m commerce 451group
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Emerging players in the M-Commerce marketVishal Jain, Analyst, Mobile ServicesThe 451 Group
The 451 Group
Founded in 2000New York City: HQ
Offices in London, San Francisco & Boston
Staff of 170+30+ Analysts
Analyzing the business of enterprise IT innovation
The 451 Group
451 Research is focused on the business of enterprise IT innovation.
The company’s analysts provide critical and timely insight into the
competitive dynamics of innovation in emerging technology segments.
Tier1 Research is a single-source research and advisory firm covering
the multi-tenant datacenter, hosting, IT and cloud-computing sectors,
blending the best of industry and financial research.
The Uptime Institute is ‘The Global Data Center Authority’ and a pioneer
in the creation and facilitation of end-user knowledge communities to in the creation and facilitation of end-user knowledge communities to
improve reliability and uninterruptible availability in datacenter facilities.
TheInfoPro is a leading IT advisory and research firm that provides
real-world perspectives on the customer and market dynamics of the
enterprise information technology landscape, harnessing the collective
knowledge and insight of leading IT organizations worldwide.
ChangeWave Research is a research firm that identifies and quantifies
‘change’ in consumer spending behavior, corporate purchasing, and
industry, company and technology trends.
Agenda
• Introduction to context of mobile commerce and payments
• Expanding scope of mobile commerce opportunity
• Emerging players and their business model
• Evolving nature of mobile advertising leading to payments
• Trends and Implications
Whose payments is it anyways
• Not so long ago - Mobile banking was seen as a harbinger of mobile payments
• However, its emerging into a wider context
BanksCarriers
• However, its emerging into a wider context
• New entrants are making payments a part of their services ecosystem
Mobile commerce – starts with payments
New marketplaces
“By breaking the market boundaries of theater
and circus, Cirque du Soleil gained a new
understanding not only of circus customers but
also of circus noncustomers: adult theater
customers.” – W. Chan Kim and Renee
Mauborgne, Blue Ocean Strategy
Mobile commerce – starts with payments
• Around 150 (451 Group estimates) mobile
payment startups with more than $500m in
VC/PE money
• PayPal to top $3bn in mobile payments
volume
• Apple iTunes reports $1.4bn revenue in Q2
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010
New marketplaces
revenues for 2010
Mobile commerce – starts with payments
• Around 150 (451 Group estimates for WE
and US) mobile payment startups with more
than $500m in VC/PE money
• PayPal to top $3bn in mobile payments
volume
• Apple iTunes reports $1.4bn revenue in Q2
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010
New marketplaces The Handwriting on the Wall
revenues for 2010 “The quicker you let go of old cheese, the sooner
you can enjoy new cheese” - Dr. Spencer
Johnson, Who Moved My Cheese
Mobile commerce – starts with payments
• Visa Europe commits €100m for mobile
payments
• Major banks across US and Europe form
consortium for mobile payments
• US Carriers commit $100m for mobile
payments
• Around 150 (451 Group estimates) mobile
payment startups with more than $500m in
VC/PE money
• PayPal to top $3bn in mobile payments
volume
• Apple iTunes reports $1.4bn revenue in Q2
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010
New marketplaces The Handwriting on the Wall
revenues for 2010
Mobile commerce opportunity
Higher
complexity
Video
Games
Fea
ture
s
Apps
Books
Newspaper
In-app
content
Web app
contentDigital Content
Digital + Physical Content
Coupons/Offers
In-store purchases
Ticketing
Location-
based/targeted
Real time offers
Financial
Services
Low Value High Value
Low
complexity
Wallpapers
Ringtones
News feeds
Scores
MusicFea
ture
s
Price per unit
Voting
Screensaver
Newspaper
VAS/WAP ContentPotential
Addressable
OpportunityPresent
Opportunity
