tag:blogger.com,1999:blog-40699656195891476622024-03-05T22:39:05.710-05:00payments and more...My thoughts on global payments, big data, cards and portfolio management and how its changing the way we do business...Anonymoushttp://www.blogger.com/profile/07680715716738448125noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-4069965619589147662.post-53673281987957959872013-06-12T16:20:00.000-04:002013-06-12T16:20:09.999-04:00Why Visa and Mastercard should worry about Amazon Coins<div dir="ltr" style="text-align: left;" trbidi="on">
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Virtual currencies have been
around since almost 15 years now and have only recently started getting a lot
of attention from regulators and business analysts alike. Are they legitimate?
Are they a profitable business model? One
of the larger firms to join the fray recently is Amazon, which launched its own
virtual currency, Amazon Coins, last month. To most people, this seems like yet
another virtual wallet with limited scalability. Many analysts have already
drawn parallels between Amazon Coins and Facebook’s failed virtual currency,
Facebook Credits. While in its current form, Amazon Coins does seem to be very
similar to Facebook Credits, assuming that it will stay that way is gravely
underestimating Amazon and its need to increase margins. Knowing Amazon history
of piloting initiatives before launching them all out, Amazon Coins just may be
Amazon’s first step towards setting up its own payments network. And if that
does happen, it may seriously rock the boat for Paypal, Visa and Mastercard.<o:p></o:p></div>
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Amazon Coins has the potential to
be much more than a virtual wallet as it complements Amazon’s strengths and its
strategy. Amazon is in the business of retail where each transaction involves a
‘payments’ cost and, given its thin margins, bringing down those costs is
critical for Amazon. Currently, almost 1% of Amazon’s total revenues go towards
paying fees to card issuers and networks. That is at least $0.75 Billion in
costs for Amazon in 2013. Looking at how eBay has built Paypal into a $5.1
Billion business that grew by 26% last year alone, it is evident that there are
benefits to both the revenue and the cost side of the business if Amazon
creates an alternate payment system.<o:p></o:p></div>
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<br /></div>
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To understand how Amazon would do
this, you need to first understand what Amazon is creating. In its current
form, Amazon Coins is nothing but a virtual wallet, where the currency is only
limited by the number of merchants that accept it. Although Coins can initially
be used only for media purchases on Kindle, I believe that Amazon will
gradually get other online and offline merchants to start accepting Coins as a
mode of payment. Amazon is already offering deals at brick and mortar
establishments through AmazonLocal and it won’t be too tough for it to get
these merchants and LivingSocial’s merchant partners to accept Coins as a mode
of payment. <o:p></o:p></div>
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<br /></div>
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This would be an almost
inevitable extension of Coins as it seamlessly fits into Amazon’s focus on
reducing costs, its increasing involvement with offline retailers through
AmazonLocal and its ability to leverage the merchant network of LivingSocial.<o:p></o:p></div>
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<br /></div>
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Alternately, Amazon could even
tie up with a network like American Express, which probably has a huge overlap
with the Prime subscriber base, to scale up the acceptance of Coins across the
Amex merchant network. If Amazon manages to get even 10% of its revenue in 2014
through purchases using Amazon Coins on Amazon.com alone, it is projected to
save over $100 Million in payments costs.</div>
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This potential threat should
raise serious concerns for Paypal, card issuers and networks like Visa and
Mastercard, given how it may directly impact their businesses. Amazon already
accounts for almost 26% of all US eCommerce sales and if it starts processing
these sales directly, Visa and Mastercard have a lot to lose as transactions
shift from offline to online over the coming years. So does Paypal if Amazon
gets most merchants to start accepting Coins as a mode of payment. And if I
were any of these firms, I would start planning accordingly.<o:p></o:p></div>
</div>
Anonymoushttp://www.blogger.com/profile/07680715716738448125noreply@blogger.com0tag:blogger.com,1999:blog-4069965619589147662.post-12188620781540819122013-03-13T17:42:00.000-04:002013-03-13T19:10:58.876-04:004 Reasons why Amazon may never be sustainably profitable...<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">For
the past many quarters now, Amazon has been a darling of stock market analysts
and investors with the stock currently trading at a P/E ratio of 187.</span><b style="font-size: 12pt;"> This
despite the fact that key metrics such as Income from operations as a
percentage of Sales (dropped from 1.7% to 1.1%), Operating Cash Flows, Free
Cash Flows and Inventory Turnover Ratio have been decreasing year-on-year.</b></div>
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<span style="font-size: 12.0pt;">Analysts are betting on the revenue growth of the
firm, with estimated revenue of $75 Billion in 2013 and $92 Billion in 2014<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>.
