Peter Guidi's Blog

Posts Tagged ‘Google’

Alexa, how do you spell “competition”? H y p e r -M a r k e t

In connected consumer, Convenience Store, digitization, Hypermarket, merchants, omni-channel, Platforms, retail, retailers, smart speaker, Uncategorized, workspace services on August 24, 2017 at 5:09 pm

Michael Buffer is the boxing ring announcer who coined his trademarked catchphrase, “Let’s get ready to rumble!” I could hear Buffer’s distinct announcing style as I read about Amazon’s repositioning pricing at Whole Foods and Wal-Mart which has teamed up with Google. Can you hear him today saying; “This is a special tag- team match between Amazon & Whole Foods in the red tights, fighting Wal-Mart & Google in the blue tights……. Let’s get ready to Rumble!”

What does the paring of these four behemoths’ mean to the rest of the retail market? When these two finish fighting, will there be anything left? Or are these announcements related to something else? In this blog, I’ll explain how these announcements are related to your business and what you need to compete in this new “Hypermarket”

Amazon.com, Inc. & Alphabet Inc (GOOGLE) are two of the world’s biggest tech companies. Their partnership with traditional “Brick and Mortar” (Wal-Mart and Whole Foods) combined with the introduction of smart speakers represents a new, more aggressive, type of competition. What makes these two partnerships so dangerous is that they link world-class, leading-edge technology with major product distribution channels. If Google can get Home right, Wal-Mart’s store based distribution means I put my money on the blue tights.

The Hypermarket links the consumer to their shopping in a subliminal way by simplifying the process, and the processes, between need, order, payment and delivery. The objective is to provide a seamless, consistent shopping experience…and kill your competition. The smart speaker is an early form of Artificial Intelligence (A.I) in the home. Either “Amazon Echo” or “Google Home” links consumers to the retailer in a new way, surpassing Smart Phone apps, TV’s, Tablets’ or PC’s. The scale of these partnerships are immense! As an example, 55% of U.S. adults start their online shopping trips on Amazon and they expect to ship 10 million Amazon Echo speakers in 2017. As for Wal-Mart and Google; well, they are Wal-Mart and Google! Apple will soon announce I-Home and we don’t know yet how it will be marketed. If retailers plan on keeping or growing their market share, competing in the Hypermarket will require new tools and offer new reasons for consumers to visit their store.

To compete, retailers will need to look to new aggressive strategies, innovative solutions and technology. Stephen Covey wrote about “Sharpening the Saw”. Sharpening the Saw is to preserve and enhance your greatest assets. Partnering with others, as these four industry leaders have done, adds speed and expertise. Competing in the Hypermarket will require each retailer to identify its own unique market position and focus on building similar partner and consumer relationships, both with operations and marketing.

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“For their return home, the Greeks dedicate this offering to Athena”. Apple Pay and increased mobile payment fees.

In mobile payment, Retail Payment on October 23, 2014 at 12:00 pm

The Blogosphere has been alive with information on mobile payment and Apples introduction of Apple Pay. The flame-out of PayPal Off-line, Google, Amazon, ISIS (or whatever), and MCX (whenever) have the experts writing and talking about how, when and where mobile payment will become common place.

Enter Apple. While Apple may indeed be the first broad based mobile wallet to achieve consumer adoption, Retailers will remember Apple as Odysseus’ and Apple Pay as a wooden horse bearing higher payment fees. New fees may start arriving in the first statements and no doubt merchants will be asking about the tokenization, wallet storage and API fees. According to legend, “after a fruitless 10-year siege, the Greeks constructed a huge wooden horse, and hid a select force of men inside. Once inside the walls of Troy, the Greek force crept out of the horse and opened the gates to allow the Greeks to enter and destroy the city of Troy.” A fruitless siege might be a good way to describe the tug of war between retailers and banks; abetted by the technology, to describe the painful march to mobile payment. Apple brings scale and technology, but it is their Trojan Horse approach to payments fees and merchants opening the doors to Apple Pay seems eerily like the Troy opening it gates.

Apple deserves applause for devising a strategy that hides their transaction costs within the issuer as a share of interchange rather than charging the merchant directly. Herein the lies the “Trojan Horse” and the promise of higher fees in the future. Published reports indicate Apple will be paid 15 basis points by the issuer (Banks). Retailers need to ask themselves, how long before this cost is shifted to the merchant by way of a higher acceptance fees? My guess, about the same time Apple reaches 10 million Apple Pay consumers.

The big unknown is how high will fees go? The answer is as high as possible. Merchants often say there is little competition in the card fee world and therefore it’s a monopolistic business. Apple Pay can only add cost and another partner that needs to earn profit. 20 years ago banks convinced retailers to accept card based payment using low fees, the results are clear. As merchants open the gates and let Apple Pay in, they should hardly be surprised when Apple Pay is earning 100 basis points rather than 15, and it won’t be the issuer paying the bill.