e-Commerce: Complete. Configured. Connected.
Posts tagged ebusiness
Cyber Monday Hits an All-Time High
Dec 8th
2010 marked an all-time high for the e-Commerce industry. Cyber Monday, a day dedicated to online holiday shopping deals following Black Friday’s official kick-off to the holiday shopping season, surpassed one billion dollars of online spending in the United States. This year’s event is now the heaviest online shopping day in history. Pretty cool, if I may say so myself.
comScore released figures, following the day, which indicated a 16 percent increase in e-Commerce spending versus a year ago, $887 million in 2009 to $1.028 billion dollars this year. So what does all of this mean?
It means that consumers are increasingly pounding the virtual pavement and shopping online in addition to visiting shopping malls and department stores for their holiday shopping. It means that online retailers and e-Commerce and deals sites, such as Amazon.com, eBay, BestBuy.com, Facebook, Groupon, etc. are giving consumers a good enough reason to choose shopping for deals on the couch with their iPad in pajamas over venturing out into the holiday craze. And it means consumers don’t have to get up at 4 a.m. and wait in those insane lines on Black Friday – instead, they can sit comfortably at home (or in the office as the case seems to be) and click away for the big holiday sales. In fact, nearly half of consumers this year did their holiday shopping at work.
That is great news for Plimus and our Plimus sellers and affiliates. Plimus’ e-Commerce platforms handle nearly 20,000 digital goods transactions daily. With that said, digital sales for our customers and affiliates helped beat the billion dollar mark as consumers are planning to give and also receive digital goods this holiday season.
In my recent post, I discussed a holiday survey we conducted, “Are Consumers Dreaming of a Digital Holiday?” The survey solicited via social media platforms, asked consumers about their projected holiday spending and how big a role digital goods would play. I’ve included some of the highlights below and you’ll see that our responses match up nicely with the numbers collected from comScore.
Charles Born,
Head of Marketing
Photo credit: http://www.flickr.com/photos/the_justified_sinner/2498066986/
Game Developers Got Game – New Game Monetization Models, That Is
Nov 8th
For as long as I can remember, offline subscription billing models have been dynamic. Consumers pay one flat rate for the service they are subscribing to and are given only what the fee includes – nothing more – at least not without a hefty price. While it may have taken some time, the online world has finally caught up with the offline world. Online vendors, most successfully social game developers, are now offering dynamic billing models online.
Let me explain dynamic subscription billing in a bit more detail, using an offline subscription we know so well, our monthly cell phone plan. Each month you pay a flat rate of $50 a month for 400 weekday minutes. This means that 12 times per year, the carrier is guaranteed at least $50.00 from your wallet, $600 total in a calendar year. However, given the dynamic subscription billing, you never pay the base rate.
In order to get SMS text messaging and emails on your phone you’ll need to pay extra each month, which adds to the bill. And should you happen to talk more than 400 minutes in a month, you will be charged a premium fee for each additional minute. That’s how carriers have been able to capitalize on dynamic billing subscriptions and reap additional revenues from their subscribers.
Yet, times have changed. Offline subscription billing that we’re accustomed to has now moved online. How, you say? I thought you’d never ask.
Retailers of virtual goods are now offering dynamic subscriptions to users opening their business models up to unique revenue streams. Instead of a flat monthly rate, small, independent game developers are increasingly offering zero to low on-boarding costs to game players. The philosophy of this business model is that the lower startup cost will engage more users and help build a broader customer base. Additionally, once the player has been activated, payment for services within the game are issued as they are consumed. Gamers do not need to leave the current page they are playing to buy the magical sword that will defeat the dragon; instead, they can buy it instantly in the game. Yes, it might cost the gamer a premium to get the sword, but without it they can’t move forward and win the game thereby earning themselves bragging rights the next time they hang out with their friends or as they’re playing with their friends online, as the case may be. And who doesn’t like winning and bragging?!
Game developers are now catering to their customers by offering pay as you play pricing, instead of paying for unlimited online gameplay for $19.99 a month. This is a winning subscription offering that Plimus has seen executed successfully by several of its customers. The revenue growth is much higher for the vendors leaving gamers equally satisfied because of their instant access to additional purchases within the game.
