't need any sort of mobile phone — NFC-enabled or otherwise — to complete Square transactions. It's the merchant who provides the "mobile" in this mobile payment: the Square, plugged into a merchant's phone (or tablet) takes the card swipe and processes the payment. With Square going on sale at Walmart, expect more merchants to be doing just that — though we don't expect Walmart to be one of them.

Tap and pay at 35,000 feet

Flight passengers have gotten used to flight attendants swiping their credit cards to collect payment for chicken wraps and mini bottles of Merlot. Now, WestJet, a Calgary-based airline, will try MasterCard's tap-and-pay PayPass system on some flights. NFC News reports that this system, once in place, will also allow NFC payments on mobile phones. But do passengers want to pass their phones to the aisle? American Banker quotes Brian Riley, senior research director with TowerGroup, as saying it might be a stretch. "While you might not mind handing your credit card momentarily to a stranger, the whole point of mobile payment is that you get to hold on to your phone; you don't want everyone touching it."

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 PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


September 01 2011

ePayments Week: Financial Times bets on its web app

Here's what caught my attention in the payment space this week.

Financial Times drops iOS app

Financial Times web appThere are at least two big issues involved in The Financial Times' decision to pull its iPad and iPhone apps from the iOS App Store this week: one is about data; the other is about money. The FT, along with other publishers, has complained that the key sticking point in Apple's new requirement that all purchases, including subscriptions, go through the App store, has been the question of who controls the relationship with the subscriber. The publishers see these as their readers, and they want to know everything about them. And when readers upgrade or renew their subscriptions, the publishers want to deal directly with them. The view from Cupertino is different: these readers appear to be iTunes subscribers making an in-app purchase. For delivering this consumer to the app maker (the FT in this case) Apple would like its 30% cut of revenue. That may have been a factor in the FT's decision, though it seems the amount of money it would have had to give up — Robert Andrews at figured it at $1.63 million at the high end — would have been fairly insignificant to FT's parent company Pearson (and even more so to Apple with its billions in cash).

The FT's withdrawal comes as no surprise. Its online and print versions have been encouraging readers all summer to dump their iOS apps and switch to's "web app" — its HTML5 site that displays nicely on the iPhone and iPad. The Wall Street Journal reported that more than 550,000 users have the web app. PaidContent's Andrews speculated that the web app's adoption may have been spurred by a promotional offer earlier this summer granting full access to the site. ( is primarily a paid-subscription site, allowing only 10 free articles to registered users every 30 days.)

Lest we wonder if "the pink 'un" knows what it's doing in walking out on Apple and its 200 million store members, we should note that has run successfully on its paid subscription model for more than 10 years, even during the days when most mainstream news publications believed they could never charge for online content. Some publishers have come around to the FT's model, most notably The New York Times, which resumed charging for full access to online content earlier this year.

What's more, the FT says it hasn't completely abandoned Apple and, according to a Reuters report, still plans to distribute future apps in its store, including one for its luxury weekend magazine, "How to Spend It." Apparently, those are subscribers that the FT doesn't mind sharing with Apple.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

Save 20% on registration with the code AN11RAD

Flickr's geofencing: setting access based on location

Last week, I wrote about geofencing in the context of Placecast's service to announce deals and other offers when subscribers enter a virtually delineated space. This week, Flickr rolled out another interesting use of geofencing: automatically setting privacy restrictions on photos based on where they were taken. Flickr's blog explains the new feature, and creating a geofence and linking it to access preferences is a quick and easy process.

Flickr geofence example

Flickr's geofencing is a mashup of two services that its members are already familiar with: geotagging photos and setting limits on who can see them. But in combining these two simple features, Flickr (and parent Yahoo) will offer many consumers the first glimpse of a new degree of control they will gain over the intersection of their digital and physical worlds: setting controls over what happens when they move from one location to another.

As a bonus, there's a nice post on describing the details of the feature and the fun process the coders went through to pull it together: "We met at Nolan's house, ate a farmer's breakfast, and brainstormed."

Is daily deal fatigue getting you down?

Robert Hof has a compelling column on Forbes: "5 Reasons Daily Deals are Tanking — and 3 Reasons They're Not Dead Yet." Movements this week among the category's top players would seem to confirm the ambiguity of that headline. Facebook has said it will stop its four-month old Deals program and Yelp said it would scale its program back (CEO Jeremy Stoppelman said "it hasn't been all rainbows and unicorns"). Meanwhile, Google appeared to be ratcheting up its Offers program, even promoting an offer on its legendarily sparse home page ($5 tickets to New York's American Museum of Natural History). And Groupon continued to storm toward its anticipated IPO.

I tend to agree with one of Hof's main points: too many offers are for expensive, bucket-list or birthday-party events, like flying in a hot air balloon or learning to scuba dive. Google Offers appears to take a more budget-friendly approach, offering things that people really buy every day. Google launched its Offers in Portland in June with a $3 deal at Floyd's coffee, and it continues to promote cheap recession-friendly luxuries, like $7 worth of frozen yogurt. But even Google Offers suffers from an excess of kayak rental offers.

I have to wonder if all the wine-tasting and helicopter ride offers are part of the reason why Groupon has seen its web-based traffic drop by half since June, as reported by Experian Hitwise. It may be that while there is a continuous appetite for bargains on things we consume every day (like coffee and bread), it's more difficult to sustain interest in endless offers for boot camps and laser-based body slimming.

Got news?

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

If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.

Fence photo: Fence Friday by DayTripper (Tom), on Flickr


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