While the world loves to pick winners and losers – and will occasionally turn things into horse races that possibly shouldn’t be – it is not always an easy thing to assess. Because in real life, as opposed to a game, there is no time clock by which we can call the game over and assess the score.
The activity is always ongoing, and who’s “winning” is always a relative question.
And while one might argue that this is especially true in payments and commerce, there are usually events in any given week that even the most barely trained referees can call as wins, losses or impressive plays. And this week, Prime Day, Google and Zelle were the best candidates for wins, losses and score-equalizers on the week.
How Everyone Won Prime Day
Prime Day was, as to be expected, a mostly very good day for Amazon, being as it is a holiday they invented to celebrate their own membership program. After getting off to an unexpectedly bumpy start with a tech glitch, Amazon bounced back to reportedly have the strongest Prime Day in its company’s history. According to reports, spending during the first 12 hours of the 36-hour long event increased by 89 percent as compared to the beginning hours of last year’s Prime Day.
Amazon further disclosed that it had sold “millions” of devices that work with Alexa, its voice-activated digital assistant. The most popular items included the Fire TV Stick with Alexa Voice Remote and the Echo Dot speaker.
But Amazon wasn’t the only Prime Day winner. Target reported that its one-day sale on July 17 was its biggest online shopping day of the year, in terms of both traffic and sales. Walmart promoted free two-day shipping and cut prices on Google Home devices as a counter to Amazon’s Echo sales, and reported strong results.
“We’ve seen a 55 percent lift in online sales YOY over the course of Prime Day for large retailers — massive growth that we attribute to shoppers making purchases online with a variety of retailers," Director of Adobe Digital Insights Taylor Schreiner told Retail Leader. "As a result of Amazon’s holiday increasing in popularity, numerous retailers offered deals on their own sites to combat Amazon, turning mid-July into a mini holiday shopping season. People love to comparison-shop, with many turning to Amazon’s competitors to compare deals and prices. Prime Day has turned into a huge opportunity for all online retailers."
Not all retailers benefitted from Prime Day, however. The loss within the win went to niche retailers — those with under $5 million in revenue — that saw an 18 percent decrease in their online sales on Prime Day, according to Adobe Analytics data.
Loss of The Week: Google Says Goodbye to $5 Billion
After a long wait, the fine came – and the tech world flinched.
The European Union (EU) levied a $5 billion fine – a record antitrust fine – against Google, claiming dominance of the Android operating system. Issues in tandem with the EU penalty order may have even further-reaching implications, perhaps including fundamentally loosening Google’s grip on the smartphone market.
According to EU antitrust regulators, Google used its control of the Android operating system to benefit its own mobile offerings, including its search engine.
The long-entrenched business practice of pre-loading that search engine and other apps has given Google an unfair leg up over smaller rivals, those firms complained – and the EU’s watchdogs have concurred. Google was found to have acted illegally in enticing handset makers to load those apps along with the free operating system.
“These practices have denied rivals the chance to innovate and compete on the merits,” said EU Competition Chief Margrethe Vestager.
Google will be appealing the decision, and has argued (most recently via a blog post by CEO Sundar Pichai) that the firm has actually boosted competition amid smartphone manufacturers and helped to spur consumer choice. Now, he said, the ecosystem could see a balance that is “upset” if Google has to charge for the operating system or change the way it distributes the system to those stakeholders.
The EU mandate further requires that the company no longer demands that phone giants preinstall the Chrome browser or make Google the default search engine. The ruling also bans the payment incentive that pushes such pre-installing.
Most experts agree that the ruling, if it is not successfully appealed, would present sizable challenges to Google's business model – though not fatal ones. Google has 90 days to make the EU’s requested changes or it faces fines equal to 5 percent of global daily revenue for each day of non-compliance.
What if Google takes this forced unbundling as an opportunity to start charging for Chrome and its other features and decides it’s time to rewrite the mobile tech ecosystem?
But then again, what are these OEMs going to do? Install Bing? Really now. The point –seemingly lost on the Commission – is that Chrome is “dominant” (their words) for a reason: People like it and use it.
Well, hmmm … check back in on who really lost here after all…
It looks like Zelle is living up to its namesake animal, the gazelle, and is running quickly to catch up to P2P segment leader Venmo.
During its earnings release earlier this week, Bank of America (BoA) indicated it has seen 142 percent year-over-year growth in Zelle P2P transactions to 35.1 million, with a total principal amount of more than $10 billion (a 100 percent year-over-year increase).
“We believe we account for about 25 percent of Zelle, and this activity will continue to grow as the industry continues to drive this as our standard for P2P payments,” said BoA CEO Brian Moynihan during a post-earnings conference call with investors on July 16. In 2017, the bank represented a third of all Zelle transactions.
BoA went on to note that Zelle reported $75 billion of volume, growing at 36 percent versus Venmo’s $34.6 billion, growing at 94 percent," and that Zelle’s P2P payments are at an “inflection point, and [could] pose a threat to Venmo."
And BoA is not the only source predicting Zelle will outrun Venmo this year – recent eMarketer projections indicated that Zelle is on track to reach 27.4 million users in the U.S., more than Venmo’s 22.9 million users.
“One of the main hurdles new apps face is building trust and a sizable audience,” said eMarketer Forecasting Analyst Cindy Liu. “But Zelle has leapfrogged the early stages of adoption by having the benefit of being embedded into the already existing apps of participating banks.”
Overall, eMarketer forecasts that P2P mobile payment products will rise 30 percent in 2018 to encompass 82.5 million people — or just about 40 percent of smartphone users nationwide.
Not everyone is quite as confident in Zelle’s ability to capture market share, as Venmo has better name recognition, a well-established base with a strong preference for their service and a more proven track record than the bank-based service.
PayPal has yet to release its Q2 financials for Venmo, but reported an 80 percent increase year over year to $12 billion as of Q1 reports in April. All in all, P2P payments volume was up 50 percent year on year to $30 billion, comprising 23 percent of PayPal’s total transaction volume processes.
When PayPal reports later this week, we’ll all get an exact idea of how close Venmo is looking in its rearview mirror.
So what is the lesson of the week? Always be careful when you declare a winner. Amazon won Prime Day – but then, so did other retailers. Google lost out with the EU, but it’s only money –consumers will ultimately decide, since that’s how markets work. And Venmo is winning the P2P race, but Zelle is turning out to be a better sprinter than anyone first expected.
See you next Monday.