While casual game developers are leading the pack on billing model innovation, I’m also seeing larger gaming powerhouses turning to a dynamic model. For example, the next release of the Lord of the Rings video game will be sold to gamers through this new model. This release will be the industry’s first massively multiplayer online (MMO) game that’s completely free for gamers. Any gamer can download the game for free and any additional activation, tools, weapons, etc. that he or she wants to buy can be purchased within the game for a premium. The cost of these premium purchases is up to the game developer and varies depending on the accessibility and value to the gamer.
This new model is here to stay. By the end of 2011, Plimus believes that dynamic billing subscriptions will outpace traditional billing models and there will no longer be monthly fees.
If you’re still looking to learn more, check out Plimus’ new whitepaper, “The New Monetization of e-Commerce 3.0” that we proudly announced today. Click here to read the entire whitepaper.
Charles Born,
VP and Head of Marketing
Photo credit: http://www.flickr.com/photos/shareski/2703624033/
Plimus at Rise of Social Commerce 2010 “Entering the Gaming Market – New Techniques for Monetization in the Age of Social Networks”
Oct 12th
Last week’s Rise of Social Commerce inaugural conference appears to have been a huge success. Our very own Simon Jones was a featured speaker in the session “The Games Social People Play.”
During his session Simon spoke about ‘Turning on the TAP.’ He discussed the importance of understanding that success is represented by the three-legged stool of Technology, Audience and Process. To better articulate this tiered approach, Simon presented three case studies outlining key elements involved in driving online engagement, and revealed some of the key lessons we have learned along the way to help guide companies looking to enter the market.
Simon shared a Plimus case study as well as two customer case studies, Youdagames and Yummy Interactive.
Horst Streck, CEO, Youdagames:
Chris Hennebery, VP Software Distribution, Yummy Interactive
We truly appreciate the help from our customers and value their continued partnership with Plimus.
The basis for this presentation is built upon the ongoing growth of the social Internet. The social Web, and marketing games within, has become a vital business play for game developers looking to expand their reach, their fan base and revenue. With the ongoing explosion of social networking and online gaming, we at Plimus are quite confident this phenomenon won’t be going away anytime soon. However, the market is getting increasingly crowded, and the “build it and they will come” approach that blossomed in the last couple of years doesn’t work anymore. As a result, game developers must strive to create the perfect online environment in order to thrive.
At Plimus we are working to solve the needs of clients who are looking to optimize their investments in e-Commerce 3.0, the newly developing way in which online customers want to buy anytime, anyplace, anywhere, with as little hassle as possible. Call it a desire for ‘frictionless e-Commerce.’ Simultaneously, many game consumers have shifted their attention toward the social Web to supply them with their next distraction-of-choice. The combination of factors means that simply looking at one element of the mix won’t get the job done: you may have awesome technology, but if you don’t know your audience’s preferences, you’re toast, and vice versa.
Thanks to the Altimeter Group for the opportunity for allowing Plimus to participate in your event. It was a huge success and we’re already looking forward to next year’s show. I’ve included a few images of Simon’s speaking engagement below.
Charles Born,
Head of Marketing
Photo credit: http://www.flickr.com/photos/seandreilinger/2326448445/
Want to Improve Your e-Commerce Site? APIs Can Help.
Sep 8th
In case you haven’t seen the increasing number of industry reports and news articles, e-Commerce is growing at an exponential rate making it vastly important for online merchants to find new ways to make their businesses relevant enough to cut through the market clutter. In a piece for Practical Ecommerce, Armando Roggio gives an overview of how Application Programming Interfaces (APIs) enable Web-based applications to interact –helping online merchants improve store features, add site content and engage customers and partners… pretty cool, huh?
In the article, Armando compares the API to a simple instruction manual – in that APIs explain how a Web developer can operate a particular application. In order to illustrate his point, Armando uses the example of an online merchant using an API to track customer information and transfer it externally for marketing purposes. Many API’s not only allow merchants to transfer this information to an external marketing site, for example, they also instruct merchants on what formats can be submitted (i.e. XML), how to connect to the application’s servers and provide all kinds of other information as well.
Additionally, Armando explains how APIs can improve online businesses through user interface enhancements, helpful feature add-ons and much more. For example, it’s an API that provides users with real-time shipping rates from FedEx and the United States Postal Service online. So, when an online merchant connects to an external application to add a useful feature and improve the user experience, it’s most likely an API that’s doing the heavy lifting, enabling website features many of us have come to expect in our day-to-day online activity.
