Wednesday, April 30, 2008
The 'Frictionless' Online Payment Alternative
Given the powerful double-digit growth of e-commerce during the first decade of the industry, few merchants worried that a payment alternative to credit cards or the well-established PayPal was needed. More recently, however, as e-commerce growth rates slow, the fast-growing, credit card-free alternative Bill Me Later has proven that merchants and consumers alike are hungry for alternatives.
Though it has focused mainly on the largest online merchants, Bill Me Later has seen rapid growth. Twenty-two percent of online buyers used Bill Me Later to make a purchase during the holiday shopping season, according to the Piper Jaffray eCommerce Survey for the fourth quarter of 2007.
"We knew there was a pain point for merchants around credit card fees," Bill Me Later Vice President of Corporate Development Mark Lavelle said. "We also knew that consumers don't necessarily always want to use credit cards to make purchases."
In fact, as much as 40 percent of brick-and-mortar sales come from sources other than credit cards, he noted. "We knew there was an opportunity to create a frictionless payment method, which is what e-commerce is all about. You have these catalogs all in one place and sites optimized for user experience and then you get to the checkout and the process grinds to a halt while you reach for your credit card and enter all that data."
Of course, there are also many consumers concerned about sharing that data for privacy and security reasons. Those consumers may be among the ones that merchants are most eager to reach as well, as they are the last to embrace shopping online.
The founders of Bill Me Later came from the bank credit card business and knew that any alternative offering would have to address risk issues. They spent extensive time doing that and building the user experience.
"We spent a lot of time before we went live making sure it was a process that would be frictionless for consumers," Lavelle said. "We wanted it to be something that is incremental for the merchant" rather than taking sales from other payment methods.
Bill Me Later works by enabling users to provide limited information and to be billed later for purchases they make online. Customers with high credit scores qualify quickly for the service, which is finding traction particularly among older and more affluent shoppers.
Online businesses can capture more purchases from more shoppers if they offer alternatives that don't require entering a credit card number at checkout, said Gartner analyst Avivah Litan. "For that customer base that isn't yet buying online regularly, merchants should promote alternative payments," she said.
The success of PayPal -- which has launched a product called "Pay Later" -- and the early traction of Google Checkout suggest consumers are aware of the risks associated with sharing their credit card information widely, Litan added. "It's a message driven home in the media every day."
The merchant base was receptive to alternatives, but it still took time to build momentum around the new product, said Lavelle. The company's strategy involved focusing first on major e-commerce merchants with a slow but steady uptake during 2005 and 2006.
While Bill Me Later has been growing steady for some time, it got a huge boost in its profile late in 2007 when Amazon announced it would offer the payment alternative and would also make an investment in the firm, whose parent company is I4Commerce. That move "validated Bill Me Later's place in the payments marketplace," said Forrester Research analyst Sucharita Mulpuru.
Amazon may view the investment as a way to combat the rise of PayPal, which is owned by rival eBay but the fact that such a well-known retailer backed the system will resonate with consumers, Mulpuru said.
The value of Bill Me Later is expected to increase over time as it continues to work with merchants on the best ways to promote the alternative, such as by offering terms such as 90-day same-as-cash financing, Lavelle said.
Though 90 percent of its business comes from online merchants, it is offering services to brick-and-mortar stores and believes that multichannel retailers will want to offer the same payment options across their various outlets over time, whether a consumers buys through a call center, online or in a store. "We think we're at the beginning of a birth of a whole new payment network," he added.
Still, online is where the sweet spot for Bill Me Later is for now. The company has more demand from small and medium-sized merchants than it could keep up with and is expanding its capacity to serve that market, Lavelle pointed out.
"We think we can help reaccelerate the growth of e-commerce," he noted. "Choice is a concept that consumers crave and enjoy, and that extends to their payment options as well." Bill Me Later is not worried that credit card companies will respond to its rise by lowering their fees or responding in other ways, Lavelle concluded. "Our value proposition is well understood as being broader than price alone. We're [given] access to that customer the merchant can't reach with other methods and providing a better consumer experience as well."
Get Your Site Certified. Site Credibility Pays At Guardian eCommerce!
Though it has focused mainly on the largest online merchants, Bill Me Later has seen rapid growth. Twenty-two percent of online buyers used Bill Me Later to make a purchase during the holiday shopping season, according to the Piper Jaffray eCommerce Survey for the fourth quarter of 2007.
