Merchant Innovation

Sizzle Or Fizzle: Prosper, Alibaba, Snapchat – And Amazon Dash

AWS IoT Button

So many things to talk about this week, but let’s stick to payments and commerce, shall we?



Alibaba’s exec team is hoping that $3.7 billion in quarterly revenue, 39 percent year-over-year growth, 423 million active users and $115 billion in gross merchandise value will quell any concerns investors have over the resiliency of the Chinese economy and spending power of its consumers. Also an effort to friend investors, Alibaba’s CFO said that they would also begin to offer revenue guidance annually, and more details on new business cost structures and margins. With a stock price that’s dropped nearly 5 percent over the course of the last year, it’s possible that yesterday’s results will put a little sizzle back in the investors' steps.

Online Fraud

Problem – what problem? The latest CyberSource annual report on online fraud tells the tale of card-not-present fraud not just going down, but going down by a whole big bunch – across all channels. Mobile was down, online was down and even cross-border fraud was down. The problem, which seems quite manageable by comparison, is the volume of transactions that are still manually reviewed and the number of false positives that still plague the good guy shoppers in the face of an ever-growing number of transactions happening online. While the watch phrase here is “merchants you gotta think about scale” when managing fraud, it’s still better than “merchants you gotta shut down sales” because the fraudsters are winning.


Snapchat’s new shoppable ads have put new meaning into the term “impulse purchase.” The site, which counts 100 million users a day and more than 10 billion videos, is now showing shoppable ads on those videos within Snapchat Discovery. The experience is reported to offer a branded merchant frame, once swiped, that lets purchases happen inside of the Snapchat app. The rub though is that those ads last for only 10 seconds. That, of course, means that if a consumer sees something, they better buy something. Some merchants, not surprisingly, have jumped to give it a try, while others worry that the 10-second countdown clock won’t give consumers enough time to make the decision to make that big purchase. Whatever and whoever tries, it’s an interesting mashup of commerce and advertising in a very contextual and targeted environment.


FinTech got a huge primetime shoutout courtesy of Lesley Stahl, "60 Minutes" and Stripe last week. OK, so a few important details got left on the cutting room floor – like there really is the need to have a bank in the background when you’re doing things like moving money online and, no, it’s really not like posting a photo to Instagram, even though the experience is as simple to do – but it was cool to be able to tell your Mom and Dad that’s it sort of, kinda the stuff you do at work every day.



Bitcoin Creator

Talk about a tease. Here we all got so excited on Monday (May 2) that Aussie Craig Wright is really Satoshi, only to discover yesterday that we really don’t know at all. He outed himself on the world stage on Monday on BBC, said he would prove it by transferring bitcoin using a hash only known by Satoshi, then got cold feet and apologized to everyone - “I believe that I could do this," he said. Well, turns out he couldn’t. Plenty of the devoted still believe Wright is the man, but then again, maybe we’ll never really know. At this point, should we even care?


Yikes. Economy in a freefall. The Communist party is shutting down media properties left and right, including Apple’s iBooks and iTunes. That same ruling party wants to take a small stake (and resulting board seat) on new Internet startups – presumably to keep an eye on them. Experts report that “cyber hacking” is just a part of doing business in China now. The Obama Administration expressed concerns last week over the increasing levels of interference by the Chinese government in American companies looking to do business there. And this week, it was decreed by the Chinese government that economists are welcome, so long as they are cheery and optimistic – ignoring the historical fact that economics is the dismal science. Rumors are that the co-author of a new book on platform economies, "Matchmakers," and Founder of MPD – has been banned from China for being, well, just too dismal.


Tim Cook took to Jim Cramer’s show this week in an effort to defend Apple’s lousy earnings report. The problem here is that what he used to defend Apple – like $50 billion in quarterly revenues and $10 billion net income – “more than most companies make” – and that Apple isn’t most companies. It’s the biggest technology company in the world and it was the first time in 13 years that Apple had posted a decline in revenue. And by a lot. As Karen Webster said in her piece this week, “Overall the sales of Apple’s flagship products, all products sprung from the genius of Steve Jobs, were down 17.4 percent.” Even the Apple Services revenue which everyone touted as Apple’s telltale for a sunnier future was misleading – more than 50 percent of the increased revenues reported from 2016 Q1 over 2015 Q1 were the result of a one-time legal settlement from Samsung. The string of me-too products may have been well-executed, but are apparently not exactly inspiring consumers – or the Street.

Prosper/Alt Lending

We hate having the same fizzle two weeks in a row, but if the fizzle shoe fits, why not. The alt lending space is looking like it’s ripe for a correction – or a meltdown – you decide. Prosper is cutting 28 percent of its staff, citing lower online lending volume - which is a function of their inability to find funding to make those loans. Citi turned its back on Prosper after investors demanded more of a premium commensurate with the increased risk of the borrowing pool they are serving. But Prosper isn’t alone. OnDeck’s shares are worth about 50 percent less than they were at the start of the year – down 34 percent this week after reporting big time loss. Lending Club shares are off more than a third.


