Thanks to some of the posts of Tom Noyes (Author of Finventures). Those articles inspired me to re-evaluate my understanding of the the networks and its functions and got started me to day dream.. and I have just rambled my views here..
My previous post talks about the payment networks and this article talks about a potential network that could encompass the payment network, advertisement network, online, offline, mobile handling any possible emerging payment instrument.
Sounds far fetched?? Maybe, as of today, but each of the contenders have some assets and some are building more assets while some are partnering with others to form a commerce network. Let us take a look at which player can be that platform.
As I am a payments buff, I can think of only those players who are in this industry. Pardon me for not considering other possible contenders..
So, what is this Commerce uber-network/platform? A platform that can “connects” consumers and merchants, gets the best deals for the consumers and the best possible consumers for the merchants and enables a transaction – wherever and whenever! Online, offline, with cash, cards, emerging payment instruments, local, international, etc..
Contenders for Commerce uber-networking platform
Of course, there are several companies today addressing some of the issues. The problem is that they have grown from a certain area of business, but they don’t necessarily work well in the other areas. Here is a quick run-down on which companies could possibly be this uber-network.
1. Amazon orchestrates the commerce well online, but when it comes to other e-tailers or retailers, they cannot even serve as they compete head-on with them. There are certain segments where they can dominate (check my post http://www.niksepa.com/?p=465), but they can never be this uber-commerce network.
2. Visa/Mastercard have built fantastic payment networks (check http://www.niksepa.com/?p=494) but they don’t have the assets to connect the consumers and merchants well. Because of their model, they didn’t have a direct relationship with consumers and merchants till recently. They have started working on wallets and certain other tools, but their very card-centric model doesn’t help them create an unbiased platform!
3. The banks (FIs) had a huge opportunity understanding the consumers/merchants. What great insights than the actual spending patterns and the merchant’s earnings did the banks need to capitalize on? They didn’t capitalize it? Lack of technology agility, heavy focus on compliance or just inertia? Lost opportunity and they are too late to work on such a network now.
4. eBay has created one of the greatest marketplace online, but they haven’t tried to address the offline retailers. A marketplace is not what an offline retailer needs. They need customers. eBay doesn’t have the assets to get these customers. Paypal is attempting to address the retail merchants, but their payments-only focus and strategy is not in a position to create a great value proposition to the retailers. If they are working on a stealth-strategy, they have a chance to create great propositions to the merchant and consumers..
5. Amex (and even Discover in a much smaller scale) is in a great position to create this uber-network. Amex understands the consumers, they understand the merchants, they have direct relationships and they have complete payments technologies, tools and know-how to orchestrate the commerce. With new social networking technologies (twitter, foursquare, etc. ), they can create exclusive experiences that no body else can.
6. Discover seems to be selling its ubiquity and rails to other players. They seem to be providing the dumb-payment pipes to other players. Not a bad strategy considering their size. They are just playing to their strengths.
7. Apple seems to be creating all the necessary infrastructure for them to be a major commerce orchestrator. They may, however, decide to stop at the infrastructure level and let the other players in the ecosystem (Square, Amex, etc.) innovate. Apple’s success is not in orchestrating the commerce themselves but expanding their i – ecosystem and strengthening it.
8. Facebook is undoubtedly the best platform that connects consumers and merchants online. They need to get their mobile strategy right to compete in this uber-network platform.
9. Google knows the consumers and what they want better than anybody else(sorry Facebook!) . They also help the merchants in attracting customers. They do it online and they have started doing in offline. The only mistake they did was making NFC a central strategy till now. They are in a great position to be the “best overall commerce orchestrator”. Unlike Amex, they do not have to be biased on certain payment mechanisms/systems. They have ubiquity in points of presence, great assets and great technologists. If they do not become a leading commerce network, it is because of bad execution and nothing else!!
10. Finally, MCX! They are just a hot air balloon as of now – lot of clout and hype but no product assets. If they strategize well and have the right partnerships with other players, maybe they have a shot. Their biggest asset is also their liability. The member retailers represent a big chunk of the US retail commerce, but it looks like several competing cooks are cooking together to serve their customers in an exclusive manner. Too early to comment.
Any thoughts? You can write to me at This email address is being protected from spambots. You need JavaScript enabled to view it.