"We knew there was a pain point for merchants around credit card fees," Bill Me Later Vice President of Corporate Development Mark Lavelle said. "We also knew that consumers don't necessarily always want to use credit cards to make purchases."
In fact, as much as 40 percent of brick-and-mortar sales come from sources other than credit cards, he noted. "We knew there was an opportunity to create a frictionless payment method, which is what e-commerce is all about. You have these catalogs all in one place and sites optimized for user experience and then you get to the checkout and the process grinds to a halt while you reach for your credit card and enter all that data."
Of course, there are also many consumers concerned about sharing that data for privacy and security reasons. Those consumers may be among the ones that merchants are most eager to reach as well, as they are the last to embrace shopping online.
The founders of Bill Me Later came from the bank credit card business and knew that any alternative offering would have to address risk issues. They spent extensive time doing that and building the user experience.
"We spent a lot of time before we went live making sure it was a process that would be frictionless for consumers," Lavelle said. "We wanted it to be something that is incremental for the merchant" rather than taking sales from other payment methods.
Bill Me Later works by enabling users to provide limited information and to be billed later for purchases they make online. Customers with high credit scores qualify quickly for the service, which is finding traction particularly among older and more affluent shoppers.
Online businesses can capture more purchases from more shoppers if they offer alternatives that don't require entering a credit card number at checkout, said Gartner analyst Avivah Litan. "For that customer base that isn't yet buying online regularly, merchants should promote alternative payments," she said.
The success of PayPal -- which has launched a product called "Pay Later" -- and the early traction of Google Checkout suggest consumers are aware of the risks associated with sharing their credit card information widely, Litan added. "It's a message driven home in the media every day."
The merchant base was receptive to alternatives, but it still took time to build momentum around the new product, said Lavelle. The company's strategy involved focusing first on major e-commerce merchants with a slow but steady uptake during 2005 and 2006.
While Bill Me Later has been growing steady for some time, it got a huge boost in its profile late in 2007 when Amazon announced it would offer the payment alternative and would also make an investment in the firm, whose parent company is I4Commerce. That move "validated Bill Me Later's place in the payments marketplace," said Forrester Research analyst Sucharita Mulpuru.
Amazon may view the investment as a way to combat the rise of PayPal, which is owned by rival eBay but the fact that such a well-known retailer backed the system will resonate with consumers, Mulpuru said.
The value of Bill Me Later is expected to increase over time as it continues to work with merchants on the best ways to promote the alternative, such as by offering terms such as 90-day same-as-cash financing, Lavelle said.
Though 90 percent of its business comes from online merchants, it is offering services to brick-and-mortar stores and believes that multichannel retailers will want to offer the same payment options across their various outlets over time, whether a consumers buys through a call center, online or in a store. "We think we're at the beginning of a birth of a whole new payment network," he added.
Still, online is where the sweet spot for Bill Me Later is for now. The company has more demand from small and medium-sized merchants than it could keep up with and is expanding its capacity to serve that market, Lavelle pointed out.
"We think we can help reaccelerate the growth of e-commerce," he noted. "Choice is a concept that consumers crave and enjoy, and that extends to their payment options as well." Bill Me Later is not worried that credit card companies will respond to its rise by lowering their fees or responding in other ways, Lavelle concluded. "Our value proposition is well understood as being broader than price alone. We're [given] access to that customer the merchant can't reach with other methods and providing a better consumer experience as well."
Get Your Site Certified. Site Credibility Pays At Guardian eCommerce!
Wednesday, April 02, 2008
Establishing Your Web Brand
Any form of branding essentially means being recognized. A positive website brand image means that your potential customers will recognize your brand and begin to associate that brand with a particular product or range of products. In achieving this, those same customers will begin to turn to your brand when they need the product you sell or require information that you provide.
A lot of websites and website owners mistakenly believe that creating a brand means a compelling and relevant name, and well designed logos and web pages. While these are a part of website branding, they are far from being the whole story. In fact, every aspect of your website and online business needs to convey your brand image. This includes design, narrative voice, advertising, and marketing. Customer communication is equally as important, and provides the opportuníty to strengthen your brand even further.
Branding needs to concentrate on the target market you are aiming to attract. Market research and some competitor analysis will usually garner you with relevant information regarding the people you are aiming to attract. What products and services are they looking for? What information do they want access to? Do they expect to be able to interact with you or other members of your online community? These are all important questions that you not only need to ask but answer as well.
