Wrapping Up the NRF Big Show 2013 with PayPal and eBay

From a payments point of view, PayPal was a major story of the show once again this year.  Or was eBay the story?  

That small bit of confusion is, in fact, evidence that the parent company is beginning to leverage the multiple assets it has acquired over the years and to flex its brand muscles beyond the eBay Marketplace.  

Unlike last year's exclusive PayPal focus, "eBay Inc" asserted its corporate brand at the NRF show.  PayPal's logo was in evidence throughout but the banner above the booth and the name in the directory was all eBay.   

Besides the obvious power shift toward the eBay brand management team, this year, at last, the capabilities of its many acquisitions become a major part of the story.  Synergy instead of Internet conglomerate was the theme.

Magento, from what was once an open source shopping cart, has evolved into a sophisticated e-commerce and mobile development platform with an enormous cadre of third party developers expert in tuning it for individual merchants.  It had a major place at the booth.

An example demoed at the show was a Magento-driven interface for a women's apparel shop, tied to a GSI-based inventory feed, powering a tablet interface for use by in-store sales associates.  The app included to-do items such as putting an item aside for in-store pickup as well as, based on customer permissions, a record of recent purchases, favorite colors, and a display of items the customer might find attractive. 

GSI Commerce, the $2.4B, 2011 acquisition, had a strong role as well. The logistics powerhouse, behind the online presence of many major retailers in their battle against Amazon, powered the apparel shop demonstration's back end.  

Another eBay acquisition Milo.com, coupled now with GSI-based inventory sophistication, powers eBay Local.  To Milo's local product search, eBay's GSI unit provides an important feature for, in particular, smaller merchants who want online ordering and in-store pickup capabilities.  To accomplish that, the retailer provides an inventory feed to eBay on an, at least, daily basis, a now more or less straightforward process. I just checked and both my local Kmart and Staples are out of iPad Minis.   

And if I lived in San Francisco or New York, I could have that tablet delivered to me within an hour or so via messenger.  Speaking with JJ McCarthy, eBay Local's Director of Marketing, messengers have delivered massive HD monitors, the usual complement of tech gear, and a small flood of sundry items.  At $5 a delivery, it's hard to see how eBay makes much money but it has to be a full employment act for bicycle messengers. 

Don't Forget PayPal

eBay, Inc's payments division announced more major retailers who are now supporting its digital wallet as a method of payment.  

"The 23 national brand name retailers are Famous Footwear, Dollar General, Mapco Express, RadioShack, Spartan Stores, Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, the Home Depot, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct, Toys “R” Us and two additional partners that we will share publicly soon."

NCR Tie-up

Another significant announcement from the show was NCR's agreement with PayPal to bring its method of payment to NCR point of sale devices.  This is a big event for PayPal given NCR's footprint of hundreds of thousands of electronic cash registers and payment terminals.  While the splashy news of expanding the number of national retail brands taking PayPal is important, getting access to the array of small and medium sized business using NCR gear means PayPal acceptance will not just be something that happens at the mall.  Getting into little stores, no matter what the means, is big. 

Demo Beauty

Once again, the company demonstrated its vision for the future of commerce using beautiful graphical interfaces, massive touch screens, and attractive, intelligent actors to lead you through the storyline.  And, like last year's demonstrations on the show floor and in elaborate detail at its demonstration store way downtown, the story is a compelling one.  The visual sophistication and appeal of these demos is remarkable. We've come a very long way.  And there's a ways to go yet.  Demos aren't commitments, they're suggestions of what's possible. Last year's demos haven't all made it out the door yet.  The levels of integration I've mentioned don't exist.  But the major components are in place.  It's now a matter of figuring out which combinations to assemble - and that's what demos are meant to help determine.

Wrapping Up

First, it's time for everyone to admit that PayPal is getting some traction with retailers and industry partners who recognize its growing rolle in consumers' lives.  Sure, it's going to take plenty of time for PayPal to drive volume through its retailers or NCR.  But there's been zero volume because there was zero capability before.  That's over.   

It also appears that MCX is getting some traction, too. Assuming that the MCX ownership agreement is non-exclusive - despite the fact that there should be economic reasons to steer transactions in its direction - it will be, as the integration effort required of a retailer drops away given software power tools and consumable data, that merchants will take whatever payment mechanism comes along, provided its footprint is sufficiently broad.  For those 23+ national and regional merchants, PayPal's tens of millions of active users is no small draw as a transaction funding pool.  In other words, the PayPal message is resonating even if the cost is many basis points higher than a typical card transaction.

And both PayPal and MCX are taking the same open-minded approach. They have moved beyond the "one wallet to rule them all, one wallet to bind them" mentality of competitive efforts.  Each will have its own branded app for consumers.  That one picks up the brand loyalists.  Each will also expose its digital wallet APIs for retailers to incorporate within their own merchant apps.

PayPal was clear that it's building tools for retailers to manage their customer experience, from appearance to process.   Of course, those PayPal tools, or contractual terms and conditions, will likely not allow the use of the MCX payment method.  And vice versa.  Top of wallet, "top of app" will still  matter.

The NRF Big Show is a favorite conference.  It's well run, I like NYC, and it shows where payments are going - into merchant and consumer devices and into the customer experience.