(Dead God, Where ever you are, please tell my Mom that it was the best for me to change lanes from Computer science to Quantitative Economics , and now understand the world more completely 🙂 )
[Includes excerpts from the “Alternative Payment methods” Workshop with Kai Boyd, CEO Deal United , March 2012 ]
We know the stuff about digital games, tracking our trends and the Big data, and the conversation starts exactly from this “How can make money in the ever increasing distributed e-commerce world ?
I attended a workshop with Kai Boyd, CEO Deal United a firm that invented Pay-By-shopping. Now virtual currency has been there for long, with Paypal being the market leader by far (by Revenue)
These are some of the statistics he mentioned (**Please see disclaimer)
Virtual currency constitutes $.5 Billion of the $1.5 Billion dollars of the Facebook revenue.
Of the 850 million users, 20-30 % of the users play games online
Of this the majority of the users are 22-55 (female)
Consumers “bought goods” worth as much as physical/real $ 10 in the virtual garden . Could you believe people buying virtual pigs for $ 10 ??
With a brief background on the online retail in gaming and other goods , we discussed the monetizing opportunities in the digital goods space. We moved over to the case studies & each team had to make piches on strength of the Business model, and every metric we could consider for the growth of the Business model – which could be customer growth, Merchant growth per month, facility of paying in local currency for transparency, Double layer security, No block up fees like Paypal . (more on this later )
The following were the case studies we had to perform :
SupersonicAds , Pay by Shopping , Click And Buy , sofortüberweisung , Amazon payments and ofcourse Paypal .
As for Pay.by.shopping and other players in this space – their model is simple :
Track the users using the sophiticated analytics tools that we have, to know what a consumer would be “willing to buy”. Through this, you have a panel data of consumers and a matrix of things he might want to buy. All this could effectively be tracked via Socil Media Analytical solutions such as semantic listening/research tools like crimson hexagon , radian6 .
[ Super hint : Quora pretty much cover very detailed crowd-sourced answers – please check them 🙂 There is a super amazing post on Zynga’s analytics and(early) success again at Quora, check it out . ]
Now pause for a moment, and think about the last time you went online to play a game, and quit just before you had to pay for an “advanced round” to buy sheep, or goat or whatever and you quit (Who buys Virtual sheep) Now, you see why they say, “your actions are as important as your inactions” – which is to say that by declining you are still giving the Analytics algorithm, if you would, an opportunity to know about your preferences.
Next week is your Girlfriend’s birthday, and facebook prompty reminds you of flowers, or expensive jewellery, or a dress (you get the point) – But here’s the trick –
You get to pay for the flowers and keep the “game” for free in a virtual world.
While according to Behavioral Economics and Neuroscience, you kept the “game” or software, or whatever it is you were willing to “try”, but not “buy” – you get an extra ulility from the free-seemingly-no-strings-attached .
EXCEPT that –
According to what we know from “Influence” and Gaming – once you keep something, the mind’s natural tendency is to continue using it, ven though after sometime you would have to pay for it. Like, Free copies of newspaper, like 3 months trials (cancellable afterwards) , and the list goes on .
Where is the OPPORTUNITY ?
There is a BIG space, that all Analytical companies are trying to harp on, develping relaible means to interpret this “Big Data”. It is HUGE money and a very recent way of making scientific decisions in revenue growth, sales, customer segmentation – across Telecommunication companies for tariff plans and Online retail companies & supermarkets for customer segmentation for premium & commodity products
(The telecommunication sector and Online retail are two main spaces where the Big players have virtually killed most margins to boost volume growth)
The Workshop
Later in the workshop we were divided into teams and we had to compare various “digital currency’ payment companies , like Paypal,Pay-By-shopping etc. I think I did a fair job by crisply pitching why click&buy was better vis a vis paypal.
The seemingly innocuous comparison between the Click&buy vs. Paypal just reduces to this —
1. Double layer of security – SSl coding & the security from normal bank registration processes
2. No fixed sum of money that rests in your account and verifical procedures – A new account is directly piad for by the debit card (unlike Paypal that “blocks” about $1.95 in your account.
3. The possibility of paying in your local currency – directly from your card , or the conversion which is transparent (paypal got on to this )
4. The huge Growth rate of new customers each month , new merchants and finally ..
5. Creating an eco-system of “local relevant offers” – that can be used to increse revenue streams from existing customers. Thus, capturing on the “localization” is a fair trend to bet on.
One more thing, we were given just 15 minutes 2 teams each of size 6 , and our team hot 3 topics and the other one 2. I broke down the team into subteam of size 2 to use the 15 minutes more effectively (so , teams of 3*2 = 6 with one topic each) . At the end of the workshop, the other team said it wasn’t fair for us to divide the team internally.
Well, welcome to the corporate, and getting things done. Point.
Think different.
—
Ekta
** All views, unless in Italics are my understanding or synthesis from the workshop. Please quote with discretion.
Finding symmetries in an unsymmetrical world .. 