The most effective branding will also consider the demographics of a target market. Age, sex, nationality, religion, and disposable income bracket are important factors. Again, the savvy online business owner should have at least a reasonable understanding of their target market demographics. Knowing this information ensures that you not only create a brand, but that you create a relevant and powerful brand that is attractive to the right people.
The first aspect of your brand is your company or website name. It doesn't necessarily have to portray the products you sell, but it does need to be memorable. Brands like Google and Ebay relay little about the service they provide but they are short, catchy, and easy to remember. You can consider other aspects of branding when choosing a name – PayPal clearly conveys the fact that the service is related to paying and payments, while the addition of the word Pal implies that the service is user friendly and intuitive. It still sticks to the format of being short and memorable; the use of alliteration making the name roll off the tongue even easier.
Once you've determined a brand name and ensured that domain names and company names are available, it's time to register domaíns. .com domaíns are the most effective because they are the ones that we, as surfers, generally remember. We may remember a company name and forget the domain extension. Nine times out of ten we would add .com as the extension and hope to find the right site. It will pay, in the long run, to purchase a number of domains including regional domains (.eu, .co.uk, etc...) and others. Some potential customers like to deal with local firms and these customers will use local extensions.
Many websites now utilize a header rather than a true logo. Whichever option you plump for, it is usually a good idea to have your graphic designed by a professional. This design can cost $100 upwards but the results should be more than worth it. A logo will appear on all communication you send to customers, every page of your website, every newsletter, brochure, and virtually any other form of communication or promotional material. It needs to be strong and instantly memorable to prove effective.
The design of your website and other online media needs to be attractive, but it needs to provide the level of usability and functionality that your target market expect. Website design, in particular, needs to be easy on the eye, give simple guidance to the most important parts of the page, and appear professional. It should also cater to your target market. A younger audience will gladly appreciate a more modern design, while the older generations may prefer a classic and more simple design.
Bringing all aspects of design together in all of your media is important. If you intend to use video marketing as a tool to drive traffic and promote your brand, then you need to try and include your logo and a link to your website within that video. Emails, newsletters, faxes, and invoices should largely match the design of your site and should certainly include any logo you have.
Narrative voice is another important facet of website branding. The main reason that we go online and search for certain terms is to find out more about that term, and not usually to directly purchase a product. As such, website content should provide the information that your visitors are looking for and throughout your website and other media you need to convey the same type of voice.
Websites that are geared towards individual consumers can adopt a more friendly and personable style. This conveys an image that you and your brand are equally friendly and personable – an attractive perception to most consumers. B2B websites can approach content in a more formal and businesslike manner. CEOs and other business executives prefer to know that their budget is being spent on a professional service that will deliver, rather than push an amicable brand.
Offering free newsletters or promotional giveaways is an excellent way to kick start your website's popularity. It provides visitors with the information they crave and it provides you with an opportuníty to further enhance your new brand. Blogs, forums, and web applications provide similar advantages and they convince visitors to bookmark your pages and visit more frequently. This, in turn, helps to improve brand awareness and makes your brand much more memorable to your visitors.
Start creating content for use outside of your site. Articles, videos, blog posts, and news stories are all good material that can be branded effectively and distributed in various areas of the Internet. This extra push will help to improve your brand image because it will begin to convey you as being an expert within your field. It will give you and your brand greater exposure and will also help drive traffic to your website.
Get The Privacy Seal From Guardian eCommerce.
A lot of websites and website owners mistakenly believe that creating a brand means a compelling and relevant name, and well designed logos and web pages. While these are a part of website branding, they are far from being the whole story. In fact, every aspect of your website and online business needs to convey your brand image. This includes design, narrative voice, advertising, and marketing. Customer communication is equally as important, and provides the opportuníty to strengthen your brand even further.
Branding needs to concentrate on the target market you are aiming to attract. Market research and some competitor analysis will usually garner you with relevant information regarding the people you are aiming to attract. What products and services are they looking for? What information do they want access to? Do they expect to be able to interact with you or other members of your online community? These are all important questions that you not only need to ask but answer as well.
The most effective branding will also consider the demographics of a target market. Age, sex, nationality, religion, and disposable income bracket are important factors. Again, the savvy online business owner should have at least a reasonable understanding of their target market demographics. Knowing this information ensures that you not only create a brand, but that you create a relevant and powerful brand that is attractive to the right people.
The first aspect of your brand is your company or website name. It doesn't necessarily have to portray the products you sell, but it does need to be memorable. Brands like Google and Ebay relay little about the service they provide but they are short, catchy, and easy to remember. You can consider other aspects of branding when choosing a name – PayPal clearly conveys the fact that the service is related to paying and payments, while the addition of the word Pal implies that the service is user friendly and intuitive. It still sticks to the format of being short and memorable; the use of alliteration making the name roll off the tongue even easier.
