Posts

The rise of the second-hand market in China boosts the circular economy

The second-hand trend is spreading around the world and gaining ground in China, particularly with the weakening of its economy due to the Covid-19 crisis. We look at Xianyu, a Chinese app that provides a second-hand product purchasing platform for the 75.5 million users of Taobao, Alibaba’s e-commerce website.

Since 2019, the second-hand market, which forms the basis of the circular economy, has grown rapidly in China. Whether it is clothing, cars or books, it has become as simple to sell as it is to throw away. According to Bloomberg, the second-hand market achieved a value of 100 billion dollars in 2018, a figure which is set to grow in 2020. According to a survey by Mintel, more than half of urban Chinese buy second-hand goods for environmental reasons.

Tech giants Alibaba and Tencent have taken the lead in this market by developing exchange platforms that enable buyers and sellers to carry out fast, secure and rated transactions. The secret of the success of the circular economy in China is the scoring system introduced by Alibaba, which evaluates citizens over time. It should be noted that with the current epidemic, this scoring system, known as Zhima Credit or Sesame Credit, has been reviewed and relaxed.

 

Xianyu – Alibaba’s second-hand goods exchange platform

Occasion 1

Linking individuals for second-hand sales:

Building on its expertise in online sales and social media, Alibaba has managed to transform Chinese preconceptions about buying second-hand and provide a solution for people on a tight budget. Xianyu, the platform developed by the tech giant within the framework Flutter, makes it possible to sell and/or buy articles that were previously acquired on Taobao, Alibaba’s e-commerce platform.

Goods such as clothes, designer bags, refrigerators, smartphones and cars are sold in this way. According to the product category, the seller must enter information about the state of the item (time used, origin, brand, etc.) and receives an estimation of the sale price.

Occasion 2

Occasion 2

Occasion 3

Screenshot of the homepage and the screen for the telephone category – Source: The Pixellary

Recycling and transformation of unsold items

In addition to the buying and selling of second-hand goods, the application provides other functions for recycling. In a few clicks, clothes to be recycled can be retrieved from a private individual, who receives payment in exchange, in order to be resold to partner companies. These partners sell some of the items collected and recycle the rest (about half) to produce industrial or agricultural materials (such as fabrics for greenhouse temperature control and noise-dampening).

Since the platform was launched, 8500 tons of clothing, or around 24 million items, have been recycled.

 

Xianyu’s popularity is due to its Super App status

Ease of use

Its status as a “Super App”, due to the fact that it combines various recycling functions in a single app, has boosted the platform’s use and popularity. 64% of its 75.5 million users per month only use this platform.

By contrast, in the United States, for example, in order to buy second-hand goods, users have to use several different interfaces or websites, creating an account, entering payment data and so on, each time.

Another advantage is that Xianyu is integrated in Alibaba’s Super App, which is in turn integrated in the Alipay payment system, providing ease of use that makes it significantly more accessible for individuals of all ages. The main users remain millennials, however, with 60% of users born after 1990.

Social and fun side  

The Xianyu app is also connected to the gamification functions of Ant Forest, an Alibaba mini-app that enables users to win “green points” to grow virtual trees, which will then be planted in the real world, in China’s arid regions. In 2019, 230,000 trees were planted due to actions carried out on Xianyu.

Social mini-communities have also been created on Xianyu, based on hobbies, with communities for fishing, photography and sport, for example. People belonging to a community can exchange information and advice, and products sold are more easily categorised. There is even a community to buy the products of bloggers and celebrities, or to follow and seek inspiration from their clothing styles.

Occasion 4

Image 1: Promotion of goods that belonged to the basketball player Kobe Bryant

 

 

Occasion 5

Image 2: Communities available in the local area  
Source: The Pixellary

Trust-based transactions guaranteed by the Zhima scoring system

Payment secured by Alipay

Annual sales on Xianyu achieved a value of 14.4 billion dollars in 2019, and are set to grow in 2020. Transactions on Xianyu are carried out through the Alipay online payment service, as are all of the Alibaba group’s applications.

Users have a virtual wallet, which is credited or debited when the second-hand good purchase is made. However, given that transactions can involve significant sums (for cars and household appliances, for example), it is possible for the seller to receive a deposit to ensure and secure the transaction before the good is delivered.

The amount of the pre-payments and payment deadlines are defined according to the parties’ reliability, which is evaluated by the Zhima Credit scoring system.