Sizzle or Fizzle: You Decide

Sizzle Or Fizzle: The Dash Button

Usually when something is described as “push button easy” the person doing the describing is not actually being literal. Instead, they are trying to communicate that said product is so easy it may as well be pushing a button. Unfortunately in life there are no real “easy buttons” of the type Staples made famous in its most famous ad campaign.  

Or at least there weren’t until about a year ago, when the Amazon Dash Button made its first official appearance on the market.  An initial appearance, it bears mentioning, that was actually largely written off as a prank and a joke because Amazon made the slight error of announcing the launch of Dash on March 31, and so people thought it was an April Fools' prank come early.

Because that’s how ingrained the idea that “there are no real easy buttons” is — when presented with a real one, the commerce ecosystem immediately assumed it was being punk’d. A year later, however, and the world has gotten much more used to the idea of the real-life easy button and as such, the program got a big boost all of a sudden in early April when 100 or so new Dash buttons appeared on the market to make commerce that much easier for everyone.

With a Prime membership and a will to tap, customers now had access to Brawny, Charmin, Clorox, Doritos, Energizer, Gain, Honest Kids, L’Oreal Paris Revitalift, Lysol, Peet’s Coffee, Playtex, Purina, Red Bull, Seventh Generation, Slim Jim, Snuggle, Starbucks, Trojan, Vitamin Water and more.

In the span of a short year, the Dash Button had gone from being mistaken for a joke to one of the main contenders for the future of contextual commerce.

And if ever there were an idea that seemed destined for “sizzle” rating, the Dash button must surely be it — after all, who doesn’t love an easy button?

A customer, after all, is most likely to want to buy detergent right after using up the last of the Tide in the bottle — and what better way to capitalize on that sudden certainty about a purchase than to put a branded button right on their washing machine? 

A customer that finds themselves eye level with a distressingly low roll of toilet paper will likely be glad to have that Charmin button placed reassuringly next to their toilet paper dispenser.  

And every parent everywhere with a child under the age of 5 will know that every time they see the Brawny button, they should press the button because they are certainly running dangerously low on paper towels.  

It seems like a no-brainer — and most of the headline writers of the tech press agreed: Amazon Dash was the slam dunk contextual commerce was waiting for.

So easy sizzle right?

Well, certainly an idea with a lot of promise, but also with a few notable fizzlers lurking nearby.  

The first is the simple factual problem that while quite a few users have decided to get an Amazon Dash button, only about half have actually used it so far. Consumers like the idea of an easy button, but seem to be persistently forgetting to actually push it because they are habituated to doing something else.  

The slightly bigger issue is the problem with placement and actual convenience. The ideal location of a Tide button is on one’s washing machine.  The ideal location for a Doritos button is a little less clear.  

Sure, consumers store their Doritos in the kitchen, but they bag is likely going to run empty while they are sitting on the couch meaning from a contextual commerce point of view users will ideally put the Doritos button in their living room or family room. We somehow doubt that this is a decorative touch that Martha Stewart would approve of.    

And while that may sound like a silly objection, the bigger issue it points to is that while there may be over 100 Dash buttons out there, there is likely a finite amount that consumers want lying around the house. A Tide button on the washing machine does not affect that aesthetics of one’s home, but a dozen Dash Buttons sprinkled throughout one’s kitchen, on the other hand, might.   

Moreover, the service also has tendency to be a bit limited since the buttons are branded. If one only ever washes their clothes with Tide, a Dash button is a great idea. For consumers who like to shop for price, it's not quite as useful.  (Yes, we get that’s the point of this too – to establish brand presence and to give brands the chance to have a mini billboard in the consumer’s house, 24/7, but still.)

But then again, maybe Dash is the warmup act to two other things that also embody Amazon and contextual commerce.  

The Dash Replenishment System is software baked into appliances and other products that think for the consumer and order when suppliers are low. Don’t like a Tide button on the machine – no problem, your washing machine will be an IoT endpoint that calculates how much detergent has been used based on the last order and number of loads and alerts you that it’s time to buy more. And does it. Phillips and Whirlpool and Brother and Samsung and Brita are among the major brands all producing appliances that made Dash the intel inside of commerce.

Then there’s Amazon’s Echo and its personal assistant, Alexa. Instead of pushing a button, users can ask Alexa to order them detergent and choose from the list of offerings.  

But at $179, the Echo is still an expensive buy-in from consumers, particularly those not quite convinced this is a convenience their life needs. If you can get one! Jeff Bezos said on his last earnings call that Amazon can hardly keep them in stock and it takes a month or more to get one. Even the Tap — the Echo’s less expensive counterpart — is still an investment of $129. Amazon Dash buttons are free (after rebating magic) and a very good “stutter step” for the fuller service menu Alexa orders.  

Maybe the hope is that after using a couple of Dash buttons and realizing they like the service but would prefer not to have their kitchen look like a NASCAR racecar with branded Dash buttons all over the place, users will upgrade to the fuller Alexa service package.  

Or buy appliances that do the thinking for them.

Or both.

In which case it won’t matter if the Dash fizzles or sizzles Amazon will sizzle in the end.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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