Once you've determined a brand name and ensured that domain names and company names are available, it's time to register domaíns. .com domaíns are the most effective because they are the ones that we, as surfers, generally remember. We may remember a company name and forget the domain extension. Nine times out of ten we would add .com as the extension and hope to find the right site. It will pay, in the long run, to purchase a number of domains including regional domains (.eu, .co.uk, etc...) and others. Some potential customers like to deal with local firms and these customers will use local extensions.
Many websites now utilize a header rather than a true logo. Whichever option you plump for, it is usually a good idea to have your graphic designed by a professional. This design can cost $100 upwards but the results should be more than worth it. A logo will appear on all communication you send to customers, every page of your website, every newsletter, brochure, and virtually any other form of communication or promotional material. It needs to be strong and instantly memorable to prove effective.
The design of your website and other online media needs to be attractive, but it needs to provide the level of usability and functionality that your target market expect. Website design, in particular, needs to be easy on the eye, give simple guidance to the most important parts of the page, and appear professional. It should also cater to your target market. A younger audience will gladly appreciate a more modern design, while the older generations may prefer a classic and more simple design.
Bringing all aspects of design together in all of your media is important. If you intend to use video marketing as a tool to drive traffic and promote your brand, then you need to try and include your logo and a link to your website within that video. Emails, newsletters, faxes, and invoices should largely match the design of your site and should certainly include any logo you have.
Narrative voice is another important facet of website branding. The main reason that we go online and search for certain terms is to find out more about that term, and not usually to directly purchase a product. As such, website content should provide the information that your visitors are looking for and throughout your website and other media you need to convey the same type of voice.
Websites that are geared towards individual consumers can adopt a more friendly and personable style. This conveys an image that you and your brand are equally friendly and personable – an attractive perception to most consumers. B2B websites can approach content in a more formal and businesslike manner. CEOs and other business executives prefer to know that their budget is being spent on a professional service that will deliver, rather than push an amicable brand.
Offering free newsletters or promotional giveaways is an excellent way to kick start your website's popularity. It provides visitors with the information they crave and it provides you with an opportuníty to further enhance your new brand. Blogs, forums, and web applications provide similar advantages and they convince visitors to bookmark your pages and visit more frequently. This, in turn, helps to improve brand awareness and makes your brand much more memorable to your visitors.
Start creating content for use outside of your site. Articles, videos, blog posts, and news stories are all good material that can be branded effectively and distributed in various areas of the Internet. This extra push will help to improve your brand image because it will begin to convey you as being an expert within your field. It will give you and your brand greater exposure and will also help drive traffic to your website.
Get The Privacy Seal From Guardian eCommerce.
Amazon Aims At M-Commerce
Amazon.com launched a text-message shopping option Tuesday that enables users to search for, compare and buy products via short message service, in addition to its existing browser-based mobile commerce offerings. TextBuyIt, as the service is known, joins Amazon's mobile site and a site dedicated for access with the iPhone in Amazon's mobile arsenal.
To use the service, consumers send a text message to Amazon containing the name of the product they are seeking or, if they know it, the UPC code of the item. Amazon responds with matching products and prices, each with a single-digit number alongside it. Customers buy items by responding with a text containing that number.
Amazon then follows up with a phone call to the device that sent the text confirming the order. Using e-mail addresses and ZIP codes as identifiers, the service also accesses a customer's existing Amazon account, including their preferred payment methods. The service will enable people to shop anytime, anywhere, the e-tailer said. Likely uses include the purchase of a CD after a music concert or buying a book that a friend recommends at dinner, noted Howard Gefen, director of mobile payments at Amazon.
Though mobile commerce remains a small market, Amazon has moved to lay the foundation for a strong presence in the space. Most of the features on its Web-based site, such as customer reviews, discounted shipping and one-click checkout, are now available for mobile browsers.
Mobile commerce, or m-commerce, has been a red-hot buzzword since the earliest days of the dot-com craze. Though it has gained steam in overseas markets such as Japan, where mobile devices are widely used to make payments in person and over the Internet, it has grown much more slowly in the U.S.
The relative awkwardness of mobile browsers and security concerns have hampered m-commerce growth. Last year's launch of the iPhone from Apple and the subsequent releases of similar devices from competitors are helping to pave the way for more mobile buying as consumers now have access to more robust mobile browsers.
