Do Alternate Payment Methods Help Retailers?

moneyAlternate payment methods (APM), in eCommerce terms, are ways to complete a transaction without using the normal credit card authorization process.  For the past couple of years Rosetta has completed a quick study of a hundred leading online retailers using the big players in this space.  Paypal, BillMeLater, and Google Checkout are the ones we have measured mostly due to marketshare in the large online retailer category.  New services and startups continue to crop up, as evidenced by the buzz related to Chris Brogan’s sponsored post around the new service eBillMe.

The major play for each of these payment methods is the additional uptick in conversion – the premise that providing alternate ways to pay will reduce people from abandoning their shopping carts and more broadly appeal to those worried about giving their credit card to a website.  Our study shows that both Paypal and BillMeLater have gained retailer adoption in the last 18 months.  Google Checkout appears to have maintained ground at the same relative group.apm

The list of retailers surveyed is the same list from our recent study on Facebook.  While not scientific, it shows us some trends in the marketplace.  The major points of the APM study this round are that the growth rate is continuing among retailers, and Google Checkout is stagnating.  Two major questions have come up:

  • Why is Google Checkout not keeping pace?
  • Why are other big name retailers still sitting on the sidelines?

Google Checkout recently dropped their incentive program for AdWords customers, but retailers aren’t typically quick to respond.  BillMeLater was recently acquired by eBay from Amazon, who also owns Paypal.   I wonder if the ROI is really there, despite low cost to implement these programs.

What I am more interested in is hearing from you.  Do any of the online sites you shop at regularly offer these methods?  Do you use them, or would they influence your buying decision?  Why or why not?  Our study was picked by DM News and (thanks!) but I’d love to hear what people use and why.

Photo credit:  nicmcphee via Flickr

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Redefining Social Commerce


Folks shy away from the term “social commerce.”  Why?  I asked the question on Twitter, “What’s the first thing that pops in your mind when you hear the term ‘social commerce?'” and I received quite a number of cynical (and humorous) responses:

  • @k_seas: “Pyramid Scheme : – ) kidding”
  • @illig: “Social commerce: Prostitution, human trafficking and ice cream socials. In that order. But I’m not normal. : ) “
  • @heatherrast: ” (1)selling out your friends (like personal info?) (2) the cost of selling out your friends (3) revenue from adsense ads”
  • Taken out of context, my question also sparked a little debate about what social commerce is and caused friend Aaron Strout to weigh in with some great dialog happening in the comments. 

Here’s the danger: People want conversation in social networks to be genuine and to avoid overt marketers hawking their wares.  Social networks bring people to connect, not to shop.  But as technology evolves and people look to leverage their networks as information sources, invariably those networks will turn to helping each other make purchases.  I, for one, take a friend’s recommendation as an important information source before buying – and I have to admit consumer ratings and reviews are helpful and important to me.

Back to the Future

As far as I could dig up, one of the first posts defining social commerce was back on December 23, 2005.  Steve Rubel wrote an intriguing post on 2006 Trends to Watch.  Steve started to predict the trend of advertising and commerce shifting to blogs:

Social commerce, however, is an area that I think holds a tremendous amount of promise as a way for bloggers to make money. It’s a win-win for the bloggers, product marketers and existing e-commerce sites.”

His post went on to show examples of how e-commerce sites had extended functionality to allow bloggers to take advantage of the Long Tail and bring the ability to conduct commerce on their blogs, beyond the innovation of Google ads.  At the time, Yahoo!’s Shoposphere was the highlight, where users could collaborate on shopping lists.  More posts went on about preparing for social commerce as the next big wave of innovation that would push the continuing trend of online shopping growth (combined with broadband adoption at home and at work along with the continual adoption of Web 2.0 technologies like Flash).  But the term “social commerce” seemed vaguely defined to include innovation in customer experience on commerce sites, and overall the term remained nebulous. 

The Year of Social Commerce?

Jay Deragon predicted 2008 would be the Year of Social Commerce.  On January 1, 2008, he wrote:

While social networks continue to grow exponentially the next growth curve will be driven by the “holy grail of economics“, social commerce. Social commerce may actually become the dominant development in 2008 and subsequently turn business models upside down and inside out.

Jay is on to something here.  While the last year brought the challenges of Facebook’s Beacon product, and there continues to be large debates about ways to monetize social networks, big ticket retailers are starting to get involved by adding functionality on their own e-commerce platforms.  Already we have seen reviews, stories from other customers and ratings start to really permeate the online retail space – where retailers that don’t have them are becoming the exception. (Bazaarvoice is a business partner of my agency, Rosetta, and one of a few vendors who provide user ratings and reviews as a service to be integrated into a web commerce user experience.)  In addition to sites adding this functionality – and receiving a bump in conversion % of visitors – here are some other examples of what vendors are doing:

  • Facebook Connect and platforms like Open I/D  allow corporations to authenticate social graphs on their own sites.
  • IBM did a recent case study integrating the capabilities of Lotus Connections with Websphere Commerce.  
  • Companies like LiveWorld have launched products to integrate social interactions directly on websites, like their recently launched LiveBar product.

Based on watching what vendors out there are doing, I’d argue that beyond the initial premise of bringing commerce to social media tools and networks, it appears the next wave is bringing the social networks back to commerce sites.  Some companies like eBay and Amazon do this well, but I think more merchants will be trying to figure this out.  Bringing customers together to help on purchase decisions can be a good thing if it’s handled properly and e-commerce companies engage their customers the right way, beyond just user ratings and reviews.  What do you think?

