The New (Savvy) Way to Shop!

The retail world is changing and it isn’t just about online versus offline retailing, it is about ‘new ways’ to shop. This fundamental shift in retail is led by mobile commerce that has blurred the lines between online and offline; the retailers are looking for new ways to grow (and compete with Amazon!).

As these retailers explore technology to serve customers across channels, TV or video streaming is becoming a logical next step, a new way to shop. Experts have talked about interactive TV, and some adventurous retail startup has even tried interactive advert. So, I would rather explore two specific (hypothetical) ways to shop while streaming a video:

1. The Amazon Way   If you are a Kindle user, you would have heard of ‘Explore Your Book with X-Ray’. For beginners, Amazon.com defines this new feature as “X-Ray lets you explore the ‘bones of a book’. You can also view more detailed information from Wikipedia and from Shelfari, Amazon’s community-powered encyclopedia for book lovers.” So, what does this has to do with video streaming, let alone shopping? Let me introduce you to my friend.

  • Ron is not really a shopaholic but he loves to buy toys for his toddler son whenever he comes across the right item. He also spends a good amount of time watching kids shows with his son
  • One day, while watching Sesame Street on Amazon Instant Prime Video on his Kindle Fire HD, he really liked a toy. He immediately paused the video, pressed the new (the future!) X-Ray icon for video that quickly generated a catalog of products that are related to that episode and are available through Amazon.com
  • He was excited to see the toy in the catalog. He clicks on the item, buys it using the check-out option and returned to the video

2. The Other Way   What if Ron is not a Kindle user? What if Ron is watching the same show on Netflix, Hulu Plus or iTunes that is streamed through Apple TV. Lets introduce eBay’s Milo to this scenario – Milo’s engine allows eBay to list in-store inventory of participating retailers.

  • Once again, Ron will start by pausing the video and/or hitting the Shop (X-Ray in #1 above) button on the remote
  • He will see a similar catalog of products and click the item of his choice
  • Milo’s engine will use his location to search in-store inventory of participating retailers, lets pick Toys-R-Us
  • Ron finds out that there is one available in the Toys-R-Us that is 2 miles away from his house
  • Ron can buy this toy in two ways – use ‘eBay Now’ for same day delivery or use pick-up from the store option

Excited about the new and savvy way to shop? It may not take too long for companies to turn these scenarios into reality. In fact, I named these scenarios in a peculiar manner, The Amazon Way and The Other Way, for a reason. In my take on one of the future ways to shop, Amazon does not need a partner while scenario #2 requires partnership between at least three players – Video Streaming (Apple iTunes, or Netflix/Hulu on Apple TV/XBOX), Technology (eBay’s Milo) and a Retailer (Toys-R-Us, Macy’s, Target, Best Buy etc). It is clear that scenario #2 is very difficult if not impossible to execute. It’s far too early to predict a first-mover into this new way of shopping but I’d bet my money on Amazon.

– Please feel free to comment and provide feedback. I know I have made few assumptions here but I love to explore interesting ideas.

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Swiping a card is not a problem for people. Really?

Earlier last month, I was in a meeting with a Director at PayPal who talked in length about PayPal’s new initiatives, including the new way of POS payment at Home Depot. My immediate reaction was why would anyone prefer to enter 14 numbers (Phone # and PIN) instead of simply swiping a card. I also told the guy that I loved the Isis demo at SXSWi  at Austin. He responded in an animatic fashion and I decided not to take away his thunder and focus on the task at hand. But, it got me thinking and then I bumped into Rocky Agrawal’s take on PayPal’s new POS service on VentureBeat- “PayPal’s New POS Service is a Piece of Sh*t“. This is a strong statement based on following observations:

  1. People prefer swiping a card
  2. (Phone number + 4-digit PIN) poses security concerns
  3. Ability to change underlying funding source for the purchase is not a frequent need

Lets take a closer look at Rocky’s arguments. So, even though I considered myself a person who would prefer to swipe a card, I found myself struggling to accept Rocky’s views. Then, something struck my mind. I am a MBA student at Ross School of Business, and to use printers at school I can either use my student ID to swipe or simply press/enter 8-PIN ID on a number pad. What do I prefer to do? I manually enter the number since I have discovered that option. That was a revelation for me. I supported Rocky’s argument #1 but I don’t anymore. It led me to believe that we do not realize the extent to which we are bound by our sub-conscious assumptions that sometimes lead us to believe in something we may not actually prefer in practice. So, it is not about whether swiping a card is a problem or not. The right questions to ask is if entering numbers is more convenient than actually taking out a card to swipe. There is no right answer anyway. It is about personal preferences and PayPal is out to target people in the ‘Empty Hands’ camp and these people sure do exist.

I recently attended a panel on mobile payments during the SXSWi. One of the most amazing thing that I learned from that panel was regarding the perception of security in payments space. We give out our card details on multiple website, sometimes we even save the data forms for future convenience. We hand our card to cashiers, waiters etc at cafes, restaurants and retailers. Yet, people feel secure. So, why would someone consider (phone number + 4-digit PIN) to be less secure? Is that the crowd effect? We always feel less secure when we are alone. A new mode of payment will always be perceived as less secure. Does that mean we should reject every new idea without a valid premise?

Lastly, I loved the idea of changing the account/source for funding the transaction after the transaction has taken place. It is truly amazing, possibly disruptive! I was an entrepreneur before coming back to school and I learned about the importance of cash flow. PayPal’s feature is revolutionary as it allows consumers to go back and think over the purchasing decisions and how to fund them. I do not care if I ever use this service but I am excited about it. This service is not about how many and how frequently people would use it but it is about empowering consumers with a level a flexibility that was not seen before.

Having said all that, I am definitely not convinced by Rocky’s arguments. Rather, I believe that PayPal has done an amazing job at exploring consumer payments behavior and implementing some of the insights. What I would rather ask PayPal is why they have such strong feelings against alternative options such as NFC? Will PayPal react late, once again (referring to PayPal Here)?

Categories: Payments Tags: ,

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SXSW Interactive

Its a perfect day to start blogging! I have created this blog to explore the shift in commerce, both retail and payments, and to share my opinion with others.

It’s been over 12 hours since I boarded the bus with over 40 fellow students/entrepreneurs from across University of Michigan to invade SXSW Interactive at Austin, TX. I am amazed at the quality of ideas that have been discussed so far. From revolutionizing sports broadcasting space to making reading fun for students, most ideas are grounded on vision to change lives. I am excited to be a part of this fantastic group and expect to rock Austin tomorrow.

Go Blue!

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