Still, consumers remain reluctant about mobile purchases. They are twice as likely to use their mobile phone to check prices or find stores than to order or pay for items, according to a survey conducted by Gartner last year. "Mobile commerce is still pretty much in its infancy," JupiterResearch analyst Michael Gartenberg said. "But this is the type of service that can give it a jump start because it really leverages the ubiquity of that mobile phone in your pocket."
In addition to impulse buyers, the service may have legs as a comparison tool for shoppers. For instance, a consumer who sees an item in a store can quickly check the price at Amazon, use that information to bargain for a lower price in the store, decide to buy later from the Web or complete the purchase online on the spot.
"It's a good set of services and it's coming at a good time," Gartenberg added. Mobile browsing still has its limitations, he added, and text messaging is no longer the youth-only novelty it was just a couple years ago. "The fact that I can kind of automate this process through text messaging and voice automation that links the two together makes this much more appealing."
Amazon may have the power to give mobile commerce a boost because it has become a trusted online brand thanks to its longevity as an e-tailer and its sheer size.
Still, mobile may be better seen as part of a larger, multichannel push for Amazon, Forrester Research analyst Carrie Johnson said.
The text-based service is important as "another touchpoint between consumers and a retailer they trust," she said. Registered users in particular may be able to benefit from the ability to recall a mobile search from a Web session, for instance. Direct sales via text messages will still likely remain small for time being, but the long-term impact significant. "Amazon has made it clear it wants to protect its turf on the mobile side."
Amazon shares rose 1.5 percent in midday trading Wednesday to US$77.80.
Go Guardian eCommerce. Site Credibility Pays.
To use the service, consumers send a text message to Amazon containing the name of the product they are seeking or, if they know it, the UPC code of the item. Amazon responds with matching products and prices, each with a single-digit number alongside it. Customers buy items by responding with a text containing that number.
Amazon then follows up with a phone call to the device that sent the text confirming the order. Using e-mail addresses and ZIP codes as identifiers, the service also accesses a customer's existing Amazon account, including their preferred payment methods. The service will enable people to shop anytime, anywhere, the e-tailer said. Likely uses include the purchase of a CD after a music concert or buying a book that a friend recommends at dinner, noted Howard Gefen, director of mobile payments at Amazon.
Though mobile commerce remains a small market, Amazon has moved to lay the foundation for a strong presence in the space. Most of the features on its Web-based site, such as customer reviews, discounted shipping and one-click checkout, are now available for mobile browsers.
Mobile commerce, or m-commerce, has been a red-hot buzzword since the earliest days of the dot-com craze. Though it has gained steam in overseas markets such as Japan, where mobile devices are widely used to make payments in person and over the Internet, it has grown much more slowly in the U.S.
The relative awkwardness of mobile browsers and security concerns have hampered m-commerce growth. Last year's launch of the iPhone from Apple and the subsequent releases of similar devices from competitors are helping to pave the way for more mobile buying as consumers now have access to more robust mobile browsers.
Still, consumers remain reluctant about mobile purchases. They are twice as likely to use their mobile phone to check prices or find stores than to order or pay for items, according to a survey conducted by Gartner last year. "Mobile commerce is still pretty much in its infancy," JupiterResearch analyst Michael Gartenberg said. "But this is the type of service that can give it a jump start because it really leverages the ubiquity of that mobile phone in your pocket."
In addition to impulse buyers, the service may have legs as a comparison tool for shoppers. For instance, a consumer who sees an item in a store can quickly check the price at Amazon, use that information to bargain for a lower price in the store, decide to buy later from the Web or complete the purchase online on the spot.
"It's a good set of services and it's coming at a good time," Gartenberg added. Mobile browsing still has its limitations, he added, and text messaging is no longer the youth-only novelty it was just a couple years ago. "The fact that I can kind of automate this process through text messaging and voice automation that links the two together makes this much more appealing."
Amazon may have the power to give mobile commerce a boost because it has become a trusted online brand thanks to its longevity as an e-tailer and its sheer size.
Still, mobile may be better seen as part of a larger, multichannel push for Amazon, Forrester Research analyst Carrie Johnson said.
The text-based service is important as "another touchpoint between consumers and a retailer they trust," she said. Registered users in particular may be able to benefit from the ability to recall a mobile search from a Web session, for instance. Direct sales via text messages will still likely remain small for time being, but the long-term impact significant. "Amazon has made it clear it wants to protect its turf on the mobile side."
