Impatience at point-of-sale

Rakesh Agrawal

I was in Washington state last week with my friend Amy and her 2-year-old daughter, Sophie. We went to the Northwest Trek Wildlife Park so that Sophie could see her favorite animal (bears) in person for the first time.

At the end of the visit, we stopped in the gift shop and I found an adorable shirt for her. (With a bear, of course.)

I handed the shirt to the clerk and my credit card to Sophie to hand over.

The clerk was having trouble with the scanner. She tried repeatedly to get it to ring up. In that time, Sophie twice picked up my credit card and moved it closer to the clerk.

Although Sophie doesn’t understand retail technology, she does know when something is taking too long.

The experience also made me wonder whether kids will use cash as much as we did, when they are growing up accustomed to seeing their parents (and their parents’ friends) paying for so many things with plastic.

Even the exposure that many of us first had to money — cash that our parents gave us to pay for school lunches — has been replaced in many U.S. schools by prepaid systems.

Some great posts on NFC, mobile payments and local

Rakesh Agrawal

There were some really good posts on NFC, mobile payments and local that I ran across this week.

These are must-reads for many of the folks who follow me on Twitter:

And in case you missed the news: I’m getting out of the writing about Groupon business. It’s been more than a year and it’s time to move on to other things. A note to my friends in the media: I’m still happy to help you with your Groupon stories, I just won’t be writing my own. Let me know if you need analysis or introductions to sources.

Relative scale of mobile products

Rakesh Agrawal

Earlier tonight I asked about mobile monthly unique users for various products.

Here is a compilation of that data along with some others:

  • Facebook – 350 million – publicly announced
  • Google Maps – hundreds of millions – estimate
  • Angry Birds – 30 million daily uniques – Mashable via Anil Dharni
  • Twitter – tens of millions – estimate
  • Pandora – 20-30 million – based on 37 million total in SEC filings
  • TripAdvisor – 10 million – tweet from TA employee
  • Yelp – 5 million – from Yelp PR
  • Where – 4 million – announced at time of eBay acquisition
  • foursquare – 400,000 – tweet from Rabois
Others likely above 5 million:
  • ESPN
  • Instagram
Others smaller:
  • Discover (1MM app installs reported)

No, Netflix shouldn’t launch its own streaming box

Rakesh Agrawal

It’s a little early for that and it might turn out to be unnecessary. There’s too much content that isn’t available streaming. As much as I would like to stream everything, I find that a lot of what I want to watch isn’t available. 

Netflix has made acquiring a box so easy that you can do it almost by accident. Buy a DVD player, Xbox, Playstation, Wii… chances are you already have Netflix streaming. It also saves the hassle of setting up another box and having another remote control — which are significant challenges when it comes to the general population.

Creating a proprietary box would create competition with companies that have distribution already. Why would Roku continue to distribute Netflix if they were competing with Netflix on hardware?

Netflix is also trying to use pricing to encourage consumer adoption. Plans with DVDs are more expensive than plans without. Netflix is also using recommendations and UI to shape demand for content. (I’d love to know Netflix A/B testing results on whether to show “DVD Only” when people search for content on streaming devices.)

If I were are at Netflix and I wanted to experiment with sending out boxes, here’s what I’d do:

  1. Identify which users do not have streaming devices. (No need to subsidize those who don’t need it.)
  2. Among those users, identify users who are primarily ordering DVDs whose content is also available on Netflix streaming. (They have a substitute available.)
  3. Among those users, identify those who are frequently ordering DVDs. (Cost savings of not mailing to them is material.)
  4. Send them email offers with varying discounts for a Roku box, fulfilled either by Roku or by Amazon.

Why the foursquare and American Express deal is really big

Rakesh Agrawal

Screenshots from foursquare's AMEX integration

Foursquare’s new deal with American Express will allow AMEX cardholders to save money on purchases at select retailers including Sports Authority and H&M. As important as the deal is, I think the technology is more important.

We’ve heard a lot about NFC lately. Products like Google Wallet can talk to the payments network and transmit your credit card, loyalty program and promotion information.

I’m sure it will happen over time, but the benefits are marginal at best. Yawn.

What’s really exciting is what you could do if you flipped the model and had the payment networks talk to your phone. That’s exactly what foursquare is doing. When you redeem an offer, American Express sends a confirmation to your phone.

The payment network can reach out and touch your phone. That’s huge. That enables a lot of possibilities:

  • Risk reduction and increased convenience. If you’ve ever been traveling and had a card rejected because it was flagged as suspicious, you know how frustrating this can be. Instead of declining the transaction, it would be routed to your phone where you could authorize it. This also saves a phone call to unblock your account. Fraud reduction, more transaction volume and operations cost reduction. A credit card company’s trifecta.
  • Online transaction authorization. Similar to above, a notification to your phone could be used as secondary verification of online transactions.
  • Parental authorization. Parents could provide a restricted prepaid card to children. On every transaction, they could remotely approve or deny it. Some merchants could be automatically authorized. This would be a great addition to American Express’s PASS product line.
  • Promotions. Offers based on your recent purchases and location could be sent while you’re in a shopping mood. If you just made a purchase at mall, you might get an offer for discounts on dinner and a movie.
  • Access for the blind. A text-to-speech engine on the phone could provide an overview of the merchant and amount to help the blind.

An application like this also eliminates the two-sided market problem that NFC has. As much as Google would like to have NFC terminals everywhere, that will take a long, long time. Merchants don’t have to do anything to the installed terminal infrastructure to make this happen. It’s all between the backend and your phone. It also works with a much broader base of phones than NFC.

This type of integration also eliminates the need for training retail employees and doing POS integration. These are both significant hurdles to running promotions.