ENTRIES TAGGED "Commerce Weekly"
Amazon patent may address payment privacy concerns, Warby Parker outfits store with sensors, and Alipay launches sound wave payments.
Editor’s note: This will be the final installment of our Commerce Weekly series.
Mobile payments security, privacy concerns rise; Amazon may have a solution
The race is on to democratize mobile payments, to create a solution that improves the payment experience for consumers and merchants to the extent that it will replace traditional payment methods. Some experts, however, are concerned that technology developments are failing to address increasing concerns with security and privacy.
Kirk Ladendorf reports this week that smartphone security software company NQ Mobile noted a rise in worldwide phone malware threats from 24,000 in 2011 to 65,000 in 2012. In an interview with Ladendorf, Gavin Kim, chief commercial officer at NQ Mobile, warned that “[s]martphone sales are booming, and they are becoming a much more targeted device by hackers.”
Brent Warrington, CEO of online and mobile payment company SecureNet, disagreed, telling Ladendorf that he’s “comfortable and confident in the level of security of [payment] transactions” through his company, noting that the transaction information is “encrypted from end to end.”
While security concerns may be getting addressed, Ladendorf says that privacy advocates don’t see the same attention being given to privacy concerns and the “potential misuse of growing mountains of electronic data tied to the spending patterns of individual consumers.” Ladendorf notes that the same advances that make mobile payments more enjoyable and convenient also make it easier for companies to mine consumer data. He quotes from a McClatchy newspaper interview with Jeff Chester, executive director of the Center for Digital Democracy, in which Chester said, “[Mobile payment] is about exposing your financial behavior to a daisy chain of financial and other marketers who have a very detailed understanding of where you are, how you spend your time and what you buy.”
iWallet may arrive yet, PayPal's new partnerships prepare for launch, and mobile payments hit fast food.
iPhone patent application focused on “a method for conducting a financial transaction”
The US Patent & Trademark Office published a new patent application from Apple this week that indicates potential advancement on the iWallet mobile payment front. Jack Purcher at Patently Apple dug in to find what set this patent application apart from other iWallet patent applications previously filed and found that this application “focused on ‘A method for conducting a financial transaction‘” (emphasis is Purcher’s).
Purcher pulled out 14 specific claims in the patent related to conducting a financial transaction. The first not only describes how the transaction will take place, but indicates near field communication (NFC) could be accommodated:
“1. A method for conducting a financial transaction comprising: taking a picture of a first code displayed on a transaction terminal using a camera of a portable electronic device; and sending data from the portable electronic device to the transaction terminal to conduct the financial transaction with the transaction terminal using a near field communication channel or another wireless communication channel, or both, wherein the data is derived from the first code to enable the transaction terminal to verify that the portable electronic device is physically located near the transaction terminal.”
Wal-Mart and Google pursue speedy delivery. Elsewhere, more reasons for retailers to fear smartphones, and mobile may be eBay's best bet.
Wal-Mart wants to crowdsource delivery, while Google chases same-day
On the heels of launching its in-store delivery locker program to compete with Amazon Locker, Wal-Mart has announced it’s toying with the idea of having in-store customers deliver online orders to speed delivery times. Reporting on the news at Reuters, Alistair Barr and Jessica Wohl note that, in essence, Wal-Mart would be experimenting with the growing crowdsourcing trend that works well in so many other areas, so why not for Wal-Mart delivery? They write:
“A plethora of start-ups now help people make money by renting out a spare room, a car, or even a cocktail dress, and Wal-Mart would in effect be inviting people to rent out space in their vehicle and their willingness to deliver packages to others.”
Barr and Wohl mention a few of the “why nots” — numerous legal, regulatory and privacy obstacles — but report that Joel Anderson, chief executive of Walmart.com, believes it to be a viable plan. “This is at the brain-storming stage,” he says, “but it’s possible in a year or two.”