Amazon shares rose 1.5 percent in midday trading Wednesday to US$77.80.
Go Guardian eCommerce. Site Credibility Pays.
Cashing In on MeCommerce
Will you add me? Have you written on my wall? Are we LinkedIn? Social networks are not only changing the way we speak to our friends, they are influencing our actions and behaviors. There is no question that social networks are becoming the networking standard as e-mail replaced snail mail years ago. Today, there are more than 350 million social network users, which is more than the total U.S. population.
Social networks have grown like wildfire -- both on a social and professional level. Sites like LinkedIn that target professionals provide an easy forum to build your professional contacts quickly. For example, on my personal LinkedIn profile, I have nearly 100 contacts in my network. Within three degrees of separation from me, I have access to more than 850,000 contacts that might be of interest to me or my company.
As the social network is becoming the de facto standard in how we communicate, interact and react to others, there is no doubt that new innovations will continue to sculpt social networks. As users have expanded their virtual network, many often ask, "What's next for social networks?" Social network users now have access to blogs, podcasts, RSS (really simple syndication) feeds, widgets and countless other technologies, which have leveraged on the power of the social networking environment. Yet, how do we, social network users, capitalize on this and monetize our social networks?
Because power is shifting from institutions to online communities, the way we've traditionally conducted business is changing. As Web 2.0 proliferates, so do the new buzzwords and behaviors associated with new media. A mashup with social network applications is similar to turning a kaleidoscope. While the pieces inside might not change, the image that appears changes radically. Take the rate of e-commerce within social networks.
The current social network revenue model relies heavily on targeting consumers via online advertising, hoping the ad reaches the best demographic possible to influence their buying decisions. This approach is outdated and has proven unsuccessful. Business owners and advertisers are finding it harder to segment audiences into distinct demographics.
Furthermore, most people do not even pay attention to the sea of online advertising, especially on social networks. BusinessWeek recently reported a drop in page views and advertising click through rates on social networks. This isn't such good news for advertisers who want targeted exposure to social network users. Plus, with an ever-increasing number of social networks, ad dollars will not increase to create sufficient revenues for social networks, or returns for advertisers.
Clearly, the traditional online advertising model within social networks is not working. A failure for social networks to find a long-term revenue strategy will limit their growth. We see a mashup between e-commerce and social networks as the Holy Grail for members, advertisers and social networks.
The demographics of the social networks are changing; the relationships between the members are changing; and thus, the applications from the developer communities on social networks are changing. New breeds of social networking widgets are giving social network members the opportunity to instantly participate in e-commerce without the headaches of back-end fulfillment such as payment processing, fulfillment and customer service.
People naturally seek out products and make buying decisions based on recommendations from their friends, not necessarily from third-party banner ads and advertising placements. The ability to create a fully e-commerce-enabled site for total transaction management, all without any involvement from the user's perspective, is a new way to conduct e-commerce. It's more like MeCommerce, from me to you, with a plethora of vendors' products to recommend on your social networking profile.
Users are putting themselves into the driver's seat on what and how they are choosing to buy. This is a new trend and an extremely cost-effective sales channel for vendors. With ease, any size vendor can tap into this enormous channel, featuring their products to millions of potential customers as part of a multi-channel retail strategy reinforced by user-generated content -- without a huge marketing budget to gain online exposure.
What makes the mashup of social networks with e-commerce, or MeCommerce, compelling is that it not only makes users' recommendations viral to their social networking friends' list, but enables the author (social network member) to actually benefit monetarily from their recommendations.
As the MeCommerce generation emerges, social network users will be empowered to leverage sites like Facebook , MySpace and LinkedIn through a mutually beneficial "social commerce" model for all parties involved.
Social network users can cash in from a simple product endorsement. Vendors gain a new online sales channel without a huge marketing cost. Social networks increase membership, site visitation and potentially gain a much-needed new revenue stream over-and-beyond advertising. MeCommerce will prove to be just what the social networking community needs.
Go Guardian eCommerce! Get Site Certified.
Social networks have grown like wildfire -- both on a social and professional level. Sites like LinkedIn that target professionals provide an easy forum to build your professional contacts quickly. For example, on my personal LinkedIn profile, I have nearly 100 contacts in my network. Within three degrees of separation from me, I have access to more than 850,000 contacts that might be of interest to me or my company.