We had a great conversation with Armando back in June regarding the launch of the Plimus Buy Anyware™ API. You can read the result here. The Buy Anyware™ API allows e-Commerce developers to integrate online sales solutions into website content or applications without requiring users to go to a virtual store or shopping cart. For example, if a social gamer wants to purchase one virtual good or another, he can do so without being diverted from the game screen. These anytime, anywhere transactions can turn browsers into buyers and lead to increased revenue. It’s a great example of how APIs can improve business online by providing a seamless experience for consumers while boosting monetization for vendors.
Customer Profile: Yummy Interactive Talks Frictionless Gaming
Aug 27th
For today’s blog, I’d like to highlight one of our partners, Yummy Interactive. This week, Christopher Hennebery, VP of software distribution at Yummy Interactive, spoke with Rebecca Lieb from Econsultancy about making digital rights management as painless as possible. During the discussion, Christopher described how Yummy is now able to offer its customers a “frictionless” e-Commerce experience – with the help of Plimus.
Plimus announced its relationship with Yummy Interactive back in the middle of June at E3 and since then we’ve been working with them to offer a seamless online buying experience for gamers. Yummy Interactive’s GameShield In-Game Activation, developed with Plimus, provides game developers a way to turn the trial-to-purchase process into a hassle-free, immersive experience. This e-Commerce platform provides a one-click purchase experience, which helps maintain immersive gameplay throughout the transaction. This, in turn, gives these developers a new tool to use to increase revenue and convert trials into sales.
Rebecca’s post includes a great conversation with Christopher and provides some interesting statistics on how Plimus and Yummy Interactive are helping game developers increase their revenue streams, “We’ve seen one of our clients base a 19% increase in conversions from trial to purchase.” Click here to read the entire blog on the Econsultancy website.
Charles Born,
Head of Marketing
E-tailers Capitalize On Web 2.0 Era
Aug 18th
Despite the economic downturn, there is at least one group that’s flourishing – e-tailers. I read an interesting article the other day in Forbes.com about all the things e-tailers are doing right. The article discusses how online retailers have been able to increase revenue, while traditional retailers are struggling in the down economy. While thousands of traditional stores closed their doors last year, and notable chains such as Circuit City declared bankruptcy, forward-thinking online merchants enjoy continued growth. In her piece for Forbes, Patricia Nakache outlines how different tools have helped online merchants attract more customers than their traditional retail counterparts.
It did not surprise me that over the past 10 years online sales have grown. Since 2001, Plimus has experienced the phenomenal growth of e-Commerce first hand; however I was shocked to read exactly how much online sales currently outpace traditional sales! By targeting technically savvy consumers, e-Commerce sales have grown 19 percent per year, a rate much higher than offline sales. So how are these online merchants doing it and what can traditional retailers learn from these successful online vendors? E-tailers are capitalizing and cashing in on the Web 2.0 era, that’s how.
Social media is a tool that has become pivotal in driving viral traffic to retail websites. The rise of the social Web has created communities that are changing the online buying process, shifting focus away from brand-owned properties toward peer-to-peer recommendations on social networks. With more than 500 million active worldwide users, 56 percent of which shop online, Facebook allows consumers to advertise their purchases and encourage friends to participate in group discounts. Similarly, sites like Groupon encourage consumers to publicize deals with their friends by only offering subscribers a deal if they get enough people to sign up for the daily newsletters. Platforms such as these have already led 11 percent of retailers to report social media as their most effective acquisition tactic, and this percent will undoubtedly continue to grow.
The success of e-Commerce seems to be a light at the end of a dark economic tunnel. Plimus’ e-Commerce platform will continue to help e-tailers smooth out the online buying process and make the experience enjoyable for consumers and benefical for vendors. As Web 2.0 and traditional e-commerce continue to mesh making way for the rise e-Commerce 3.0, Plimus will be here to help e-tailers “flourish.”
Charles Born,
Head of Marketing
Photo credit: http://www.flickr.com/photos/yourdon/3229663883/
Social Gaming: Who’s Spending What, Where?
