eBay's commerce platform competitive, but won't dominate

eBay's commerce platform competitive, but won't dominate

Summary: X.commerce platform, together with payments functions from PayPal which the e-commerce giant owns, provide good "synergies" but market won't be dominated by a single player, analyst observes.

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E-commerce giant eBay is aiming to be a one-stop shop for commerce products and services for consumers, merchants and developers with its X.commerce platform. However, one analyst notes that while the company's assets offer "synergies" that will make the platform competitive, these will unlikely be a key differentiator as there are other providers offering similar services.

With X.commerce, eBay is attempting to build out an ecosystem that connects buyers and sellers through the combination of technology assets, services of partners and independent developers, as well as developer communities of eBay, PayPal and Magento and other eBay assets.

In an e-mail interview, an eBay spokesperson added that this will offer merchants a one-stop shop for all products and services. The platform gives them an easy, efficient way to expand their capabilities so they can grow the business and deliver great shopping experiences, she added.

Developers, too, can tap X.commerce to improve the commerce world and generate revenue for themselves, she said. "Their innovation will now live on a platform that will be distributed to the hundreds of thousands of merchants in the Magento, eBay and PayPal networks," she noted, adding that over 200 companies have pledged to work with X.commerce, including Facebook and Adobe Systems.

A report by ZDNet Asia's sister site CNET News said Facebook was tapping eBay's commerce platform to create new social shopping experiences for hundreds of millions of consumers. The social networking giant's new Open Graph 2.0 functionality would also be integrated into X.commerce as part of the partnership. eBay's enterprise-level offering would handle the massive media and content-sharing as well as commercial transactions Facebook was planning for its 800 million users.

eBay CEO and President John Donahoe noted in a separate ZDNet report that the lines between online and offline retail business was blurring. Almost half of all transactions now involve a consumer accessing the Web at some point in the shopping process, whether to research the product, look for store locations or make the final purchase. This market represents a US$10 trillion opportunity, Donahoe said.

No market dominance
Praveen Sengar, principal research analyst for enterprise software at Gartner, pointed out that eBay is not the only vendor looking to foster a developer community to enrich its services, but it is one of the most active, particularly, through acquisitions. These included GSI Commerce, an e-commerce marketing services company, which it acquired for US$2.4 billion in March this year, as well as Magento in July.

The Magento platform is touted to provide online merchants with a feature-rich, open source enterprise e-commerce product to build their online stores. A software-as-a-service version also offers smaller vendors access to the online e-tailing tools, according to a report by ZDNet UK.

The various assets gained from these acquisitions, together with payments service provider PayPal which it bought in 2002, offer "synergies and deep integration" that makes X.commerce a potentially compelling platform and ecosystem, Sengar said.

However, the Gartner analyst noted that the e-commerce market would unlikely be dominated by one single service provider.

"I don't see it becoming so strong that it will limit the market to just eBay and PayPal customers," he pointed out, adding that in markets such as China, Alibaba was a strong e-commerce provider which would be difficult to displace.

Competitors building up capabilities, too
Ashwin Raj, Visa's head of mobile for Asia-Pacific, Central Europe, Middle East and Africa, noted the payments service provider also opened up a similar developer platform last October.

In an e-mail to ZDNet Asia, the executive said its Developer Center, which was built on Authorize.Net's existing platform, enables independent developers to create applications that support electronic payments and related services for major payment networks.

Raj said: "These apps can be created to run on a variety of devices--from PCs to smartphones--and can support [services] such as digital wallets, e-commerce transactions, mobile transactions, person-to-person payments and payments at the physical point-of-sale."

Authorize.Net was acquired in 2007 by online payments and security services provider, Cybersource, which was in turn acquired by Visa for US$2 billion last year.

Quizzed if eBay's platform ambitions would derail Visa's digital wallet offering, Raj noted that its digital wallet was not built to address a specific competitive offering. Rather, Visa developed the technology from the company's experience and expertise in delivering products that meet the evolving needs of consumers, he said.

In fact, he added, many of the e-commerce transactions that passed through its Visa Network daily included that from PayPal as well. "PayPal is a valued partner and it is welcome in our open platform," Raj said.

Visa also has a partnership with Google via the latter's Google Wallet initiative to allow Visa's account holders to make mobile payments using Android-powered devices, he said.

A Google spokesperson elaborated on its service, noting in an e-mail that Google Wallet was built as an open commerce ecosystem, making it possible to integrate numerous types of partners from the banking community, mobile carriers, handset manufacturers and merchants, among others, to work with Google.

Asked to comment on the entrance of X.commerce, the spokesperson said: "We think it is fantastic that other companies are innovating in the payments space. This will create more choice for both consumers and merchants, and ensures that solution providers and merchants have the impetus to constantly innovate and improve their product offerings."

Topics: Mobile OS, Apps, CXO, E-Commerce, Mobility, Software

Kevin Kwang

About Kevin Kwang

A Singapore-based freelance IT writer, Kevin made the move from custom publishing focusing on travel and lifestyle to the ever-changing, jargon-filled world of IT and biz tech reporting, and considered this somewhat a leap of faith. Since then, he has covered a myriad of beats including security, mobile communications, and cloud computing.

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2 comments
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  • As someone who works with tons of small businesses, I can tell you that x.commerce is even more appealing to the long tail than it might be to the high-end of ecommerce businesses. A larger portion of ecommerce online is still done through small mom-and-pop websites, not Amazon.com, so this is a big deal.

    There is still a gaping hole in all of these platforms though - while these platforms help merchants set up a storefront quickly, they still don't answer the question - how do you get your first customer? Customer acquisition is the #1 issue for small biz, and that's not adequately addressed by anyone today.

    Until marketing services are deeply integrated into these platforms, ecommerce online will still be a tough nut to crack for smaller businesses.

    Amit
    http://lexity.com
    akumar.me
  • As a developer, this conference was long overdue. We need a venue to share information and explore opportunities, particularly for payment-enabled-apps. I've posted my comments on the "Social Commerce Trends" panel at http://www.bitmenu.com/blog.html.
    duhring