e-commerce 3.0: The Next Wave of Customer Experience 2013

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1 e-commerce 3.0: The Next Wave of Customer Experience 2013

2 Early Innovation in e-commerce The Internet has been bringing us e-commerce in one form or another since 1984, when UK grocer Tesco successfully sold a week s worth of groceries online. Of course, Tim Berners-Lee hadn t invented the World Wide Web as we know it yet (1990), nor had Netscape released Navigator to draw the masses online (1994). So we can look at 1994 as the watershed moment: Pizza Hut started offering pizza via the web, online banks started to open, and SSL was introduced to fight off the first online identity theft attacks, Arguably, though, 1994 was both the first and last year that real innovation drove e-commerce. Since that date, we as consumers and as merchants have been subject to two connected, but distinct, constraints: Domain exclusivity: broadly speaking, if you want to buy something directly from Company A, you ll need to do this through Company A s e-commerce solution; Browser exclusivity: whatever you want to buy online, wherever it s needed, you must resort to opening a browser On the face of it, this is logical enough, as (1) the browser tends to be our window to the Web; and (2) the dominant metaphor for accessing information is the data owner s website. A customer wanting to pay to use Salesforce.com, for instance, would quite naturally make their payment using their browser through a page found at salesforce.com as those are the vehicles that deliver the service. However, ongoing innovation outside the tried-and-true model is rapidly making this model obsolete. Social networking, arguably the foundation of Web 3.0, blurs the distinction between individual sites. For instance, Facebook users use software that is owned and provided by hundreds of distinct publishers, but is fully embedded into the facebook. com domain. And downloadable software now has the capacity to use the Internet directly. For instance, Microsoft Office users can scan the Web for new templates without leaving Office and using a browser.

3 Frustratingly, e-commerce simply is not keeping pace. If you want to purchase additional credits for a Facebook game, you are subject to domain exclusivity and browser exclusivity. Put another way, you need to open a fresh browser window to access a payment process that is owned and/or managed by the game s developer. Similarly, if you want to buy additional seats of MS Office, you will need to open up your browser, then find a qualified retailer and buy from its domain. Where the earliest innovations in e-commerce eliminated friction by allowing consumers to interact in realtime online, the continuing slow pace of innovation is arguably now the greatest source of friction in online transactions. Realistically, those Facebook users become exasperated (and therefore less likely to pay) when they cannot purchase new credits without leaving their application. And those MS Office users come up with revenuefree alternatives when they cannot seamlessly purchase additional capabilities or licenses. The failure of e-commerce systems to provide this level of convenience, and to adapt to evolving consumer needs, represents a significant barrier to optimizing product revenue potential.

4 Surpassing the Limits of e-commerce Today Fortunately, we are standing at the cusp of the next great leap in e-commerce. Call it e-commerce 3.0, a broad leap to meet the needs of today s social web. Some groundwork was laid for this e-commerce 3.0 leap by companies like PayPal, Paymentech and Authorize.net who have been offering API access to their services for some time. These API options represent more of an evolutionary step than a revolutionary one, however, as such solutions are bounded by limitations anchored in the past rather than the future. These limitations are: Single-Source Payment Processing: Most merchants building their own e-commerce system will tend to connect to a single payment processor for all processing due to integration requirements. Having a single payment processor is, however, fundamentally limiting, as any processor has a finite list of payment vehicles it can manage. For instance, a US-based credit card processor may not recognize more esoteric European debit cards. Indeed, that same processor may only enable a single class of payment types, limiting the merchant, for instance, to credit cards, and therefore excluding important options such as wire transfer, direct deposit and other manual choices. Relying on a single processing platform necessarily limits the customer audience that a merchant may successfully pursue. Internationalization: While a merchant can accept payment from around the world, they may struggle to charge customers in their local currencies and then to hedge the incoming revenues to achieve accounting consistency. The very essence of using the Web to market, sell, and distribute digital products and services is to take advantage of the borderless customer audience potential. The merchant, therefore, needs to be able to both (1) offer payment types compatible with an international audience, like IDEAL in the Netherlands, GiroPay in Germany, Nordea in Scandinavia and so forth; and (2) accept payment that is natively processed in the preferred currency of the customer. The data are clear: customers offered an opportunity to pay in a familiar currency and with a familiar payment method are as much as twice as likely to make a purchase.

5 The real meat of innovation in e-commerce 3.0, then, is the emerging capability to move sales out of domain and browser exclusivity, while providing the merchant an easy way to connect to multiple payment processors, and deliver an internationalized experience that fundamentally impacts conversion ratios. Let s return to an earlier example to illustrate how this would manifest itself. Imagine a Blackjack game, built in Flash, embedded within the Facebook platform. In the e-commerce 3.0 world, a player who wishes to purchase new virtual currency to extend their game play will simply click a More Chips button. Rather than being sent to another browser window, they are served a new interface within the Flash game. They select their payment method of choice, as well as the currency they prefer, supply their billing information, and the process is completed without ever leaving their game. Indeed, if this is not their first purchase, the game owner may have stored the customer s account number and be able to re-charge the card they used last time by simply having the customer login and approve the deal. The complete elimination of the friction that is so common to current e-commerce results in a smooth, almost irresistible, transition from prospect to customer. The customer convenience creates an experience that meets and exceeds expectations and sets the merchant s business apart from the noise. Viewed from another perspective, e-commerce 3.0 offers merchants the opportunity to creatively re-think the business models they use to generate revenues. Software publishers may lower the initial costs to acquire their offerings (increasing the available audience), but generate additional revenue by selling additional capabilities once the software is installed. Media sites streaming music or video, for instance, might offer a subscription service at a low cost, with premium content purchased on an ad hoc basis. Games studios may choose to extend the life of individual titles by selling level packs over a period of time, with a completely seamless experience that draws the game player in. Merchants are no longer shackled to a 1990 s model, and will surely introduce not only new e-commerce processes, but new licensing models that are enabled by the new-found e-commerce flexibility.

6 The Future of e-commerce: Plimus Buy Anyware This total elimination of friction in e-commerce transactions, and a core focus on delivering an enhanced customer experience, are the concepts behind Buy Anyware, a newly introduced e-commerce 3.0 solution offered by Plimus. Buy Anyware uses a REST-based API to open the full capabilities of a complete, configurable, and connected e-commerce platform to developers, who may then embed e-commerce 3.0 into substantially any computer experience. e-commerce can become an embedded part of a 3rd party web application, a C# client, even a mobile app. The end customer can then pay in their preferred currency and an ever-increasing set of synchronous payment methods. Buy Anyware is currently commercially available, and interested parties can contact Plimus at to learn more Ultimately, the inevitable progression of e-commerce is toward the distributed, e-commerce 3.0 model. Customers already are demanding comfortable and simple to use processes that match their true usage patterns and the first vendors to offer them will enjoy the benefits. The emergence of e-commerce that is freed from the restrictions of domain and browser exclusivity will ultimately drive greater revenue volumes for all businesses and create new challenges for online merchants: the need to upgrade to e-commerce 3.0, or risk being left behind.