Aug 4th
As the popularity of social gaming continues to grow, the marketplace for virtual products is now offering consumers more options than ever before. Today gamers can purchase nearly any type of virtual object – from elephants to guns – nothing seems to be off limits. According to a recent report conducted by market researcher VGMarket, roughly 75 percent of online gamers are using their cold, hard-earned cash to purchase virtual goods. But how and where are these consumers spending their money?
Dean Takahashi took a look at the habits of these online spenders and broke it down in an interesting article for VentureBeat. In his piece, Takahashi highlights that not only are gamers buying, they are buying often! According to the 2010 Digital Goods Report, roughly 64 percent of users make at least one purchase a month and 9 percent buy virtual goods daily. And there seems to be no buyer’s remorse here, with half of these online shoppers reporting that they plan on spending the same amount on digital goods over the next 12 months.
And there’s no shortage of sites offering virtual goods. Currently, social networks dominate the online marketplace with users reporting that they spend an average of $50 per year on digital goods through these platforms. Trailing shortly behind social networks, consumers in the multiplayer and causal gaming markets, shell out nearly $40 per year for digital goods ranging from weapons to puppets.
Surprisingly, while men play more online games and are the primary purchasers of virtual goods, women over the age of 24 report spending disproportionately large sums of money on certain products. Women surveyed in the study, reported spending an average of $55 dollars on social networks per year compared to males who only spent about $30 dollars per year. Similarly, women reported spending twice as much as their male counterparts when buying in-game currency.
It seems there is no end in sight. It will be interesting to see where this market will expand and what digital goods will emerge as a result. For now, we here at Plimus will continue to focus on making this buying experience as immersive, seamless, and enjoyable as possible for all.
Charles Born,
Head of Marketing
Photo credit: http://www.flickr.com/photos/bohman/219249582/
Mini Update: Trade Shows and Radio Shows
Jul 23rd
The Plimus team has been on the road the past two weeks at the Software Industry Conference and Casual Connect Seattle. We’ll be posting a blog recapping the events of the shows very soon. Stay tuned! Until then, I wanted to share a new podcast with Simon Jones, our Vice President of Strategic Solutions, recorded at Casual Connect. Simon sat down with Omaha Sternberg of iGame Radio to discuss our new Buy Anyware API. Check it out by clicking here.
Photo credit: http://www.flickr.com/photos/roadsidepictures/145257863/
The Social Web: This Changes Everything for e-Commerce
Jul 21st
The social web has irrevocably changed the way that web users interact with the Internet. Sharing thoughts, opinions, reviews, and personal responses to what we find online creates a vast pool of deeply valid consumer information. This empowers consumers to make choices that are informed by their peers, rather than relying on the PR and Marketing delivered by sellers. It also changes usage expectations: today’s buyer is looking for more than a storefront, a catalog, and a checkout page.
There is no greater indication of this shift than the rise of social applications, particularly games, within the wonderful world of Facebook. Zynga recently suggested that they expect to drive $1B in revenues through their games on Facebook – in 2010 alone! What drives the popularity of those games, and the resulting monetization? Sure, there’s advertising and PR, but fundamentally the drive for users to join the fun is the recommendations and comments of their connections within the network.
Simultaneously, we see the same shift occurring in the MMORPG world. The newest Lord of the Rings MMORPG is making headlines due to the announcement that it will offer Free-to-Play (F2P) access to absolutely anyone. The expectation is that monetization will happen within the game through the in-game commerce (and also that free players will convert to paid memberships, of course). The underlying assumption is high volumes of participation will drive more revenue through upsells and cross-sells than could have been captured via subscription payments alone. This is the network effect writ large!
The core of this shift is explained by some pretty simple behavioral economics: once a consumer has something, it is more valuable to them than something they simply want. When I read glowing accounts of Farmville from my friends, and watch the notifications that their farm is getting bigger and better, I’m already immersed – and want to participate more actively. Similarly, my spending patterns within my favorite MMORPG are driven by the desire to compete with my friends far more than a simple motivation to succeed.
Interestingly, casual game studios are in amazingly good shape to take advantage of this set of consumer behavior changes. Their games are already resident on players’ computers, and presence is, to re-write an old saw, nine tenths of the law. What casual game studios have known for years is that trials are infinitely better than storefronts: as soon as one is installed, the player feels they own the game. This makes it very much easier to fill in the missing links between the player’s impulse to buy, and the necessary steps to have them complete the process.