Amazon clearly has a lot going for it, with market leadership in the eCommerce
segment, very strong digital assets (Kindle, Prime Customer base), and a great
customer experience among other things.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Amazon does, however, need to keep investing heavily
in its technology and building its distribution capabilities (it invested $3.8
Billion on purchasing property and software in 2012) to grow revenue. The
assumption is that once the firm achieves its scale objectives, it will longer
need to continue investing so aggressively and hence show exponential growth in
profits. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;">And <b>here is where I feel many analysts and industry
observers are wrong. I am not sure if Amazon will ever manage to show profit
margins comparable to its competition</b> (eBay Net Margin – 18.54%; Walmart Net
Margin – 3.78%, Amazon Net Margin – 1.1%). And here is why:<o:p></o:p></span></div>
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<b><span style="font-size: 12.0pt;"><br /></span></b></div>
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<b><span style="font-size: 12.0pt;">1. Higher
Fulfillment Costs:<o:p></o:p></span></b></div>
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<span style="font-size: 12.0pt;">Many analysts assume that with more warehouses,
Amazon’s distribution and fulfillment costs will reduce as it will be able to
service orders locally thus reducing shipping costs. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">The fact is that Amazon’s <b>fulfillment costs as a percentage of net sales has steadily gone up
over the past 3 years and is now at 10.5% of net sales</b><a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>
due to increase in payments costs and inventory carrying costs. Its <b>inventory turnover ratio has steadily gone
down over the past 3 years from 11 in 2010 to 9 in 2012</b>. With more
warehouses, Amazon needs to keep inventory at each of the warehouses. This
results in higher inventory carrying costs which partially dent the savings
from lower expenses on shipments. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;">So, in a nutshell, the projected profit margin
increase is going to be lower than what most people expect.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;">Compare this to Walmart. They don’t need to invest a lot
in warehousing as they already have stores near most major cities. Allowing
customers to pick up products at stores not only helps in saving shipment costs
<b>but also drives incremental sales at
stores(Customers spend an average $60 additionally on each trip<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></b></span><!--[endif]--></span></a>).</b>
Its fulfillment costs for home deliveries are also much lesser due to far
better interchange rates from banks.<o:p></o:p></span></div>
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<b><span style="font-size: 12.0pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt;">2. The rise of
Third-Party Sellers:<o:p></o:p></span></b></div>
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<span style="font-size: 12.0pt;">Amazon’s share of revenue from third-party sales has
been increasing steadily (39% of Amazon’s total paid units in Q4 2012 were sold
by third-party sellers). While this means Amazon needs to carry lesser
inventory and earns money through commissions charged to third-party sellers,
it also results in slightly higher costs (<b>As
Amazon itself admits “<i>…sales by our
sellers have higher fulfillment costs as a percent of net sales.</i>”)</b> and
lesser flexibility in negotiating prices with product manufacturers which will
eventually impact Amazon’s ability to sell its products at competitive prices. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Sales through third-party sellers <b>also result in lesser cash generation, impacting free cash-flows.</b>
Amazon’s credit period with its suppliers is an average of 60 days. In case of
third-party sellers, it’s between 24 hours to 14 days. This impacts its cash
generation from its cash cycle and in turn impacts flexibility. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Hence, with third-party sellers, Amazon reduces its
flexibility in terms of its cash management and also its ability to negotiate
better prices with manufacturers directly which will eventually impact its
ability to sell good at a competitive price. This is <b>evidenced in a Kantar Retail survey that shows that Walmart prices are
typically 20% lesser than Amazon</b>.<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[4]</span></span><!--[endif]--></span></a> <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">If Amazon wants to continue competing effectively, it
will need to keep its prices competitive, impacting its profit margins.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
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<b><span style="font-size: 12.0pt;">3. Tax Impact<o:p></o:p></span></b></div>
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<span style="font-size: 12.0pt;">Amazon until now did not collect taxes in states where
it did not have warehouses, citing a 1992 Supreme Court ruling. It has delayed
charging taxes as it builds a loyal customer base. Now that it sees the potential
negative impact of taxes to be lesser than the positive impact of setting up
warehouses in key markets, it has started setting up warehouses in those states
and collecting taxes. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;">If we look at early reports<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[5]</span></span><!--[endif]--></span></a>
on the impact of collecting taxes, it shows <b>that the sales impact was around 10% at the worst point of the dip in
the last quarter</b>. The impact is higher for products priced at $200 or more,
which are usually higher margin products. While these are early days to gauge
