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September 06 2012

Commerce Weekly: Mainstream mobile payment a decade out?

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

Gimmick to mainstream — the difference a decade can make

With Square teaming up with Starbucks, PayPal partnering with major chains like Home Depot and McDonald’s, and all the hype and speculation around the new iPhone having or not having NFC to facilitate payments for Passbook, mobile payments are getting a lot of ink. But when will mobile payments be fully mainstream? Not for at least 10 years, writes Christina Bonnington this week at Wired. Bonnington points to slow adoption and infrastructure holdups as the major bottlenecks:

“Forrester Research estimates only one-fourth of U.S. consumers will own an NFC-enabled phone by 2016, with 100 million shipping in 2012. Until a solid majority of consumers own such devices, merchants have little incentive to create an infrastructure as receptive to smartphone payments as it is to cash and credit cards.”

Bonnington notes that credit card companies are pushing for merchants to upgrade their systems to accept contactless payments, but as analyst Mark Hung told her, this alone could take up to a decade. Bonnington points out that even after that happens, mainstream mobile payments will still face obstacles similar to those that credit card payments face now: competing platforms that force consumers to carry multiple credit cards to accommodate merchants who accept MasterCard and Visa but not Discover, for instance. Imagine a merchant accepting PayPal and whatever Apple develops but not Google Wallet or Isis. Adding to the chaos, processing fee distribution between banks and hardware/software developers will need to be sorted out, she says, as will agreements on how data gathered via mobile payment will be handled.

In a similar vein, Chris Ziegler at The Verge also argued this week that mobile payments are not ripe for the mainstream and pointed to the ultimate hurdle: consumer frustration and distrust. Ziegler shares a personal experience that highlights the cumulative result of the issues Bonnington noted together with the unreliability of cellular networks: even mobile payments in stores that are set up to accept them don’t always work. Until mobile payments become as reliable and ubiquitous as cash and credit cards, he argues, they’ll remain a gimmick.

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

Wal-Mart tests mobile checkout, cashes in with new search engine

Wal-Mart joined the likes of JC Penney the Stop & Shop grocery chain when it began testing a mobile checkout service this week. Chantal Tode at Mobile Commerce Daily reports:

“The new Scan and Go [iPhone app] service is being tested at a single store in Arkansas, according to published reports. While customers will be able to scan items with their iPhone, they will not be able to pay via mobile at this point. … The mobile checkout service is currently being tested by employees at the Arkansas store and has not been rolled out to shoppers yet. Users will be able to transfer a list of items they have scanned to a self-checkout kiosk and then pay in one step.”

The motivation behind the new service, Tode reports, is to shorten customer wait times in line and to reduce the checkout area footprint.

Wal-Mart also reported this week that Polaris, the search engine it custom built for its website, is now fully rolled out in the U.S. Nidhi Subbaraman at Fast Company took a close look at how the search engine works:

“One of the ways Polaris is designed to augment the search experience is by treating search terms as categories. So, a search for ‘garden furniture’ may not serve up results with the word ‘garden’ in it, but would offer up suggestions and options for hardy and rainproof, garden-friendly furniture.

Another interesting feature of the search engine is that a product’s popularity on social media sites plays a role in its resulting search display. Sri Subramaniam, VP at WalmartLabs, told Subbaraman “[t]his ‘product popularity score’ is essentially like a Google page rank.” Right now, Subbaraman reports, the search engine integrates with product placements and “Likes” on Facebook, but “[a] product’s popularity on other social sites like Twitter or Pinterest could also one day feed into Polaris’s radar.”

So far, the search engine has proven successful for Wal-Mart — according to a post at Reuters, Wal-Mart reports a 10-15% increase in search conversion (the number of customers who make a purchase after searching on the site) since the rollout of Polaris began a few months ago.

Project Oscar gets a thumbs up

The European Commission approved a mobile wallet scheme this week that it began investigating in April as a potential monopoly. The joint venture by Everything Everywhere, O2 and Vodafone, called Project Oscar, was called into question by UK mobile phone network Three when it was shut out of the venture and by wallet competitors Google and PayPal.

According to the BBC, the Project Oscar founders plan to “release a unified smartphone-based service offering an alternative to cash, credit cards and loyalty cards,” and intend to “create a new company and begin hiring staff ‘as quickly as possible,’” though no launch date for the new wallet has been set.

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Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.


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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