Photo credit: racineur via flickr


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Transitions: The new

Borders2 On Memorial Day, 2008, with little fanfare, Borders Group, Inc. embarked on a new chapter novel in the history of the company.  And it was most certainly, memorable.  With a few final technical switches thrown, Borders transitioned the outsourcing of their eCommerce site from Amazon to a robust, unique and compelling presence.  It's daunting being an internet retailer in 2008, without having access to customer information or control over the multi-channel experience.  Now Borders has brought their .com presence back inside the walls of the headquarters in Ann Arbor, MI. Welcome back home,

The basic design principle of the site is to create a real bookstore experience online.  In this case, the store holds nearly 3 million titles including DVDs and CDs.  In a market where Borders is trying to differentiate itself against competitors, this experience is different and more engaging.  I find myself browsing the site much like I would a store – wander in to a section and drill deeper using the guided navigation.  The Magic Shelf on the homepage gives the same feel of being in a bookstore, complete with staff picks, and goes beyond with personal recommendations based on your preferences.  The look of search results and the Magic Shelf, rich with images of cover artwork, are right in line with Borders' recent strategy to merchandise books with the covers facing out.

I'm biased, I admit it.  Brulant, my company, has played a major role in the Websphere Commerce design and development of this project, along with many other partners.  In the interest of full disclosure, I am currently the client engagement partner for Brulant's work at Borders.  Borders has been a significant client of Brulant since mid 2006.  From February 2007 until now, I personally have spent nearly full time on working with Borders as a client.  I did ask for and receive permission from Borders to blog about this event.

The best part of the culmination of years of work: I couldn't be more thrilled with the outcome.  There has been a lot of "sweat equity" invested by the entire team – Borders, Brulant and other partners alike – and it's rewarding to see it all come together.  There were some hard times and some good times, as any business partnership between two companies would go through.  In the end, there is absolutely nothing more satisfying, invigorating and motivating than when it all comes together, the team produces high quality work, the site is launched, and orders start rolling in. 

For the last several years, Borders' eCommerce team has been looking forward to doing what most eCommerce teams do – interact with customers, fine tune the user experience, adjust functionality based on web analytics and market the bejeezus out of the site.  (The site just launched officially today, so not a lot of heavy marketing of the site yet…but do a Google News search on "" and you'll see the extensive press coverage.)  Now the team can take the reins and start the evolution of web commerce optimization.  As much as it is the end of a multi-year project, it's the beginning of a new journey for the company.  Today the entire team on site in Ann Arbor signed a copy of the first order shipped to be framed, to signify the start of that journey (see picture above).

It's a new journey for yours truly as well, as I focus on trying to do more good work for other clients while continuing to figure out ways to help Borders on their journey.  A special thank you to the entire Brulant team who worked through many project challenges and set a high bar for delivery with future clients.  Another thank you to the Borders crowd, who are a passionate and diverse group, fun to work with and gracious hosts for having our team walk the halls.  I think the thing I am most grateful for is the opportunity to continue learning, while being a part of a core strategic initiative for a retailer.  Thank you and Congratulations, job well done.

Special thanks to Kevin Ertell, VP of eBusiness for Borders, for encouraging me to post about this event here. 

UPDATE: Here is Brulant's official press release related to our role with the new 

Please check out the new – it is a different experience than your traditional online bookseller.  Feedback, suggestions, comments are welcome. 

The New

Competence is King

How do you establish trust in a service provider? When you bring your car in for service, do you go to a certified dealer or the local mechanic? How did you choose – based on your relationship with the mechanic? Your loyalty to the dealer? Your concern about the car?

As a consumer you have many options and factors that influence your decision to buy services.  In the long term, however, you continue to engage in your service provider at a minimum because that provider demonstrated competence in what you seek.  The same principle applies to companies, large or small, that rely on partner firms to solve business problems.  Quite simply, any consultant needs to be competent in solving relevant problems for the client or it will not work.

One of the clients I work with is in the top 250 internet retailers, a small family-owned and operated business that moved years ago from a paper catalog to the online channel.  The catalog makes up 10-20% of its business today, and bricks-n-mortar another 5-10% – but the online channel took off.  As an early adopter of IBM Websphere Commerce, the client engaged a partner firm 8 years ago to help maintain its website.  As the online channel grew, it became apparent that a small technology shop was not suitable to maintain a best of breed site.  As recently as March of 2007 the company still used a modem to download it’s orders on a daily basis. 

Enter my current firm.  As one of the top business partners for IBM Websphere Commerce, we were able to demonstrate not only our knowledge of the product but the deep relationships to IBM’s Websphere labs in Toronto.  With core expertise in the internet retail industry, we were able to demonstrate how we could more effectively manage the website for the client and build a long term roadmap for improvements to keep up with an evolving industry.  We not only constructed a multi-year deal to maintain the Websphere Commerce installation, we have been able to make substantial impact to the business in other areas where we provide relevant expertise:  creative support for campaigns, Search Engine Marketing (SEM) driving significant % in additional revenue, and in the long term a substantial upgrade and conversion focused redesign.

The point is that through bringing the relevant expertise to bear, we are able to demonstrate through competence in online retailing, Websphere Commerce, SEM, and interactive design that we can both have a fundamental impact on the client’s business, provide value and demonstrate ROI in a long term fruitful business relationship.  Not to mention a happy client is a fun one.

How do you decide what service provider you engage, from babysitters to car service to business partners?