Wal-Mart, MoneyGram and Western Union — Why It is Never Good to be Stuck in the Middle

When reading Wal-Mart’s recent announcement about its deeper dive into banking (Wal-Mart Dives Deeper in Banking, The Wall Street Journal, Friday April 18, 2014), a few points jumped out at me that centered on the rapid segmentation of the money transfer market and why companies like MoneyGram should get out of the way of that moving truck.
Wal-Mart announced that it was rolling out a money transfer service that allowed customers to use its physical locations for person-to-person money transfers. Given its huge footprint, Wal-Mart can offer a robust network for its customers to remit funds to each other around the country.
Wal-Mart also has long standing relations with traditional money transfer giants MoneyGram and Western Union. The new Wal-Mart service directly competes with their partners’ offerings and is being offered at a significant discount to customers.
For Western Union, this is less of an issue as US domestic money transfers represented only 8% of Western Union’s business in 2013. For MoneyGram, however, almost 27% of their 2013 revenues came from Wal-Mart money transfer outlets.
In addition to Wal-Mart’s efforts, PayPal, Apple, Square, Amazon, and others are grabbing share in the payments sector. Domestically there is an acceleration in the use of these platforms as this market is seen as low hanging fruit.
Both MoneyGram and Western Union are rapidly trying to not get stuck in the middle of the rapid market evolution that is taking place. Western Union (hereafter referred to as WU.com) has truly moved to globally expand its business and is rapidly innovating its product mix to accommodate the bigger growing market for international remittances. MoneyGram, however, is trapped in the domestic market with challenges to its international growth innovation strategy.
When you see your traditional strong markets under attack and your offering is considered a commodity then it is best to creatively disrupt your business and go do something that is harder and generates more value. International payment remittance offers that to MoneyGram, and there is plenty of technology and market know-how to be created and deployed there.
Being stuck in the middle is only fun when you are with a loved one.

Alibaba’s play to control delivery in Chinese e-commerce market

Alibaba’s bid to acquire the outstanding shares of AutoNavi is one of the smartest moves to date in the competitive Chinese e-commerce market.


AutoNavi holds one of the few government issued licenses for mapping streets and addresses in China. This data is valuable for everything from delivery routing logistics to Identity verification to payment management. Alibaba’s CFO has stated, “Recent competition from large well-capitalized Chinese Internet companies has made the online-mapping market increasingly challenging.”
While this move is seen as bulwarking the defense against other Chinese companies, this is clearly a move that would impact competition with Amazon, eBay and other international e-commerce vendors seeking to further their access to the Chinese consumer markets.
Location-based services are a key and fundamental component of long-term success in international growth markets. As witnessed by the investments by other players such as Ozon and Rakuten, investment in delivery infrastructure is a key component to e-commerce growth strategies.
How the SMB e-commerce players address this shifting landscape and gain the same competitive access to this information in the high growth markets is a question that has yet to be fully answered. The one definitive statement that can be made is if this question isn’t answered, smaller players will be shut out of those markets or be forced to service them through the larger platforms with whom they currently compete against.

Lions go digital: The Internet’s transformative potential in Africa

Great reading on the progression of the Internet on the African continent.


This is what people in 9 emerging markets think about Bitcoin (survey)

Most of Bitcoin’s action happened in established tech markets in the U.S., Europe, China, and Japan, but the greatest implications could be for the developing world. http://pulse.me/s/JqRgf

Of Ghana, Cross Border Commerce and a BIG WIN for the BlackStars

In sitting in a café in Accra celebrating the big win and the World Cup qualifying round win for the BlackStar Football team. This is one of a number of fantastic meetings and interactions I have had with the Ghanaian people.

This country has shown me that the vision we have for GDC is accurate and worth pursuit. Ghana has a strong and growing populace of middle class earners for a West African nation. While many people here have smart phones and have access to the internet, what they don’t have is standard e-commerce infrastructure.

While driving through the crowded neighborhood of Le Bonne last evening we had a discussion around the challenges of e-commerce here. A colleague made it clear that the issue is she cannot have items shipped to her home nor can she arrange payment for an item purchased online. It seems in Ghana they have the same problems internally as e-retailers would externally.

Part of the challenge in solving this complex problem is the lack of a standard address system for the country. Additionally, many of the people receive mail via a postal box or private courier. Additionally western payment platforms are not recognized within the country. This means even if fulfillment were in place the complex payment issues create another barrier.

During my discussions I was able to document two examples of how difficult it is to engage in cross border commerce. The primary way of getting products into Ghana from other countries is by asking a friend or family member to purchase and bring back items when they travel abroad. The amount of infrastructure the government has put in place to try and monitor this at the country’s main airport is incredible. If you actually use international post then a package can take up to six weeks and is typically damaged during transit.

