Over the past few weeks - one thought I keep returning to is - we are in the midst of an almighty data fight between Amazon, Shopify, and everyone else. Everyone else refers to specifically the payments sector (they must be part of customers’ online purchase journey to buy an item.)
E-commerce companies, whether it is marketplaces or brand websites, want the analytics and data from when an impression is generated to when the item is delivered to the consumer. The data ensures that vendors repeatedly create a great customer experience to generate recurring revenues and sales. Then, the data generates cohorts and lifetime value models (LTV), which can help companies better understand their customer’s purchasing habits. The data collected is also an opportunity to upsell or cross-sell customers products that they may want but have not purchased yet.
From the business angle
If you buy the goods at wholesale or some negotiated cost, additional capital is required to market those products. If the checkout data is passed off to a third party - the opportunity to learn more about customers and their purchasing habits is impossible as the data is not inside the retailers/brands’ ecosystem. If there is enough transaction volume - the brand, retailer, or marketplace may create their payment solution. The challenge then becomes how can third-parties use this payment solution.
This thesis is for Amazon to develop the Buy with Prime program. Offer brands the opportunity to leverage the best parts of Amazon (logistics and advertising) and then grow the adoption of Amazon Pay. I also believe this is one point of negotiation between Shopify and Amazon for a future partnership regarding the Buy with Prime program.
In simple terms, the greater the volume of payments - the more negotiating power the solution offers customers lower rates.
From a payments perspective - having all the payments data and the swipe is valuable, but not having access to the customer journey data pre-purchase is not a position of strength. This lack of data is why PayPal has been investing in shopping cart software and other parts of the value chain to ensure they can access anonymized data pre-purchase to enable them to learn more about their customers. Shopify’s move into payments could pressure PayPal, seeing its marketshare drop even further.
Which is easier - adding payments to a commerce ecosystem such as Amazon and Shopify or adding commerce to a payments business such as PayPal? At the moment, both are dominant in their core focus market/sector, but adding a complimentary element is neither here nor there. I cant decide at the moment.