At Bloomberg’s Businessweek, Susan Berfield points to the bigger picture: “Even if the idea never moves past the hypothetical, the fact that Anderson is even talking about it signals how serious a threat Walmart considers Amazon.” Wired’s Laura Heller agrees, noting that though there are “far too many unattractive variables” for this program to become a reality, “it shows the retailer is thinking outside of the box when it comes to competing with its online competition, Amazon.”
Revealing shopper behavior, retail battles web with experience and service, and Starbucks' struggles with Square.
Snooping on shoppers pays off
Liz Gannes took a look this week at how online retailers’ desires to track consumers’ shopping habits are resulting in emerging startups offering services to track various behaviors on behalf of retailers. In a post at All Things Digital, she highlights newly launched startup Sift Science, which tracks online shopper behaviors to uncover fraudulent activity, and Commerce Sciences, a startup in beta that offers online retailers a Personal Bar for their websites that uses behavioral science to increase online sales.
Gannes outlines a few interesting insights each company has gleaned from aggregating consumer shopping data. For instance, Sift Science has found that a shopper who types her last name in all caps is 5.6 times more likely to be a fraudster, and shoppers who don’t sign in with a Facebook log-in are four times more likely to be fraudsters. Early findings from Commerce Sciences include using the word “free” — as in “you have won a free coupon” as opposed to “you have won a coupon” — increases sales by 15%, and social influences from displaying what a user’s friends liked and bought had zero effect during the day but resulted in 49% more sales in the evening. You can read Gannes’ report at All Things Digital.
In related news, it turns out Facebook ads are strongly influencing the platform’s users’ buying habits, even if they’ve never ever clicked on an ad in Facebook. Farhad Manjoo reports at Slate on in-depth studies conducted by Facebook showing that ad clicks don’t matter. He reports:
“‘On average, if you look at people who saw an ad on Facebook and later bought a product, [fewer than] 1 percent had clicked on the ad,’ [Sean Bruich, Facebook's head of measurement platforms and standards,] says. In other words, the click doesn’t matter; people who click on ads aren’t necessarily buying, and people who are buying are almost certainly not clicking.”
More notable, however, might be the way Facebook is managing to gather this data. Manjoo notes that last year, Facebook partnered with consumer data aggregator Datalogix, which tracks the purchasing behavior of more than 100 million U.S. households by tying consumer identities to their purchases through store loyalty cards. Manjoo writes:
“Over the past few months, Facebook and Datalogix figured out a way to match their respective data sets in a manner that maintains people’s privacy … Facebook can now tie its users to the stuff they buy at supermarkets. Armed with this data, Facebook began running a series of analyses into the effects of advertising campaigns on its site. If, say, Procter & Gamble ran a Facebook ad for Tide, Facebook could look at Datalogix’s data to see whether people who were exposed to the ad tended to purchase more Tide in the weeks after the campaign.”
Manjoo looks at the differences between direct-response and demand-generation marketing, and compares Facebook’s ad practices with TV advertising. You can read his report at Slate — it’s this week’s recommended read.
Intuit Pay in the UK, PayPal Here vs Square Register, retail insights from SXSW, and FTC chimes in on mobile payments.
Intuit Pay enters U.K., PayPal Here takes on Square Register
On the heels of PayPal announcing it would bring PayPal Here to the U.K. later this year, Intuit launched its Intuit Pay mobile payments solution in the U.K. market. The platform includes a mobile app and a card reader, much like its competitors iZettle’s, Payleven’s and (soon) PayPal Here’s platforms.
Ingrid Lunden reported at TechCrunch that like its competitors, Intuit Pay will charge a per-transaction fee — in its case, a 2.75% flat rate — but unlike its competition, Intuit will offer its mobile payment card readers for free for a limited time. Lunden noted that Intuit Pay will be able to integrate with Intuit’s QuickBooks accounting software and its other business products, so offering the card reader for free doubles as an incentive for merchants to join Intuit’s business ecosystem.
