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Amazon Skates Where the Indian eCommerce Puck Is Going

What better time to trot out old hockey metaphors than the opening weeks of the NHL season? And while I’m no particular fanatic of the sport, I’ve always found much wisdom in Wayne (“The Great One”) Gretzky’s famous quip to an interviewer asking what made him an extraordinary player. “I skate where the puck’s going,” he said, “not where it’s been.”

Sage advice, no doubt, but it’s so often hard for managers of business to follow it. We are so mired in the day-to-day efforts to keep our machines churning that it seems impossible to poke our heads up and try to peer into the future; to do that vision thing where we imagine where that puck might be going and prepare for it.

But good businesses know to make time for it. The best ones marshal serious resources for it.

Take Amazon as a case in point. Its shares took a tumble in October when the company announced a loss in 2014’s second quarter. Why? Despite growing revenue, the juggernaut was accelerating its investments in further growth even faster. It was skating fast to where Jeff Bezos and crew think that puck is going.

That includes a recently announced investment of US$2 billion in India.

The Economic Times of India announced that Amazon is expanding its year-old pilot partnership with India Post, the country’s mail service, to get the postman to both deliver your Amazon package and collect your payment. (You can find the article here. ) Cash on delivery seems such an outdated concept to those of us most familiar with eCommerce practices in markets like the U.S. and the E.U. where consumers have long been comfortable offering their credit cards to pay for goods before they’re shipped.

But for many eCommerce related businesses, this is where the puck is. To get where it’s going, they’re going to have to spend time thinking how the future of the industry might look different than it does today and begin investing strategically.

While mature eCommerce markets will see growth rates begin to fall into single digits, developing markets (not just India, but think also: Russia, China, Brazil, Argentina and so many more) are poised for staggering expansion. That’s where the puck is going.

According to The Economic Times article, more than two-thirds of Indian eCommerce transactions occur on a cash-for-delivery basis. That means if you want to stake a claim on that growth, you have to adapt yourself to the eCommerce realities of these countries. The eCommerce winners in India will undoubtedly adapt to a culture that won’t pay etailers upfront with credit cards. They’re much more likely to pay the postman when the package gets delivered.

But change is hard. When you’re used to getting paid in advance, waiting for delivery (and all the uncertainty that comes with it) is no easy transition to accept. Kudos to Amazon for investing in the future of this enormous market.

Applying this lesson to GDC’s own universe, there’s no doubt that industry players of all sorts – retailers, fulfillment specialists, logistics companies, data services, alternative payment providers, etc. – must prepare themselves to ship goods (or their clients’ ) across borders. That’s where the growth will be… that’s where the puck is going.

How are you preparing yourself for the challenges that come attached to these growth opportunities?

By way of shameless plugs, GDC would love to help you think about using our network of the world’s best data providers to get you there. Call us to talk about it.

For eCommerce companies interested in cross-border trade, the Global Data Consortium’s Worldview platform gives you one place to access the world’s best data for Delivery, Identity and Payment.

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Alibaba Looking to Make Cross Border Commerce between China and US a Two Way Street

I recently read and listened to an interview from Jack Ma (see below) that made it clear to me that he as a vision for Alibaba that goes well beyond simply enabling business to business or business to consumer trade in China. He intends to take on both the established e-commerce giants such as Amazon, Rakuten and eBay and also the brick and mortar players such as Wal-Mart.

Mr. Ma is pushing initiatives that will initially introduce US vendors to Chinese buyers of food products such as cherries, nuts and seafood. As his company learns from this experiment I expect that he will expand into other items to feed the Chinese consumers demands for products and services. In addition to US products, Ma also states his interest in bringing Russia to China, and Brazil to China, among others.

To enable and enhance these activities Alibaba has built an internal distribution logistics network and acquired mapping and location based services providers in China, thus locking up the best Delivery data information. Recently the company introduced a cross border Payment system that manages currency and disparate payment systems. This point of differentiation is a huge moat for those vendors who solely rely on the classic payment vehicles of Mastercard, Visa, American Express and Paypal.

Each of these moves makes the Alibaba platform a strong platform for vendors seeking entry into China commerce, to onboard, learn and transact. Further, Alibaba then learns more and more about the products and customers to figure out how to better enhance the services it provides to the market.

If you are an e-commerce vendor and you are not selling in China yet, consider the options and the opportunity. Using the GDC Worldview platform you can Validate a delivery address in China and over 200 other countries. Additionally you can Verify the Identity of a buyer before you ship product, thus reducing the risk of fraud. Improve Delivery, Reduce Fraud, Drive Revenue in Global Commerce. That is what we help you do at GDC.

Have a look and See the World more clearly.

 

http://online.wsj.com/articles/alibabas-plan-to-help-u-s-exporters-1414962623

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Amazon Makes the Push into Alibaba’s Backyard

Amazon announced this past week that it would open a logistics warehouse in Shanghai’s Free Trade Zone that will allow it to expand the import and export of goods in China. Clearly this is a move to sharpen the competitive nature of things against its primary rival in Asia, Alibaba Group.

