StrikeIron Blog

The Wallet in the Cloud for Ecommerce? Paypal Launches X.com

Paypal announced today at their first ever developers' conference the launch of their new developer platform called "X". It is now available for developer signup at www.x.com. This "wallet in the cloud" offering introduces the concept of "Adaptive Payments" that can be embedded in just about anything, geared towards abstracting payment system complexity from developers building applications and Websites that collect funds for goods and services. It also introduced "Adaptive Accounts", enabling PayPal accounts to be auto-created on behalf of your customers.

These offerings are built around the launch of a new offering of APIs (not all of which are entirely new) aimed at making PayPal a ubiquitous mechanism for buying anything, anywhere and substantially increasing the types of business models PayPal can now support. For example, Adaptive Payments ideally will enable such fun as buying directly off of TV's from your remote control, buying via smartphones, kiosks at the mall, at restaurants, within a car (pay tolls with PayPal?), or anyplace or anything else where it is physically possible to enter a Paypal email address and password.

Paypal currently accounts for about $70 Billion dollars per year of the $30 trillion annual global spend. This represents about 15% of the total ecommerce market. Clearly eBay (PayPal's parent company) believes there is a lot of room for growth and additional vehicles of commerce to capture. They insist that cash is dying a slow death and our grandchildren won't know what it was like to carry around cash, and other types of paper currency (such as checks) are becoming obsolete. PayPal is banking on opening up their platform and payment networks to an army of developers, and that this will lead to a wave of new online innovation with PayPal payment mechanisms at the core. With 240 million accounts now on PayPal, 80 million of which are active, it is a difficult theme for online vendors to ignore.

At StrikeIron, we follow ecommerce developments closely because of our many complementary APIs to ecommerce systems like Paypal, including everything from sales tax rates APIs, address verificationglobal too), email verification, telephone number verification and enrichment, currency rates, and even the ability to send SMS messages and text-to-voice messages to landlines to let people know that packages should have arrived for example for a better customer experience. These are all necessary components for those wishing to create an optimized ecommerce transaction and the best possible user experience. Everything that drives more ecommerce to occur is ultimately driving more need for own Web-based ecommerce SOAP and REST services, so we do everything we can to make sure our own APIs are compatible with and what our customers are using, need, and want. Hence our interest in developments at PayPal.

The new platform is already being put to use as was showcased during the event at the keynote presentations. I really enjoyed seeing SAP's demonstration of their new adoption of Paypal for B2B applications (they now have a PayPal module within R/3), enabling invoices to be generated within SAP, and then payment to be remitted and received via a Paypal account - all in a few simple clicks.

ShopSavvy had a nice iPhone application that enables one to search for a product, get a list of all online vendors selling that product sorted by prices, and then buy from the vendor of your choice. This is all achieved in a simple click with PayPal information and shipping information pre-saved in a preferences file on the iPhone. We even witnessed a pizza being ordered and paid for with PayPal.

Payments to and from the "Cloud" is a concept likely to succeed because it takes advantage of all of the things that make the Cloud itself advantageous, such as abstraction from the complexities of payment networks,  no software or hardware investments, easy API interfaces, simple adoption procedures, and usage-based expenses rather than capital expenses. And of course, the easier it is for buyers to buy, the greater the chance that they will. There are competitors of course to PayPal, including Amazon with DevPay and Google Payments circling overhead, and not to mention probably hundreds of smaller guys trying to make a living on the buying and selling of others, and it is still an early market so a lot can happen of course.

But I think this new platform and set of APIs with the easy ability for developers to incorporate Paypal as a payment mechanism for a whole new array of payment collection points will be a big win for all of us in the space and everyone seeking new, creative ways to conduct business.

New NetSuite offering underscores need in the Mid-market ecommerce space.

NetSuite's newest release and entry into ecommerce operations to go along with their CRM offerings indicate that they have recognized the opportunity that exists in the underserved mid-market ecommerce space. The press release and various news articles suggest new features such as purchasing analytics, search term sourcing, shopping cart abandonment analysis, multiple languages and currencies, and other globalization features.

The offering of course is not inexpensive and aimed at attracting larger customers than they have traditionally served. Zach Nelson, NetSuite's CEO has described it as having one system that handles transactions over the Web as well as the phone, fax, and in-person sales, and managing it all in one place.