The card reader at launch is available only for iOS devices, but Lunden reported that “other platforms like Android are on their way soon.”
In related news, PayPal launched PayPal Here for the iPad to compete with Square Register as a small business point-of-sale solution. Leena Rao reported at TechCrunch that the app — PayPal’s first native tablet app — features multiple log-in capability to accommodate multiple employees and multiple “cash registers,” and allows for a variety of payment methods, including swiping a credit card with PayPal Here, manual card number entry, and scanning a card using Card.io. Rao also noted that the app integrates with eBay’s RedLaser technology so merchants can scan barcodes to make a sale or even to add to their inventories, something Square Register isn’t yet capable of doing.
PayPal’s new iPad app only works in the U.S. using the PayPal Here dongle, but Rao reported that PayPal intends to integrate the technology with its international offerings in the future.
Google Shopping Express rumors, consumers want free — not same-day — delivery, and PayOne sues Home Depot.
Is Google gearing up to battle Amazon head-on?
The 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.”
Google's stores, Best Buy's online price match, Amazon's retail domination strategies, and Square's Business in a Box.
Google takes on brick-and-mortar; Best Buy takes on ecommerce
The Google retail store rumor ignited again this week. Seth Weintraub reported at 9to5Google that “[a]n extremely reliable source has confirmed to us that Google is in the process of building stand-alone retail stores in the U.S.” to be opened in time for the 2013 holiday season. The Wall Street Journal’s Amir Efrati followed with confirmation from “people familiar with the matter,” though one of those people said it wouldn’t happen this year.
Across the board, analysts seem to think it’s a good idea. Alyson Shontell at Business Insider noted that as Google becomes more of a hardware company — with its Android devices, Google Glass, and self-driving cars — analysts say it’s time for Google to work on its brand image, which will require consumer interaction, something the company hasn’t done much of up to this point. Google executives seem to agree — Weintraub reported that retail store plans started to solidify along with plans to offer Google Glass to mainstream consumers. “The leadership thought consumers would need to try Google Glass first hand to make a purchase,” Weintraub wrote. “Without being able to use them first hand, few non-techies would be interested in buying Google’s glasses (which will retail from between $500 to $1,000).”
AmEx now lets you buy with hashtags, 3D printing threats to retail, and PayPal comes to the gas pump.
American Express turns Twitter into an ecommerce platform
American Express announced an enhancement this week to its Sync with Twitter feature — users can now buy things with a tweet. Tricia Duryee reports at All Things Digital that all users will need to register to participate, even previous users of the sync feature, in order to provide a delivery address for purchased items. Once registration is complete, Duryee says, the purchasing process is pretty straightforward:
“For instance, participants will be able to buy a $25 American Express Gift Card for $15 … by tweeting #BuyAmexGiftCard25. American Express will reply via Twitter, asking the user to confirm the purchase in a tweet. All products will be shipped via free two-day shipping.”
Marc Andreessen predicts the end of retail; expansion plans at Starbucks, Intuit; and Newegg takes down a patent troll.
Here are a few stories that caught my attention in the commerce space this week.
Death bells toll for brick-and-mortar retail
A recent report from mobile analytics startup Flurry looked at the growth in consumer use of shopping apps and concluded the “App & Mortar economy has arrived.” Flurry president and CEO Simon Khalaf reviewed their research results in a blog post on the company website, noting that “consumer time spent in Retailer Apps has skyrocketed by 525% from December 2011 to December 2012,” exceeding the shopping app growth of 274% as well as overall app growth of 132%.
Khalaf points out that it’s “mission critical” for retailers to start extending their reach to consumers beyond the brick-and-mortar walls and into connected devices such as smartphones and tablets. “In the App & Mortar economy, the battle for deeper consumer relationships is beginning,” he writes, “and there are already thousands of apps for that.”