The tactics to take advantage of this are shockingly simple. During the first sale, ensure that a cross-sale or up-sale promotion is present – it’s amazing to me how high the customer-attach rate to these is, yet how few online sellers maximize their potential here. Once the sale is made, use the wrapper application you implemented to secure the game to provide messages and promotions to other items; those items can be completely free, because you know that your trials convert really well.
Go one step further, and ensure a customer creates an account somehow – add a check box to allow you to store that account in your checkout page. That way, when they come back next time, you can eliminate the friction of re-typing personal information and deliver a single-click experience. Eliminating that painful step can double your checkout conversion in a single stroke.
The bottom line is that casual game studios, while staring down the barrel of the threat of games moving to the social web, are also faced with a wonderful opportunity to build longer-term relationships with their players. Jumping in now represents a strong move to build strategic advantage in the marketplace – and don’t we all need one of those?
We’re at Casual Connect in Seattle this week – and will be presenting on this very topic on Thursday afternoon at 1pm at the Triple Door, so come by to hear more and ask your questions.
Simon Jones,
VP of Strategic Solutions
Photo credit: http://www.flickr.com/photos/intersectionconsulting/4465834448/
The Dark Side of Shopping – The War against Fraud and Chargebacks (Part 2 of 2)
Jul 9th
(Read part 1 of 2 here.)
Unlike a refund, in which the merchant initiates the action and have control over it, the chargeback is an action initiated by the customer or by the bank. The result seems to be identical – the money is returned to the customer but, in fact, the chargeback has much more severe risks and consequences.
Credit card companies and processing companies supervise the merchants’ chargeback levels. Every chargeback is recorded in the merchant’s account and accumulates negative credit points which reflect the company’s ability to deal with credit card fraud, as well as the quality of the provided goods and services.
Merchants with unusually high negative credit scores (over 1% or 2% of transactions, depending on the country) may be fined and, in extreme cases, even lose their processing license.
Recent studies show that the amount of internet fraud has doubled this year, and that 50% of chargebacks are made due to credit card and payment method fraud (reason number 1 here) and the other 50% due to all the other reasons (2-5).
So what is to be done about it? Here are some tips that have proven to be efficient in avoiding chargebacks:
- Product details – let’s start with a really small tip: make sure that the product’s descriptor on the credit card statement is identical to the actual name of the product or the store. Note that if the buyer fails to easily connect between this text and the product they have purchased, there is a significant chance that they will initiate a chargeback. You must check that you aren’t transmitting the same text for every purchase and that the text represents the product as clearly as possible, so as to make it as easy as possible for the buyer to link the charge with the purchase.
- Use of anti-fraud systems – these spot suspicious transactions in advance with a fraud identification system. The aim is to identify suspicious transactions such as ones made by lost or stolen payment methods, or transactions that are made in one country with a credit card that was issued in another. There is a wide range of products and companies that specialize in spotting suspicious transactions based on the parameters gathered at the time of the purchase. These solutions have different costs according to the specific models, and of course, there is also a need to employ a transaction checking and approval staff. Small or medium sized business may find it helpful to link up to outside merchant systems such as Plimus, which take it upon themselves to carry out all fraud checks as part of the processing service.
- Product and service – matching the buyer’s expectations is crucial! Verify that your promises about the product, the service, the charge and the delivery aren’t different from reality. Make sure that the customer always knows how to contact you with any issue and that you respond to their queries. See to it that the customer knows when he will be charged and the amount of the charge (especially if the product in question is a subscription). When you don’t specify contact details on the site or on the receipt, you don’t leave the customer any choice but to turn to the credit company instead.
- Refund policy – make sure that you have a clear and flexible refund policy that is to the advantage of the customer. Advertise the policy and act accordingly. Remember that a dissatisfied customer that is denied a refund can easily get their money back by way of a chargeback – and if this happens you will suffer more damage.
In short, be realistic in your pre-purchase promises, professional in its execution, and service oriented in its aftermath. By adopting these practices your chargeback problem should remain negligible and insignificant.
Hanan Sherkin
Risk & Compliance Officer
Photo credit: http://www.flickr.com/photos/andresrueda/3274955487/