true impact, it does show that customers may consider this when making purchase
decisions. And this yet again shows that Amazon will need to strive harder to
maintain a perceived price advantage.<o:p></o:p></span></div>
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<b><span style="font-size: 12.0pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt;">4. Walmart
getting its act together:</span></b><span style="font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Let me state this clearly. Walmart is still a long way
from competing with Amazon when it comes to user experience or product
portfolio, especially in the eCommerce space. But it is investing heavily in
getting itself up to speed. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Walmart Labs has been launching some great pilots such
as shopycat and goodies.co. Its social genome project is enabling it to make
its online promotions extremely effective. Neil Ashe, Walmart’s eCommerce head,
<b>projected 2013 eCommerce sales to cross
$9 Billion</b>, a close to 80% jump over 2012 sales. Walmart may soon launch
its own version of Prime. Its slated to partner with Google on the proposed
“Google Shopping Express” for same day delivery, competing directly with Amazon
and eBay’s initiatives.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;">Walmart already has a price advantage on many products
and now it just needs to do a better job of selling them online which will keep
putting pressure on Amazon’s pricing.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-size: 12.0pt;"><i>While all this may sound like fatalistic doomsaying, I
still believe Amazon has some strong advantages that it can leverage to keep
competing effectively, albeit with lower margins. <o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;"><i>The first is its Prime base. Prime customers
contribute around $1200 in revenues annually with a 12% profit margin<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftn6" name="_ftnref6" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[6]</span></span><!--[endif]--></span></a>.
With a young, loyal customer base which is likely to not compare prices across
websites, Amazon can keep driving revenues despite an eroding price advantage.<o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;"><i>The second is its proposed launch of Amazon Coins.
While it is initially limited to Kindle apps and media purchases, Amazon is
inevitably going to extend that to all products on its website. A virtual
currency increases customer stickiness and also acts as a pre-paid mode of
payment, helping increase cash flows as now Amazon will collect money from
customers even before they buy a product.<o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0.5in;">
<span style="font-size: 12.0pt;"><i>The third is its years of expertise in eCommerce. Its
way ahead of its competition now in terms of big data analysis and user
experience. While competition will catch up soon, Amazon can use this lead time
to work on its other issues and drive those margins up.</i><o:p></o:p></span></div>
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<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> http://investing.businessweek.com/research/stocks/earnings/earnings.asp?ticker=AMZN<o:p></o:p></div>
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Amazon 2012 10K<o:p></o:p></div>
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<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span></a> http://adage.com/article/digital/walmart-brings-bricks-mortar-battle-amazon/230986/<o:p></o:p></div>
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<a href="file:///C:/Users/Puneet/Downloads/Google%20Drive/Blog%202.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[4]</span></span><!--[endif]--></span></a> http://www.bloomberg.com/news/2012-06-22/wal-mart-beats-amazon-prices-including-glee-dvd-set.html<o:p></o:p></div>
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</script>Anonymoushttp://www.blogger.com/profile/07680715716738448125noreply@blogger.com4tag:blogger.com,1999:blog-4069965619589147662.post-29701958747068545792013-03-08T00:24:00.002-05:002013-03-08T12:48:01.689-05:00tCommerce - The next big thing?<br />
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<span style="font-size: 12.0pt; line-height: 150%;"> </span><span style="line-height: 150%;">Imagine watching TV and being able to
instantly purchase a product that was just advertised. Be it a Priceline deal
or a Dyson vacuum cleaner. Just by clicking on a small icon blinking at the
bottom of the screen. Ladies and Gentlemen, I give you tCommerce.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="line-height: 150%;"> A few days ago, I was talking to a
friend of mine about a project they were working on for a case competition
sponsored by Disney. Something to do with how to make television more
interactive the way Hulu or Netflix is. And it got me thinking. How do we make
it more interactive when it comes to leveraging payments?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="line-height: 150%;"> When you think about it, television
is probably the only screen right now where you cannot press a button to buy a
product. I don’t count Smart TVs in this mix as they too require you to buy
something through the Internet and not directly when viewing an ad on TV. And I
see this changing in the next few years. It has to.<o:p></o:p></span></div>
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<span style="line-height: 150%;"><br /></span></div>
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<b><span style="line-height: 150%;">The rise of tCommerce<o:p></o:p></span></b></div>
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<span style="line-height: 150%;"> Advertisers spent upwards of $80
Billion on television ads in 2012<a href="file:///C:/Users/Puneet/Desktop/Blog%201.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>.