All of this is inefficient and prevents the growth of bi-directional commerce. Where there is a problem, there is an Opportunity. At GDC we seek to provide the best local source for Cross Border Commerce Delivery, Identity and Payment solutions. We license from local country providers with the knowledge and understanding of the local data environment and who can provide solid solutions for their respect markets.

Delivery and Payment two key problems to be solved in order to move e-commerce forward in this country with a growing middle class, significant natural resources and a stable government.

P.S. – The McKinsey Global Institute published a report this week about e-commerce in Africa: Lions go digital: The Internet’s transformative potential in Africa. According to their projections the Internet could account for $300 billion of Africa’s GDP by 2025. They also use the term “iGDP” to highlight economic activity related to the digital world.

Lion male at Etosha National Park, By Yathin S Krishnappa, via Wikimedia Commons


Amsterdam Café Culture as a Leading Indicator of Cross Border Commerce

While having dinner recently in an Amsterdam cafe I took note of the high level of multicultural activity around me. The waiters were a combination of Turkish, Malaysian and Eastern European. I heard three distinct languages being spoken that I could understand with a number of others that I could not. As Friedman would say “The World is Flat” and getting flatter all the time.

Amsterdam is of course a major hub of global tourism for varied reasons and while the “smoking” establishments are shrinking and the “red light” district has been shrunk in half (I read this in the local media and have no personal knowledge of either!) the people are still coming (yes the Rijksmuseum is cool I do have personal knowledge of that one – see photograph below). Cross border commerce is in full swing given the global traffic from tourism and employment.

While on the same trip I sat in a meeting at a technology company that provides online international document verification. A key use of their technology is to digitally scan identification documents using a smart device and then verify the information. They cover over 20 different countries and hundreds of document types. Why is this cool? Think about the restaurant I mentioned and the workers there. Normally the act of verification of international work documents can be a painful, paper intensive process for employers and employees. Moreover, failure to comply with the laws can result in fines and legal troubles. If an employer can snap a photo of ID and documents and immediately get back a thumbs up or thumbs down on an prospective employees work document the background check process becomes super efficient.

At GDC we created the business to provide the back end ability to parse, standardize, fuzzy match and verify global name, address and identity information using our Worldview platform. The right tool for the right task.

Returning to the restaurant and the wait staff analogy, another cross border area of growth is the payment remittance market. A number of international guest workers send money back to their home countries to provide for their families. The growth of global cross border remittances has accelerated at the same high growth rate of global online commerce. In order to use money transfer services and mobile banking technologies, global identification technologies must be used to confirm sender information. Again using our Worldview platform behind the scenes vendors are able to standardize and match information such as name and address and then confirm the validity of it in real time. This allows for vendors and users to not have to constantly provide their documents and spend time waiting while those documents are verified.

So as I finished my meal with an espresso at the Amsterdam cafe, I saw a broad landscape of markets to serve and a bright horizon ahead helping the world improve its ability to Get Stuff Done in timely and effective manner using the vast location and identity data that we offer. Yeah, that’s definitely cool.

Getting Addresses Right in Finland and Sweden

Earlier this week I was sitting in a Helsinki café reviewing notes of meetings with one of our local market data providers. We spent most of the day together; however, it was the random mention of a couple of unique feature of Finnish and Swedish addresses that in my mind further validated the GDC business model.

Being that Sweden and Finland are both neighbors and that they also both have high degrees of cross border commerce activity, it should be no surprise that buildings have both a Finnish address and a Swedish address. Yes that is correct, every building has two addresses to facilitate cultural interaction and exchange.

Bilingual street sign in Kruununhaka, Helsinki, Finland. Oikokatu is the Finnish, Gengatan the Swedish name of the street. By BishkekRocks via Wikimedia Commons


Why does this matter? Well if you are using an international address verification solution that only offers one address or the other address for those countries then you risk offending the recipient. Suppose you are Starbucks and that you are sending out direct mail circulars about a new store in the city (yes they are spreading…everywhere). What happens when you send mail to a Finnish address that houses a Swedish family living in Helsinki. Sure they will receive the mailer but will they note that you didn’t use the address they consider to be proper? I bet Tony Hsieh, Zappos.com CEO, would give that a failcat for customer service.

The other unique occurrence in Finnish address quality is the concept of the corner address. This is where a business may have two distinct addresses while occupying the same space. Why is this important? Businesses in Finland may wish to use a different address for inventory shipments “around back” at the loading dock while receiving letters and correspondences at the front office. This is a widespread preference and not likely to be caught by most broad based international address delivery solutions.

So think about it, does your global address verification provider offer four addresses for your business addresses (two in Finnish and two in Swedish)? Does your provider enable your online retail fraud verification or identity management by having address data for both countries in both languages?

Good cross border commerce requires the use of good data with localized expertise in the form of algorithms for standardization, matching and parsing. Do it right and customer loyalty is the prize. Do it wrong and you lose the opportunity in global markets.

