ShopSavvy in Austin talking mobile payments, NFC, mobile advertising, and the war between Amazon and local retail.

One of the most common questions I’ve been getting at conferences and panels lately is around NFC and “is it a bubble” or where is it headed?  I thought it might be good to note some quick thoughts on the topic.

The last few years many large players in banking, technology and related industries have worked hard to push NFC related technologies to control the wallet.   The theory has been if you can control the wallet, you gain strategic advantages and marketing insights into the customer that are very valuable and can be leveraged across a much larger business.      This has resulted in the strategic groups at many entities engaging in a ferocious battle with carrier partnerships, talent raids/wars and other initiatives to try and push these efforts to gain the lead in the payments marketplace.

Those efforts are interesting, but what’s the value proposition for shoppers?

The problem with NFC is while the strategic benefit of “winning” is clear for large players in banking, technology and even the carriers, the value proposition to consumers  is not.  How does NFC actually make the shopping experience better?   This isn’t a developing country where no credit card system exists and you have to bring a pile of cash to check out at the hotel, you can pay a credit card and it’s great.

With NFC- how are you making the shopping experience better beyond what we have now with the credit card?  Is the credit card really broken? What’s the value proposition for consumers? What about for retailers?

People have charged ahead without answering these questions and as a result we have penetration rates on mobile phones in the single digits, and more alarmingly the same penetration rates at the retail point of sale (so even if phones catch up, not enough retailers support it yet).

This doesn’t mean NFC is dead- it just means the answers around payments will probably come from new players not yet in the game.  One candidate not often discussed—the retailers.  These retailers need to challenge their old business models and think of how they can actually improve the shopping experience using technology.   Restoring a sense of fun and wonder when I walk in the store using these portable computers in the hand could dramatically impact a retail business looking to “turn the tide”.   No question even if this innovation doesn’t come from the retailers, you are going to need to find ways that the value proposition works for them, not just the consumer.  What could the shopping experience look like in the next 5 years in terms of not just payment, but product and deal discovery?

We think the way you shop in 3-5 years will be completely different and at ShopSavy we are working to make this happen a little bit every day.   We know it’s a challenging time times for our retail partners but we believe it represents an opportunity for leaders in retail to really lead the charge and jump ahead of the competition (including Amazon) using technology.   Over the coming year we expect to introduce many of these technologies at ShopSavvy with our strategic partners—we can’t wait to help create the future of shopping.

Image via CrunchBase

The recent move by Amazon to offer $5 for retail shoppers to buy online felt like kicking a man twice when he was already down to a lot of retailers.  Many merchants were already concerned about being used as a glorified showroom for Amazon’s Jeff Bezos before this recent move with speculation that many were missing their numbers because of Amazons mobile price check application.

Here at ShopSavvy we love local merchants.   Our users want to know what all their options are both online and local presented in a neutral and unbiased way— not just merchants in Amazon’s marketplace.  They want this presented without favoritism so they can make good buying decisions about product selection and where to buy.  Buying from Amazon is great and for many habitual, but did you know in our system they are the lowest priced choice only 7% of the time? If you buy from Amazon, you are not always getting the best deal and they certainly don’t work to get you local options.

Even when the price is lower online, our users often want to see what their local options are, either for immediate gratification or because they love the relationship they have with their local retailer.  In the long run we believe a balanced ecosystem of strong local retail with efficient online options is healthiest and this is what we strive for.

So while local stores have had a really brutal few years, this is going to change in the next few years as they get new opportunities to fight back.  In fact, we think current shopping experience for local retail is going to be transformed significantly in the next 3-5 years.   The mini computers people are carrying in their hands now are just using things like reviews, purchasing and price comparison as an early beachhead.  In a few years the way you shop locally will be completely different.

Why? Whole new conversations will be starting between brands, retailers and shoppers will transform retail and the shopping experience making it more connected (with friends/family), informed and enjoyable.  This will dramatically improve the local shopping experience and give local merchants new ways to offer value relative to online options that may not be readily apparent now.

Consumers are open to new sorts of conversations with retailers that are not happening now.  For example, currently most conversations between retailers and consumers now are what I call “One to Many”.  If you offer a sale, it’s often to large groups of people and there is very little segmentation or targeting.   With these new technologies based on loyalty data, buying patterns, and strategies such as competitive couponing, consumers will start to have one to one conversations with retailers.

The last decade or so has not been a great one for local retailers, but  the tide is changing with advances in technology.  Ironically, the technology that is causing pain for local retailers now, will offer new opportunities in the future.  For the those retailers that embrace this change, and get ahead of the curve, we believe it’s a competitive opportunity to recapture some lost ground and create a better shopping experience for shoppers.  This takes courage not to stick your head in the sand while Amazon steals your lunch.

To that end, if you are a local retailer that is looking to find ways to start new conversations with consumers in your stores—reach out to us –we’re listening and open to new ideas to help local merchants.  Amazon doesn’t have the last word here, this is just the beginning of what technology can bring to local.

If you are going to be at the App Conference and Hackathon October 26-27 in Santa Clara you really need to check our panel: NFC (near field communications): How is it going to change mobile (Oct 27, 11AM, Room 4, Track 1 – Platform Wars). Matt Weathers (our VP of Product), Edwin Aoki (Architect from PayPal), Dan Preston (CTO at AisleBuyer) will serve on the panel which is moderated by Wade Roush the San Francisco Editor of Xconomy.

Here is the overview: “PayPal has announced mobile plans that include newly acquired assets like Milo.com, Where Inc, and Zong. In May Google announced Google Wallet, its new mobile-payment system based on near field communications.  And RIM released its BlackBerry Java SDK v7.0 into beta, which, among other things, allows mobile developers to build NFC applications for the BlackBerry 7 OS.   In other words, people can now use cell phones to shop and buy. In the future individual products on store shelves will have tiny NFC enabled labels with product information, advertising, coupons or offers. Come learn about the new trends and technologies, what it means, and how to develop with it in mind.”

Recently we launched QuickPay, our integrated wallet, into ShopSavvy. QuickPay 1.0 only supports payments using your PayPal account today, but QuickPay 2.0 will allow you to use PayPal AND any credit card you wish (Visa, Mastercard, Amex, Discover). Our goal is to allow you to buy products from retailers with a single tap on your touch screen – add a PIN – and you are able to purchase the product and have it shipped to your house without pulling out your wallet. Think of it as iTunes for everything else. While QuickPay can support ‘pick up in store’ it is really a tool for offline to online purchase conversion, but that is all about to change with NFC support.

QuickPay 2.0 will support local point of sale purchases through the support of NFC or near field communication. NFC is a short-range (4 inches) wireless connection that is compatible with existing ‘contactless’ infrastructure already in use for payments. ShopSavvy users who have set up their QuickPay wallet (with one or more credit cards or bank accounts) will be able to use their phone to purchase products (and even services) from retailers who have NFC readers integrated int heir point of sale systems. Users who leverage ShopSavvy’s integrated wallet will benefit from special offers such as coupons, instant rebates as well as a 1% cash back rewards for purchases. Our objective with QuickPay is to create a very flexible wallet that enables augmented payments using any payment method (credit card, debit card, ACH or online payment) in any setting (online or local).