Occasion 6

Users can access their score on Alipay – Source: CIW

Credit scoring system

In order to ensure smooth transactions and honest information about products sold, Xianyu is linked to the Alibaba credit scoring system.

Zhima Credit, also known as Sesame credit, uses an algorithm that evaluates each individual’s level of trust according to their transactions on Alipay, their borrowing habits, bill payment times, late returns of goods rented, etc.

Users are given a score ranging from 350 to 950 points. The higher their score, the more individuals will be considered trustworthy and receive benefits, while a lower score means they have to provide additional information or pay a deposit. For example, if they have a score of above 690, sellers can receive an initial payment for their sale via Alipay of up to $298, before the articles are even collected. In order to carry out transactions on Xianyu, the minimum score necessary is 600.

Relaxed rules due to the coronavirus epidemic

The scoring system is used for other Alibaba applications and covers a multitude of activities in the daily lives of Chinese citizens. Due to health conditions related to the coronavirus, some citizens confined to their homes were unable to return goods rented from various companies. Such actions, which would normally have a negative impact on the score, were not taken into account by the system, which is giving users a “grace period” due to their inability to return goods. However, Sesame Credit does record late returns and asks its users to resume their good habits once the crisis is over.

Conclusion 

The platform Xianyu has enabled the emergence of a circular economy in China, based on a scoring system that establishes trust and reliability. Other second-hand goods sales platforms are also available: Zhuan Zhuan has 2 million users per month, and Guazi achieved 50,000 second-hand car sales in 2018.

However, despite all these figures, the Chinese second-hand market still has a long way to go, and remains far behind western markets, where second-hand car sales represent 10% of GDP, compared with 0.6% in China in 2017 (National Bureau of Statistics of China). Significant growth is therefore expected in the coming years.

Beyond acceptance of the concept, there is also growing awareness among Chinese consumers of sustainable development, which is encouraging them to adopt a different attitude to their purchases and consider buying second-hand and recycling. A comprehensive platform, such as Xianyu, which makes buying second-hand goods as fast and easy as buying new products, is helping drive the circular economy.

By using technology to combine the second-hand market with fun games and a social aspect, China’s tech giants are promoting citizens’ awareness of sustainable development and supporting environmental directives introduced.

Food safety: Chinese supermarkets bet on Blockchain

In China, a number of counterfeit food and false certification scandals have hit consumer confidence in the products they buy from their supermarkets hard. As Chinese consumers slowly but surely opt for organic and healthier food, finding a solution to guarantee greater food safety has become a major issue for manufacturers and distributors.

This is the backdrop against which Alibaba began looking into Blockchain. The group started integrating this solution back in 2016 to track the origin of food, via its Hema supermarkets and its Yiguo fresh produce e-commerce platform.

Food traceability made possible by Blockchain

40% of businesses in the global agri-food industry think the traditional certification approach is insufficient, and 39% know that their products can be easily counterfeited (PwC, 2018). So Blockchain has real potential to guarantee consumers reliable and unalterable traceability, and solve the health and safety issues businesses in this field are facing.

Blockchain 1

Source: Alizila.com

In 2016, Alibaba launched the first Hema connected supermarket: one of its main innovations is the way customers can scan the product’s QR code using the store’s mobile app either when they shop in-store, or when their online purchases are delivered. This gives them access to the following information:

  • The location of the product and its temperature during the entire delivery process
  • The producer’s name 
  • Photos of the government permits and stamps certifying the distributors
  • Food certificates and standards
  • Pesticides and chemicals used on crops

The system currently provides tracking of a range of products including meat, seafood, rice, tofu, soy, fruits and vegetables, poultry, eggs, dairy produce, cooking oils, and food supplements. Each product has a unique code, meaning that the information provided is specific to the product itself, rather than the batch it belonged to. The system brings together farmers, small- and large-scale manufacturers, delivery firms, distributors, certifying bodies and consumers on a single platform, making it as transparent as possible. The open-access public platform means information on transfers of goods between supply chain partners can be integrated in real time clearly and honestly.

In addition to making the product traceable every step of the way up and down the supply chain, Blockchain’s implementation also makes returns easier to manage. It allows the identification and localisation of products that need to be replaced. This process is usually expensive and complicated, causing significant physical and economic losses. The system is possible because a growing number of brands have adopted Blockchain technology and are implementing the traceability process.