As the social network is becoming the de facto standard in how we communicate, interact and react to others, there is no doubt that new innovations will continue to sculpt social networks. As users have expanded their virtual network, many often ask, "What's next for social networks?" Social network users now have access to blogs, podcasts, RSS (really simple syndication) feeds, widgets and countless other technologies, which have leveraged on the power of the social networking environment. Yet, how do we, social network users, capitalize on this and monetize our social networks?
Because power is shifting from institutions to online communities, the way we've traditionally conducted business is changing. As Web 2.0 proliferates, so do the new buzzwords and behaviors associated with new media. A mashup with social network applications is similar to turning a kaleidoscope. While the pieces inside might not change, the image that appears changes radically. Take the rate of e-commerce within social networks.
The current social network revenue model relies heavily on targeting consumers via online advertising, hoping the ad reaches the best demographic possible to influence their buying decisions. This approach is outdated and has proven unsuccessful. Business owners and advertisers are finding it harder to segment audiences into distinct demographics.
Furthermore, most people do not even pay attention to the sea of online advertising, especially on social networks. BusinessWeek recently reported a drop in page views and advertising click through rates on social networks. This isn't such good news for advertisers who want targeted exposure to social network users. Plus, with an ever-increasing number of social networks, ad dollars will not increase to create sufficient revenues for social networks, or returns for advertisers.
Clearly, the traditional online advertising model within social networks is not working. A failure for social networks to find a long-term revenue strategy will limit their growth. We see a mashup between e-commerce and social networks as the Holy Grail for members, advertisers and social networks.
The demographics of the social networks are changing; the relationships between the members are changing; and thus, the applications from the developer communities on social networks are changing. New breeds of social networking widgets are giving social network members the opportunity to instantly participate in e-commerce without the headaches of back-end fulfillment such as payment processing, fulfillment and customer service.
People naturally seek out products and make buying decisions based on recommendations from their friends, not necessarily from third-party banner ads and advertising placements. The ability to create a fully e-commerce-enabled site for total transaction management, all without any involvement from the user's perspective, is a new way to conduct e-commerce. It's more like MeCommerce, from me to you, with a plethora of vendors' products to recommend on your social networking profile.
Users are putting themselves into the driver's seat on what and how they are choosing to buy. This is a new trend and an extremely cost-effective sales channel for vendors. With ease, any size vendor can tap into this enormous channel, featuring their products to millions of potential customers as part of a multi-channel retail strategy reinforced by user-generated content -- without a huge marketing budget to gain online exposure.
What makes the mashup of social networks with e-commerce, or MeCommerce, compelling is that it not only makes users' recommendations viral to their social networking friends' list, but enables the author (social network member) to actually benefit monetarily from their recommendations.
As the MeCommerce generation emerges, social network users will be empowered to leverage sites like Facebook , MySpace and LinkedIn through a mutually beneficial "social commerce" model for all parties involved.
Social network users can cash in from a simple product endorsement. Vendors gain a new online sales channel without a huge marketing cost. Social networks increase membership, site visitation and potentially gain a much-needed new revenue stream over-and-beyond advertising. MeCommerce will prove to be just what the social networking community needs.
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Pay Bills Online And Save...
Pay a bill, save a tree.
That, in essence, is the message of a study that the PayItGreen Alliance made public recently. The alliance, sponsored by the non-profit National Automated Clearinghouse Association, was formed last October to add another consumer inducement -- environmental stewardship -- to the already-established assets of convenience and data security of online banking, bill paying and check cashing.
NACHA is a non-profit organization of 11,000 financial institutions that encourages consumers to pay their bills online.
"Each home has a lot they can do, but the aggregated impact can be significant," said Stuart Williams, the alliance's co-chairman and director of payment services with Fiserv subsidiary CheckFree. Moving many financial transactions to paper-free systems doesn't require a lot of effort or even thought, Williams said.
"Most companies at least offer a direct deposit of payroll, and it's a decision you make at the beginning of employment, but it's something most of us don't ever think about again," Williams said. "When you make that decision once with bill payments, within one or two cycles you see than not only does it work, but it's easier -- and, after one or two cycles, you don't even think about it." The alliance's study -- the organization says it's likely the first environment-focused research on online transactions -- found that the typical household in the U.S. makes about seven paper bill payments per month.
A changeover to electronic payments could save each household nearly 7 pounds of paper and 169 miles of driving per year. The study charted other potential savings, including: 24 square feet of forest; 63 gallons of wastewater; 4.5 gallons of gasoline... "The results would be significant," Williams said.
