The Amazon mPOS Effect

Amazon’s been in the market for about a month with its mPOS solution and theories abound about the impact that it will have on the mPOS ecosystem. Eric Hoffman, SVP of U.S. Sales for ROAM, is pretty bullish on the opportunities that it will create for SMBs and has a few of his own theories on how Amazon will carve out the market. Hoffman caught up with MPD CEO Karen Webster to share his thoughts, along with how he is seeing retailers use mPOS to increase basket size and close more sales.

KW: Amazon entered the mPOS market in August, making them player number 123, no kidding, in the very attractive yet crowded space. I’d love your perspective on how you think Amazon’s entry will create opportunity and disruption for other players in the market?

EH: The Amazon news is very exciting – I think they’ll do well because today, they support all sorts of merchants. They also have a very defined audience for small business, whether they are supporting their marketplaces, or doing advertisements, a web store, fulfillment and payments acceptance online, there’s that existing relationship. The value proposition for the mPOS really comes into play as an extension of existing core services. I don’t see Amazon using mPOS as a way to acquire new small business owners as new customers, but I do see it as a way for them to retain them by expanding the list of services they’re supporting for them today.

A friend of mine has a family-run business – they have one retail store. On the weekends, they have to go to different types of shows outside of that store, so they want to design an mPOS solution. After discussing how they accept payments in-store and online, we determined that the best way to go about it, by leveraging an existing relationship, was to extend their relationship that they already have with PayPal. In a similar sense, I see Amazon’s solution as an extension of what they already provide SMBs today, using it to retain relationships and grow the overall relationship.

KW: Is that a big enough market for them? That seems to be a niche play for them if that is in fact where they will get business.

EH: I think it is – and because they do so much and have different revenue sources, there are ways to thin margins across all of their businesses, but when you add them all up, we all know that it’s a serious company with massive revenues. If you look at competitors in the payments industry, say Square, and how they are doing and what additional products they’re trying to come out with to increase the relationship they have with those SMBs, Amazon is starting with relationships they already have that are making money, so it’s an additional revenue source adding to the total value of the relationship.

KW: Do you think Amazon merchants worry that this could be another opportunity for Amazon to get customer data that could be used against them at some point?

EH: If they don’t have those concerns today, or if they have those concerns but are sticking with Amazon because of the other benefits, then I don’t see this as a concern for those merchants. If anything, it extends from the virtual world to the physical world, and helps consolidate data and eventually the analytics around customer spending habits, consolidate fulfillment and moving toward an omnichannel play. I don’t see it as being harmful to the customers who already have faith and believe that are not a concern for them today.

KW: So sadly, summer has ended and we’re in the back-to-school season. But back-to-school is when large groups of people converge on retail at the same time to get stuff. Are you seeing and hearing anything from retailers with respect how they are using mPOS to facilitate those throngs of crowds in their store?

EH: I would say the most significant innovation that’s being used and that we’ll continue to see growth across all retailers is the ability to service the customer right on the floor of the retail location, and understanding what the customer needs at that time. Often times a customer will be there picking out a complete outfit, but they are missing one key component that could be prohibiting them from buying 3-4 items, the ability to service that customer in the aisle and set up delivery either to that location or to another location, enables the retailer to close on the spot. By using a tablet with mPOS capability on the floor, and having all systems tie into it, they can easily close a deal.

We’re seeing that a lot of retailers are trying to bring the customer back to the store for pickup, and the thought process behind that is to setup the point of distribution inside the store at a point where they have to come through and buy additional items. It’s strategic because the total sale could increase for that particular consumer for that seasonal item.

KW: This is an area where ROAM has done a lot of thinking and development in supporting those kinds of use cases. What’s really necessary to have as part of that platform in order for those sales associates to do to help close a sale and increase the basket size?

EH: The first thing you have to think about is the hardware – the tablets, the secured case, the ability to power it at night – that’s a whole new industry that’s come about based on mobile commerce inside the store. You also need the embedded capabilities to accept payments, so you’ll go through a mobile card reader, figure it out how it will be secured to the hardware itself, and where it will be stored at night. And then there’s the training around the entire system – you’ll obviously have to leverage the payment engine that’s supported by the retailer at that point.

The real sophistication behind the whole process and customer experience is going to be the software on the tablet – how do you tie in and update catalogs and make sure the e-commerce, in-store, and distribution centers are all centralized in one system to get real-time inventory before closing on a sale. There are a lot of things to think about, with jobs coming to market just to support that new customer experience, as well as the hardware use cases, and what we do at ROAM, supplying the hardware for the payments, support software for SDKs, and managing the payment flow through the mobile commerce manager. At the end of the day, if you start with the customer experience and work backwards, you’ll generally come up with the right solution.

KW: I would imagine that a lot of your partners and customers that you touch directly on the merchant side are thinking a lot about this as they prepare for the holidays well. Is that what you’re discussing at this point?

EH: It is. At ROAM, we support many resellers through which we learn valuable information about how our products and services are being used. We therefore have a number of direct tier one relationships in the marketplace, and do-it-yourself stores and QSRs. Often times the use cases that we document in our sales literature are specific to what we’ve been told by customers that are using our solutions, as well as what we are hearing from resellers in the marketplace.

One example is specific to QSR – in that space, often times a POS is being run on local cable access, so the area has a power failure, they cannot accept any type of electronic payment. We’re therefore starting to see a real take-up in mPOS solutions leveraged against a smartphone or tablet with a ROAM reader being used as a business continuity plan in retailer. The entire use case around business continuity was really the voice of the customer, and that’s been a number one priority.

KW: I love to get caught-up on what ROAM is doing – what’s the latest and greatest?

EH: ROAM is doing exceptionally well. Our soon-to-be finalized sale with Ingenico has really expanded our reach. ROAM’s product, which is now Ingenico’s mobility solution worldwide, is in 14 countries. In the US, we’ve been able to sign a number of major companies in a variety of vertical markets, as well as increase our reach with major US acquirers and ISOs. We’re looking at 2015 for the expansion of EMV, so we have been able to leverage and work closely with Ingenico, who has been producing EMV terminals worldwide for many years. We announced EMV readers last year, and we’re now looking at requirements for the US market to make sure our hardware is specific to those needs.

We’re really excited about the growth of the ROAM product worldwide, as well as the runway that we have in the U.S. to continue to support existing customers and expand on new vertical markets.

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