Agri-food businesses adopt Blockchain technology

To make Blockchain really effective and trustworthy, the more businesses become involved, the more precise the traceability will be. This has resulted in the creation of alliances and consortiums in China, set up by the main distributors, delivery firms, technology firms and supermarkets that have adopted Blockchain internationally. 

For example, the Food Trust Framework (Alibaba) is a consortium whose members want to track food produced in China and guarantee international imports from Australia and New Zealand. Since 2018, members have included:

  • Tmall international, supported by the Alibaba e-commerce platform that set up the initiative  
  • Fonterra, a New-Zealand dairy cooperative featuring 10,000 farmers
  • New Zealand Post
  • Blackmores, an Australian food supplement specialist
  • Australia Post

At the final stage of the supply chain, and in contact with consumers, are the Alibaba supermarkets, which adopt the technology via their channels: 

  • Yiguo: the Chinese online food distribution site has 5 million customers and more than 1,000 businesses that can now track the origin of their products purchased online  
  • Hema (Freshippo): the brand’s mobile app allows its consumers to access information before they buy in store

The Blockchain Food Safety Alliance launched in 2018, also in China, has four founder members 

  • Walmart: the American distributor has 500 stores in China and in 2019 announced its intention to open further outlets to double this number 
  • JD.com: Alibaba’s main rival e-commerce platform, which is more specialised in electronic products
  • Tsinghua National University: the Beijing university research centre, which possesses blockchain and Chinese food ecosystem management expertise
  • IBM: the software firm behind the development of the Blockchain IBM Food Trust platform

More than an alliance, the IBM Food Trust, which is based on use of the IBM blockchain, has been adopted worldwide by distributors and brands including Carrefour, Kroger, Dole, Tyson Foods, Nestlé and Unilever that contribute to the constant growth of the number of products added to the system.

Blockchain 2

Source: IBM

Restoring consumer confidence by addressing their concerns

Food fraud is a global challenge. According to research by Michigan State University, counterfeit food is worth $40 billion every year, making the implementation of these traceability systems an important weapon in this fight. As mentioned earlier, immutable traceability means fake ingredients can be detected, which increases confidence in international trade of food products and local production. This makes it possible to solve cases of food contamination, as the product can be identified quickly on the blockchain and immediately withdrawn from sale.

Finally, by using the technology to restore consumer confidence in the information and labels found on packaging, distributors can guarantee they are supplying authentic products, increase their sales, and gain a new competitive advantage. This is the start of a new, fairer, transparent mode of distribution, focused on consumer preferences.

The Chinese traceability system has seen its adopter numbers rise since its launch in 2018. Distributors and international brands have joined the platform to work together to create and consolidate a global traceability network, discourage fraud, and promote food safety in local and international trade.

Blockchain is also used on supply chains by manufacturers and distributors. This is clearly a use case with strong economic potential; a comprehensive traceability system, from the production site to the consumer’s plateand not far off for most of the food produced worldwide.

Progressive Web Apps, a powerful new mobile-deployable tool

In an article entitled “A mobile app at any price? ”, I highlighted how difficult it is for brands to get mobile internet users to download a mobile app… and use it. The “chosen ones”, i.e. the brands whose apps are used on a daily basis, really are few and far between; but what’s left for the other brands that are only visited via a web browser? Perhaps the possibility of getting as close as possible to a native experience via a Progressive Web App, or PWA.

What’s a Progressive Web App?

A PWA is quite simply a web app that attempts to offer the best of both worlds, i.e. web and app stores. It doesn’t have to be downloaded because it’s accessible via a browser; it offers an experience similar to that of a native mobile app downloaded from App Store or Play Store.

There are major advantages to a PWA: no need for installation on your mobile, accessibility via an icon installed on your home screen, the option of offline use, even with a low-speed connection. What’s more, it offers a range of native features, particularly full-screen display, push notifications, geolocation and a camera.

Though a mobile strategy is a must for many brands, you don’t necessarily need a downloadable application.

PWAs to solve acquisition and loyalty development issues

Many brands have got in on the action, from social networks like Twitter, Instagram, Pinterest and even Tinder, to media (L’Equipe, Forbes, Financial Times), as well as famous brands like Uber, Starbucks, Lancôme, and even AliExpress.

With a PWA, they can reach a wider target audience; being accessible via a browser without having to visit a store makes acquisition easier. They can then adopt an acquisition strategy; consumers don’t have to directly engage with the brand as they don’t need to install an application. At the same time, the smartphone-based experience they enjoy meets their expectations. As time passes and visitors return time and again, brands progressively engage consumers via calls-to-action using push notifications, starting with a prompt to install a shortcut icon on their home screen.  

