Mobile, Marketplaces and Platforms

Posted on May 19, 2015 Justin Benson

The transition from web to mobile includes a consumer behavioral change of using mobile apps instead of a web browser. This transition is changing the way commerce happens online, since consumers are less likely to enter their CC data into a mobile app due to the form factor. Further, redirecting users to a third party site for a transaction was workable in a web browser but can be a disastrous user experience in a mobile/app world, with many third parties having poor flows on the web that are horrific on mobile. A poor purchase flow hurts all 3 parties involved – consumer, merchant, and payment provider – as it results in much lower conversion rates.

mobile, online marketplaces & platforms

One point of proof of this change was the announcement this week that Google is going to roll out a “Buy Now” button.  Just a few years ago consumers ready to buy a product would pull up a web browser, search on Google, click an ad and go to the website, enter in their CC and all their address information and purchase the product. In a mobile world they now open their Amazon app, search for the product, click buy and get free shipping via Prime. Google sees this as a major threat since it pulls away searchers intent on buying, who in turn are the consumers that advertisers are willing to pay to reach.

This new type of consumer buying behavior creates several risks and opportunities for merchants. The first thing is the “marketplaceization” of online commerce (yes I totally just made that up). For ease and security reasons consumers will only want to work with a finite number of apps on their mobile devices. Those apps will need to include search (choice) and payment (security and ease). The result of these pressures will result in 3 to 4 very large cross vertical marketplaces – Amazon, Alibaba, and Google if they can pull it off – and a host of focused vertical marketplaces: travel, business services, transportation, ticketing, donations, healthcare, etc.

If I’m making an impulse buy to purchase two tickets to the Durham Bulls baseball game tonight I’m going to want to open SeatGeek, search quickly, get a recommendation on the best value seats then click the buy button and be done. There’s a chance I’ll download the Durham Bulls or MLB mobile app, get comfortable with the UI, enter my card data and address and then buy, but the conversion percentage drops dramatically especially in the context of an impulse buy. That’s why these marketplaces can work for all 3 participants. The consumer is happier, the marketplace is driving incremental sales (discovery) and/or higher conversion rates than a stand alone app, and the merchant moves more product.

Spreedly is focused on enabling the payments component for platforms and marketplaces. Discovery and search apps ready to enable commerce need to securely store a card once and then allow the consumer to buy multiple times across all the different merchants on their platform or in their marketplace. That could mean using Stripe Connect or WePay to create a merchant account for sellers (a common approach we see new startups just launching take), but larger merchants tend to already have a merchant account and feel strongly about being the merchant of record and are adamant about not using something new. And there may be a need to transact against existing 3rd party API’s – Expedia, StubHub, Walmart, etc. – to pass in orders, a use case traditional payment providers don’t support. Spreedly is a tool that marketplaces can leverage to support all 3 choices in any combination they need, and improves the experience for all parties involved.

To be sure, web/browser based commerce isn’t going away soon. However as online commerce grows within mobile apps the winners of each vertical will tie together discovery, selection, payment, and customer satisfaction. Merchants may fear the power of their vertical leaders but they may also see reduced development costs and incremental revenue by effectively outsourcing their development and advertising efforts.

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