Advertisers would spend a lot more if these ads could be more measurable and
effective. And by effective, I mean translate into instant sales. I see this
happening in the next few years, possibly earlier. It will be the advent of <b>“tCommerce”. </b>But to get there, what
does television need to become?<b> The
answer lies in the question “</b>Why do you watch Hulu?” Or Netflix? Or Youtube
for that matter? There are primarily three reasons:</span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0px;">
<b style="line-height: 150%; text-indent: -0.25in;"><span style="line-height: 150%;">1. More Convenient</span></b></div>
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<span style="line-height: 150%;">The convenience
of on-demand television shows or in the case of </span>Youtube<span style="line-height: 150%;">, the convenience of
on-demand video-clips of cute cats and people doing the Harlem Shake.</span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0px;">
<b style="text-indent: -0.25in;"><span style="line-height: 24px;">2. </span><span style="font-weight: normal;"> </span></b><b style="line-height: 150%; text-indent: -0.25in;"><span style="line-height: 150%;">Better Product</span></b></div>
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<span style="line-height: 150%;">Hulu and
Netflix now produce their own shows. Shows that are not available anywhere else.
A lot like television networks. So you go there for the product.</span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0px;">
<b style="text-indent: -0.25in;"><span style="line-height: 24px;">3. </span><span style="line-height: normal;"> </span></b><b style="line-height: 150%; text-indent: -0.25in;"><span style="line-height: 150%;">Better Experience</span></b></div>
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<span style="line-height: 150%;">When you watch Hulu, you can instantly
share a video if you like it. You can comment on a particular episode.
Instantly Hulu.com allows you to choose the advertisement that you want to see.
It customizes your experience.<o:p></o:p></span></div>
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<span style="line-height: 150%;"><br /></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigW6yim1JzQLZ2jvHKwMgFUKi8AUBOH3ZddS8o9gu7jA1FpdbXDPzJ_dP9yzktcJIQfAnz6bTwcWXtUr5ci9yiPJG3JynuiloxFacLolCUcpEtfroixQM5mccNAzdkjrJWGMh9CSKHrxNo/s1600/Picture4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigW6yim1JzQLZ2jvHKwMgFUKi8AUBOH3ZddS8o9gu7jA1FpdbXDPzJ_dP9yzktcJIQfAnz6bTwcWXtUr5ci9yiPJG3JynuiloxFacLolCUcpEtfroixQM5mccNAzdkjrJWGMh9CSKHrxNo/s1600/Picture4.png" height="213" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i><span style="font-size: small;">A mock-up of a priceline ad that allows you to register for a call from a priceline sales agent</span></i></td></tr>
</tbody></table>
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<span style="line-height: 150%;"> So…Televisions already have the product.
They are already working on getting the on-demand part in place through smart
TVs and set-top boxes. But what if they now made your ad experience customized?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="line-height: 150%;"> As you are watching the ad, the screen flashes
with an icon on the bottom right asking you to click there if you want to order
the product immediately? You have your home address and credit card information
saved on the set-top box, much like you have it on amazon.com. You just click
on the icon, confirm your identity and…well, that’s it. You ordered yourself a
product without having to go online later or do anything else.<o:p></o:p></span></div>
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<div style="line-height: 150%;">
<span style="line-height: 150%;"> For advertisers, this will be
revolutionary. It makes TV advertising a lot more measurable. It makes the ROI a lot better.
It spurs impulse purchases. It limits the need to advertise across mediums. And
that’s what the next wave is going to be. tCommerce. </span></div>
<span style="line-height: 150%;"> Is it a new idea though? Not really. </span><a href="http://www.businessweek.com/magazine/content/11_11/b4219036658445.htm" style="line-height: 150%;" target="_blank">Bloomberg Businessweek</a><span style="line-height: 150%;"> carried an article on March 03, 2011 about it. According to In-Stat, BSkyB has been using something similar for over a decade making upwards of $325 Million annually through gamblers placing bets on sporting events</span><span style="line-height: 150%;">. Just goes to show that the possibilities are endless. </span><br />
<div style="line-height: 150%;">
<span style="line-height: 150%;">We will be discussing more
of that in the coming weeks. Watch out for it.<span style="font-size: small;"><o:p></o:p></span></span></div>
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Kantar Media<o:p></o:p></div>
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