The experience then becomes increasingly progressive. In other words, the more the PWA is used, the richer the interactions become. The relationship with the consumer, who is not a client, develops and strengthens; this is how brands can solve their loyalty development issues.

Pwa 1

In the case of L’Equipe, a mobile internet user first visits the newspaper’s website to read some sports news. After several visits, a pop-in suggests adding the site to their home screen; all they have to do it click on it to visit the site. We can see on the 3rd screen that the display is optimised. The PWA’s potential is starting to be developed with this first stage.

 

PWAs to optimise ROI for digital projects

In addition to an improved web experience and an enhanced acquisition and loyalty development strategy, a PWA is the perfect solution for optimising ROI, the true driving force behind any business.

By focusing on a single mobile channel, the web, acquisition and loyalty development costs are naturally reduced. Let’s also not forget that a native application needs a big budget, covering development costs (for iOS and Android environments), update and maintenance costs, and in-store promotional expenses.

Why not reallocate this budget? Several key budget items could do with it, particularly SEO/SEA strategy, UX design and content creation. These activities are crucial for brands looking to make the most of the web. There’s no reason not to go PWA-exclusive based on the sector, brand awareness, marketing budgets, and targeting needs. 

If using a PWA is an option, brands can decide to opt for the development of a native application. This is also the privilege of the “chosen ones”, big businesses and pure players like Uber and AliExpress that are aiming for ubiquity, by simultaneously targeting loyal users via an application downloaded onto their mobile, and users via a web browser.

By combining the best of both worlds, i.e. web and native, Progressive Web Apps close the gap between responsive sites and applications and meet a user need, which was previously poorly met by brands. A PWA is essential to achieving the strategic objectives of many businesses, since it is an easy solution to adopt and deploy, effectively achieving tangible results. So, before committing to creating a mobile app, think progressively!

How can a progressive web app benefit e-commerce?

The smartphone is the device of choice for large numbers of users around the world. However, network coverage and data availability are still variable and so there are considerable disparities in mobile phone use. While in Europe, YouTube and Netflix account for 30% and 23% respectively of bandwidth consumption, emerging countries have to manage with weaker network performance, while the mobile phone remains the main access point to the internet for their inhabitants. In 2015, Google introduced a new development “standard” to address this issue: the Progressive Web Application (PWA). What are the three main benefits for websites, in an e-commerce context?  

A Progressive Web Application is an application which can be accessed from a simple browser and no longer only through the app store. This means that a website can offer an experience similar to that offered by a native or mobile application. What makes it unique is that it uses a manifest, which means that the site can be installed on a mobile phone without going through an app store, and service workers, which means it can operate on a basic level in the event of network failure and offer a better user experience. 

 

Faster speed 

According to Google, 53% of users leave a page if it does not load within 3 seconds. On a PWA site, content download has been optimised to guarantee good display performance. The cache system has also been designed to update only the element or elements modified since the user’s last visit. Even with a very weak network, Google cuts download time and guarantees a faster and smoother browsing experience.  

According to a case study by Forbes, the page load time before the move to PWA was between 3 and 12 seconds. Now, with the new architecture, the load time is 0.8 seconds! AliExpress announced as early as 2016 that the number of visits to the pages of its website had doubled, browsing time had risen by 74%, and the conversion rate had increased by 104%. Alibaba had noted a 76% increase in its conversion rate and Uber was offering users the possibility of booking a ride through a 2G network.  

As a result of the optimisation of load times, the reduction in the bounce rate and the increase in the number of pages viewed, brands observed another direct benefit: better natural referencing. 

 

Improved reliability 

 

The architecture of a PWA offers a seamless user experience. The PWA can operate on a basic level, even in the event of network failure, and therefore enables users to do certain things, such as post a tweet which will be published when the connection is restored. 

In the e-commerce context, this advantage is twofold: users can log in even when offline, and losses are reduced when users place an order when the network is back up. 

 

A stronger commitment  

The  unique selling proposition involves providing a user experience as close as possible to that offered by a mobile application whose main advantages are that it can:  

  • Offer a full-screen display for a more immersive experience 
  • Create an abridged version of the brand’s website which is accessible directly from smartphones 
  • Implement a notification strategy to boost the number of return visits to the site and secure customer loyalty 

 

Thanks to push notifications, Lancôme, for example, noted a 17% rise in its conversion rate in 2017 and an 8% increase in recovered baskets. 