The study said that if 10 percent of the population shifted to electronic transactions, the savings would amount to more than 75 million pounds of paper, nearly 1 million trees and nearly 2 million pounds of greenhouse gases. It would save enough wastewater to fill 1,090 Olympic-sized swimming pools and avoid filling 3,071 garbage trucks with trash.
"Environment issues have become more mainstream and, as compared to other decisions, it's a fairly easy one to make and doesn't have a strong financial impact as if you were to go out and, say, buy a hybrid car," Williams said. "In virtually all cases, these services are free, and even those who may charge for it, it's probably nominal compared to the savings you receive from it."
Ed Kounts, a senior analyst on online banking issues with JupiterResearch, said the study mirrors his own findings. "Certainly, the alliance is an interesting consortium designed to put an environmental face on online bill paying," he said. "And, one element is 'green' consumers. We did a report on that last summer, and it laid out what consumers' perceptions are in terms of having a 'green' relationship with financial institutions."
Kountz's own research indicates there is an environmentally focused constituency that is naturally attracted to electronic transactions. "There are considerations around green coming into play that these types of initiatives are designed to leverage," he said. Consumers, in general, perhaps would be more interested in paying bills online for other reasons. "Certainly, the important thing to get consumers to shift habits around is that you have to have some incentive," Kountz said. That, he said, is often monetary. "Consumers shift behavior if they think they can get something back," he said. Tapping into consumers' sense of environmental stewardship can be an effective lure, Koontz said. There are others, he added. "It's one tool in the arsenal, and we'll see more, for obvious reasons," he said. "There's clearly an incentive to change that this taps into."
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That, in essence, is the message of a study that the PayItGreen Alliance made public recently. The alliance, sponsored by the non-profit National Automated Clearinghouse Association, was formed last October to add another consumer inducement -- environmental stewardship -- to the already-established assets of convenience and data security of online banking, bill paying and check cashing.
NACHA is a non-profit organization of 11,000 financial institutions that encourages consumers to pay their bills online.
"Each home has a lot they can do, but the aggregated impact can be significant," said Stuart Williams, the alliance's co-chairman and director of payment services with Fiserv subsidiary CheckFree. Moving many financial transactions to paper-free systems doesn't require a lot of effort or even thought, Williams said.
"Most companies at least offer a direct deposit of payroll, and it's a decision you make at the beginning of employment, but it's something most of us don't ever think about again," Williams said. "When you make that decision once with bill payments, within one or two cycles you see than not only does it work, but it's easier -- and, after one or two cycles, you don't even think about it." The alliance's study -- the organization says it's likely the first environment-focused research on online transactions -- found that the typical household in the U.S. makes about seven paper bill payments per month.
A changeover to electronic payments could save each household nearly 7 pounds of paper and 169 miles of driving per year. The study charted other potential savings, including: 24 square feet of forest; 63 gallons of wastewater; 4.5 gallons of gasoline... "The results would be significant," Williams said.
The study said that if 10 percent of the population shifted to electronic transactions, the savings would amount to more than 75 million pounds of paper, nearly 1 million trees and nearly 2 million pounds of greenhouse gases. It would save enough wastewater to fill 1,090 Olympic-sized swimming pools and avoid filling 3,071 garbage trucks with trash.
"Environment issues have become more mainstream and, as compared to other decisions, it's a fairly easy one to make and doesn't have a strong financial impact as if you were to go out and, say, buy a hybrid car," Williams said. "In virtually all cases, these services are free, and even those who may charge for it, it's probably nominal compared to the savings you receive from it."
Ed Kounts, a senior analyst on online banking issues with JupiterResearch, said the study mirrors his own findings. "Certainly, the alliance is an interesting consortium designed to put an environmental face on online bill paying," he said. "And, one element is 'green' consumers. We did a report on that last summer, and it laid out what consumers' perceptions are in terms of having a 'green' relationship with financial institutions."
Kountz's own research indicates there is an environmentally focused constituency that is naturally attracted to electronic transactions. "There are considerations around green coming into play that these types of initiatives are designed to leverage," he said. Consumers, in general, perhaps would be more interested in paying bills online for other reasons. "Certainly, the important thing to get consumers to shift habits around is that you have to have some incentive," Kountz said. That, he said, is often monetary. "Consumers shift behavior if they think they can get something back," he said. Tapping into consumers' sense of environmental stewardship can be an effective lure, Koontz said. There are others, he added. "It's one tool in the arsenal, and we'll see more, for obvious reasons," he said. "There's clearly an incentive to change that this taps into."
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