Talking with Internet Retailers at IRCE 2013

During the first week of June, several of us at the Global Data Consortium attended the Internet Retailers Conference and Exposition (IRCE). We went to meet retailers, logistics players and commerce platforms who shared interest in international address and identity data.

As you can see we had a nice booth (that’s me there), where I spent maybe a total of two hours over three days enjoying our tidy trade show digs. The rest of the time I was out talking to folks (with one stop off at Suitsupply a hip Chicago clothing retailer). From approximately 200 attendees, exhibitors, and presenters who I traded business cards and engaged with, international and cross-border commerce were recurring themes. Everybody is trying to figure out how to tap international growth. The challenges that seemed common surrounded reach/marketing (language and local checkout internationally), delivery, and payment.

Specifically, international parcel shipping can be difficult and expensive. Moreover, poor quality and likely undeliverable international addresses were a problem. We met some great consolidators who can help there if anyone is interested.

Also, there are legitimate fraud concerns. How do you really know who you are dealing with? And most of the world likes to pay with cash. There was enlightening discussion on this topic in one of the panels I attended with Lee Cheng of Newegg and Federico Torres of Traetelo. According to Lee, Cash on Delivery (COD) is so common in China that it has hastened lightning-fast delivery services that race to the consumer, as the first order to arrive is the one that will be purchased. The Chinese consumer goes so far as ordering from two or three places to see who delivers the item first and tells the losers, “No thank you.” In LATAM Federico touched on how Traetelo has developed a cash-based payment offering to align with these preferences. Federico also shared a great visual of going global that showed a person crawling, then standing, walking, and finally running to convey the journey of getting cross-border commerce right.

Those take aways highlighted some negatives. Here are some reasons to be optimistic:

eBay’s Cross-Border Trade team believes that Brazil and Russia hold the keys to its future and is investing heavily. They shared a great video with eye-popping BRIC nation growth stats.

Rakuten is going from 10 to 27 countries with its “Empowering Merchants” message. Hiroshi Mikitani gave a fine talk and I could tell the organization was authentic about helping the individual merchant succeed in its marketplace. Here is Hiroshi announcing the acquisition of Webgistix, a U.S. based fulfillment operation with an envious warehouse footprint.

Finally, not only did the Australian Post have some great trade show swag with the Australian Rules Football (see picture…still practicing three points of contact with Junior), but according to their team 30 percent of the volume they deliver down under is from the U.S.

IRCE was a solid conference to engage a wide breadth of actors in the internet retailing space. We liked it because we walked away feeling good about our focus on what unifying the best of breed global address and identity data providers can facilitate. We made many new acquaintances and learned about several opportunities to apply the capabilities that we have been building.


Forever 21 Offensive Maneuvers Against Zara

While at a conference this past week, I had an interesting discussion with a young lady who works for U.S. based retailer Forever 21. I asked her how they were responding to the incredible growth in competition from cross border commerce experts Inditex (The owners of retail chain Zara). I was pleasantly surprised by her response.

It seems Forever 21 has launched its own significant international growth effort. In both brick and mortar as well as via online channels, the company is pushing the boundaries of cross border commerce activities. She indicated some of their best growth was coming from countries where they did not have physical footprints. She didn’t feel they had anything to fear from Zara or any of the other global retailers that were pushing into the U.S. because Forever 21 was pushing back both domestically and internationally.

It was great to hear this story and response from a company I had always perceived as chained to the U.S. mall business model. As more global markets open themselves to the internet, U.S. based companies must open themselves to aggressive pursuit of these markets. Most of this challenge for customers will be via online channels and having the right strategy and tools to enable a cross border commerce strategy are the key to winning.

China’s e-commerce Revolution and Logistical Realities

Last week, McKinsey and The Economist both published reports on the e-commerce revolution occurring in China, McKinsey’s China’s e-tail revolution and The Alibaba Phenomenon from The Economist. They are both great pieces on this topic and discuss leap frog innovations occurring in retail commerce. However, I was reminded of another recent article in The Wall Street Journal about last mile delivery infrastructure being the Achilles’ Heel of this phenomenon, Scooters Rule as E-Commerce Grows in China.

I appreciate the attention to the practical aspect of logistics because I saw first hand that a common delivery agent in the country was what I called “two men and a truck.” The WSJ article mentioned Alibaba’s recognition of this extraordinary challenge and its pledge to invest $15 billion over the next decade.

China has basically skipped the stage of retail commerce maturation that involves physical infrastructure build-out such as a nationwide bricks-and-mortar store footprint and distribution center networks. E-commerce has fast become the primary go-to market channel. Physical delivery of goods and the information services facilitating it are poised to receive a lot of attention to sustain the sector’s growth.

Developing a domestic small package transportation infrastructure is expensive and challenging, as evidenced by the failed attempt by DHL in the U.S. market. This is especially true when consumer residences are a key destination. In China, I expect that government-ran firms like China Post (and EMS unit) and Sinotrans are also growth bets and innovations related to postal/parcel delivery like this blog has discussed before will emerge.