Alternative payment chain
Credit card
Debit card
Email/phone/
Account Identifier
E-money
Card network
Carrier
Mobile phone
Clearing accountTransaction
currencyInitiating channel
Cards/fobs/etcVirtual Email/phone/
Id etc
Pre-paid
account
Bank Account
Bank
Money
equivalent
Cards/fobs/etc
Wallet
operatorDirect channels
Virtual
currency
Emerging players and their charging and billing methods
• Virtual currency going beyond virtual items
• Pre-loaded wallet – build an ecosystem around it
• Talk time as a global instrument – for remittances
• Directly linked to bank account , phone bill or card account
• Embedded payments – inside the browser but linked to card or bank account
• Loyalty is the next big payment engine – well entrenched and understood – but new form factors
Which model to follow – Different pricing regimes
Paypal Google
Checkout
Amazon
MPS
Merchant
account
fees
1.4% to
3.4% +
£0.20
1.4% to
3.4% +
£0.20
1.5% to
2.9% +
$0.01 to $
0.30
• Amazon vs. Facebook and AppleFacebook
Credits
iTunes
30% per 30% per
• Quick setup and low fees
but why charge higher for
low volume
• Premium for ecosystem
• Low fees but merchant accounts setup
the online way have to go through the
time consuming set up process
Micro+ payments – right mix?
30% per
redemption
30% per
redemption
Carriers Online merchant
account for accepting
cards
5% to 30% 2% to 4% + fixed fee +
monthly fee + setup
fees
Simplicity- equivalent of a card swipe and cash
By offering
Consumers
• Reduce the amount of information
required to purchase
• Enable new touch points – QR,
NFC for P2P, P2M environments
Merchants
• Quicker on-boarding and integration• Stop fee loss to traditional payment methods
• Load offers and promotions
• Track User purchasing
behavior
• Open new channels
Target cash and card volumes
+
• Open new channels
• Monetise assets
Mobile advertising has built the ecosystem for payments
App marketing
In-App upgrades
Offer marketing
Product marketing
Brand advertising Lead generation
Incumbents will leverage relationships driven by needs
Advertising Networks
Development platforms
Content aggregators
OEMs
Publishers/Developers
Expanding monetisation
opportunities for
developers
OEMs
Carriers
App stores
Services Platforms
Consumers Expanding their digital
ecosystem for business
opportunities
By enabling mobile payments
Advertising
Coupons
OffersRedeem
And/or
Embed into the browser or app
+
Attach/Embed the POS
into the device
Offers And/or
Purchase
+
NFC
QR
Bluetooth
Camera
Audio
Voice
New touch form
factors – for seamless
redemption and
purchasesOffers Initiated from – app,
social network, navigation app,
search, SMS, proximity scan
Market movements around mobile payments
Market entrants Acquirer Target
Mobile payments
acquisitions
Mobile Interactive Group ZayPay
eBay-PayPal Zong, Fig Card
Google Zetawire
Proxama Hypertag
Neomobile Onebip
Market launch Lead Provider Product
launch/partnership
Mobile payment product
launches
InMobi SmartPay
Blackberry Messenger Mobile gifting
Opera Software, Blackberry
App World
with Bango
Android Market with carriers
Mobile commerce is pervasive
Trends
Content
+ Payment
Content
+ Payment
Payments will have to be right
sized for the mobile medium and
Boundaries of
mobile
commerce
Boundaries of
mobile
commerce
Expanding scope of mobile
commerce outside the app store
ecosystem
Reason
Its just not app stores but several
other entities that are vying to sell
goods, content and therefore need a
mobile payments option.
Implication
Are payment options on existing
platforms suitable for the content + Payment
federation
+ Payment
federation
sized for the mobile medium and
transactions
Smartphone is
the media and
channel
Smartphone is
the media and
channel
Need for an end to end interface
that rolls in advertising, offers and
payments into one
platforms suitable for the content
being sold?
New players are building critical
blocks, beyond content, to sustain
user affinity – identity, payments,
advertising.
Thank You
Questions??
Vishal.jain@the451group.com
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