I agree this whole middle market exists in the ecommerce space. On the high end, there are the billion dollar, transaction-heavy ecommerce companies with vast IT resources with full control over their ecommerce operations who don't need a lot of outside help. There is also the smaller packaged ecommerce sites and online store builders such as Yahoo's Shopping Cart and Merchant Solutions to cover the basics for companies within the range of under a million in online sales, and are well suited to fit these needs.

However, there is the considerably large remainder of the ecommerce market in between that is not as transaction-heavy, has a handful of IT personnel, and ecommerce sales are an important part of their multi-million dollar businesses. The challenge is that these companies have specialized needs and the one-size-fits-all approach is difficult for them as many of these sites are built from the ground up and finely-tuned to their own business models and unique products.

StrikeIron has been serving many of these ecommerce sites by providing various subscription XML-based Web services (standards-based approach that enables snapping in to any platform) that help them focus on expanding their core business and needs that are unique to them, not spending precious resources replicating live data feeds and other core ecommerce infrastructure components that can be picked up elsewhere.

For example, they want to focus resources on the usability of their site and their unique buying experience, not maintaining monthly postal data updates to ensure products get shipped to the correct place, or aggregating and maintaining sales tax rates which change on a monthly basis. This is why our US Address Verification, Global Address Verification, and Sales Tax Rate Web services are so popular within these crowds because they can hook right into their ecommerce platform and their maintenance requirements go away.

We also provide email verification Web services, reverse-telephone, and reverse-address lookups that are accurate within 24 hours, and a few other other services that can be plugged into ecommerce operations. These assist with identify verification of buyers, an important piece of any ecommerce system in today's world.

Our profiling Web services such as our D&B Business Prospect Web Service  help businesses understand who is buying by providing several data points in BtoB scenarios such as SIC code, number of employees, annual revenue, and others, enabling these sites to better serve their primary customer profiles.

Of course we offer several other miscellaneous subscription-based Web services such as currency rate conversion and Global SMS messaging as well for sales and other notifications that are easily plugged into to any solution, and inexpensively adding to their sophistication.

The key point is that this middle market exists and is real as we serve it every second, 24 hours a day, seven days a week. Netsuite has picked up on it, and most likely others will also.

Bob Brauer
President and CEO

The Data Warehouse in the Clouds

If organizations performed a study to determine how much of the internal data they were storing and utilizing was actually public data available somewhere else, they would most likely come to the conclusion that this number is somewhere between 75 and 95 percent. This includes names, addresses, product information, customer information, prospects, etc. The internal data that is most likely proprietary would include sales figures, accounts payable data, and other company-specific data. This is good news for the major database vendors, but not for everyone else.

The problem with storing publicly available data internally is that it quickly becomes outdated, redundant in several parts of the enterprise (and out of sync), and becomes very costly to store and manage.

Imagine for a second that a data warehouse existed somewhere in the clouds maintaining all publicly available data, from company and individuals names and addresses, to government data, financial data, and any other kind of data available all over the world. Whenever an application needed a piece of information, it simply plucked it from the sky, obtaining the most up to date, accurate information that was available at any time anywhere in the world, and with zero hardware and software storage and maintenance costs.

I predict that someday something very close to this will exist (and big database vendors beware). Today in the world, a lot of this data actually does exist on islands all over the Web. However it becomes a very challenging exercise for anyone to integrate because in each case one must figure out the various data formats(.CSVs, buried in HTML, RSS feeds, Web services), the authentication mechanisms (choose one from about hundred different variations), the retrieval mechanisms, the varying response messages (such as one million ways to say "data not found"), and of course the incongruent business models that exist for obtaining premium data. These are things that stand in the way of this ultimate data warehouse in the clouds, and all of the AJAX front-ends and its various cousins won't be able to solve it. If we can chip away at these impediments to obtaining the real-time information that is needed as it is needed, frictionless access to a world of accurate, timely data might be possible at some point in the not too distant future.

Fortunately this is the path that Web services, SOA, aggregation products like our Web Services Marketplace and our freely available Super Data Packs are taking us down. Slowly but surely we will all get there. Until the "data warehouse in the clouds" exists, early adopters can all start leveraging the partial benefits today, and ride the wave as we get closer and closer.

Bob Brauer
President and CEO, StrikeIron