Amazon is moving quickly to become a player in the Chinese Cross Border Payment market. Further Amazon is increasing its ability to Deliver packages in China. Amazon current delivers to around 3,000 cities and counties in China.

Delivery, Identity and Payment are the three key underpinnings of global ecommerce transactions growth. Amazon is showing that it is capable of managing two of the three aspects via its platform in China.

Alibaba and others should be looking over their shoulder. Amazon is competing on all fronts and winning new customers in new markets.

Read more: http://www.marketwatch.com/story/amazon-coming-to-shanghais-free-trade-zone-2014-08-20

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Mobile Money Interoperability: A Step on the Path of Global Cross Border Commerce Growth

Recently, I came across an article that describes how three of the mobile money platforms in Tanzania have signed a partnership that will allow for inter-network transfers.  This type of cross platform connection will allow for diaspora networks to more easily conduct transfers between family members. Furthermore, this will allow for increased business trade around the country.

The bigger picture is the expansion of interoperability across the borders of other African nations and further, globally. This would enable a growth in global payments and, in parallel, growth in cross border commerce.

Years ago, family members who moved abroad engaged in transactions with other family members in two ways. Funds were sent home primarily via Western Union or via informal money transfer networks. Physical commerce transactions occurred via trips home where family members would transport items back in order to sell and distribute to family members.

In today’s economy, mobile money interoperability would allow for family members to send money electronically regardless of platforms and also allow for the purchase/delivery of physical items on local e-commerce sites. This advancement will greatly enhance the level of cross border trade via e-commerce in those countries.

Global connectivity really only works when platforms are open and interoperable versus closed systems. Tanzania is a first step towards what I hope is greater connectivity and more enriched lives.

Link to original article >>

http://www.mobileworldlive.com/operators-sign-first-interoperability-agreement-mobile-money-africa

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Insufficient Identity Verification Troubling Mobile Payment Development in Nigeria

Helix Institute of Digital Finance has recently published a report on mobile payment in Nigeria. Based on interviews with mobile payment agents, the research points out that aside from regulatory uncertainty — which led mobile payment providers in the country to speculate about the rules instead of fully engaging in expanding business — insufficient identity verification is a main problem that hindered the development of mobile money in the country.

According to the report, most of the mobile payment customers in Nigeria still remain at the lowest identity registration level, which requires only a name and a phone number to activate, but limits the amount per spending to as low as 18.5 USD. This results in the frequent need to divide the bill in order to complete a transaction, giving the agents more commission at the customers’ cost. On the other hand, the information gathered in low-tier, sim-card based registrations is often not properly checked in an identity verification system, leaving the security of transactions at risk. Overall, the current insufficiency in identity verification is bringing down the quality of mobile payment service in Nigeria, and preventing broader business development.

In order to tackle this problem, efforts from various directions are called for. Agents — who are the first point of contact for end users and are carrying the brand for providers — need training and permission to initiate higher levels of identity registration. This requires combined work from both the providers and regulators. Efforts also need to be made to motivate customers to go for higher tiers of identity verification and increase their spending limit. On this point, marketing campaigns on both electronic media and point of sale should be utilized to give people more exposure to mobile money, as the general awareness among Nigerian public still remains at a low level.

To read the full report, please go to: http://www.helix-institute.com/data-and-insights/agent-network-accelerator-survey-nigeria-country-report-2014

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Cross Border Commerce Skirmish Continues in India

FlipKart recently raised $1 billion in capital to expand its e-commerce offering in India. Amazon then announced $2 billion of investment in India. Snapdeal which is the second largest e-commerce platform in India behind FlipKart is about to be surpassed by Amazon. Clearly the opportunity in Indian e-commerce segment is huge but why so much money and what are the challenges to growth?

If one reads the pundits Amazon’s dominance of the Indian e-commerce market is as inevitable as the waterflows of the river it is named after. The reason is Amazon can outspend any competitor in offering fast delivery and a broader catalogue of items. While neither FlipKart nor SnapDeal can directly compete with Amazon on those fronts they can compete with the behemoth in other ways.

The primary zones for Amazon’s fulfillment centers are focused on the large metropolitan cities. Amazon is concentrating its resources to deliver on the promise of fast delivery in these areas. Both FlipKart and SnapDeal should leverage their native capabilities and focus on selling to and securing the markets in the vast rural communities of India where there is a more even footing upon which to compete. For family members who live in a large city but wish to order items for family members in rural areas having an e-commerce platform that delivery to those communities would be a solid point of differentiation.

The other point of differentiation is with payment. India’s mobile commerce market is quickly developing its own ecosystem. Leveraging the preferred payment platforms versus the standard payment systems available on Amazon would also give Indian e-commerce vendors a solid point of differentiation in the market.

The founders of SnapDeal and FlipKart would do well to read Vikram Akula’s book “A Fistful of Rice”. His book speaks to the opportunity in India’s masses via the application of microfinance. Addressing the needs of the rural communities via e-commerce could yield a bounty of loyal and numerous customers that will help maintain the dominant market share over the long term.