In spite of their incontestable results, PWA sites are still rare in the digital landscape. As this standard is supported by just one player, Google, its adoption has been restricted. Until recently, it was not possible to offer the same experience to all users using operating systems and web browsers. Microsoft, Apple and other players have now changed their strategies and are increasingly working with this architecture.  

And what if we look even further into the future? The smartphone is an information aggregator; being able to interact with this information in a more native way would allow brands to open up a whole raft of possibilities through their sites. So users could access calendars of future private sales, or even carry out transactions with a single click by using payment APIs. PWA is a goldmine whose potential is crying out to be tapped by brands!   

 

[Checklist] Omnichannel: 7 tips for an effective IT organisation

Companies with a website and mobile app are increasingly looking to homogenise the two channels in order to offer their users service and experience continuity, while optimising development costs.

Download our checklist "Omnichannel - 7 tips for an effective IT organisation"

However, this functional homogenisation presents new challenges for IT departments. Very often, this involves significant changes in termes of organisation, tools and working methods, for several teams.

As “captains” of this transformation, IT departments need to ask themselves the right questions, be methodical and seek support if they are to guide the ship home. Here are some tips for success from web and mobile solutions project managers.

Download our checklist "Omnichannel - 7 tips for an effective IT organisation"

You will discover how to:

  • Work in feature teams
  • Apply standards and new methodologies
  • Adapt workspaces and rituals
  • Facilitate deployments

A mobile app at all costs ?

I boarded the smartphone train when the iPhone 4S and Galaxy S2 were the stars of the show.  I was a project manager at an agency that developed apps and the way forward for our clients was simple: “We have the budget: we want our mobile app!” It seemed like the obvious choice, in order to move with the times. A few years on, attitudes have changed. Instead of asking “When can we release our app?” the question is “Do I need an app?” Given the required investment (acquiring and keeping users, corrections, etc., on both iOS and Android), it is a question that deserves careful consideration 

 

81% of smartphone users only download one mobile app every week

Producing a mobile app is only the first step, which requires significant effort from an entire team. Now imagine that nobody downloads your app and it remains lost at the bottom of the store rankings, hidden from the eyes of potential users…  

No matter how good your app is, if nobody downloads it, it will not get a chance to prove itself. This is not a guide to the best marketing tools to increase app downloads; the aim is to explain why releasing an app is not an end in itself. The user-acquisition phase requires a financial investment, which can vary in size. One thing is for sure; you will need to attract future users to generate downloads. By downloading the app, they are showing willingness to enter a relationship, which will need to be maintained.  

I have already seen several projects that did not perform as well as expected. Spending several tens of thousands of euros on a mobile app and generating only a hundred or so downloads is not uncommon…  

 

On average, users only use 15 mobile apps over the course of a month.

Tomasz-zagorski-1401393-unsplash

Attracting new users is one thing; creating loyalty is another. Once they have installed your mobile app, you will need to maintain their interest. There is often a significant difference between the number of downloads and the number of actual users. 

I would put mobile apps in one of three categories, according to how frequently they are used: 

  • The first category is small and includes apps used several times a day. Unless your name is Facebook, WhatsApp or Instagram, it is very difficult to enter this closed circle.  
  • The second category includes apps with a relatively high usage frequency, generally used several times a week. In France, such apps include Leboncoin, Waze and L’Equipe. 
  • The third category includes apps that are less frequently used, usually several times a month. These include Oui.sncf, Blablacar and Airbnb in France. 

These examples will of course differ from user to user, but you get the picture.  

If entering one of these categories seems difficult, it is probably worth thinking twice before launching a mobile app project.  

I previously worked in a UX team for a client specialised in employee savings schemes, with the aim of generating more frequent use. We worked together to lay the foundations of the overhaul, with a view to adopting an effective support approach, based on individual profiles, and with content relevant to real-life situations. Maintaining the interest of your users is a challenge, which can be met if you build a real relationship.    

 

On average, smartphone users visit 51 mobile websites every month. 

It is often said that the user experience on mobile apps is better than on web apps. If you compare the same service on both types of app, you will see that this is usually the case! There is a difference in terms of performance and in terms of available functions.  

A mobile app can be used without an Internet connection, send push notifications, enable in-app purchases and more. However, such native functions may not be part of your specifications. Elsewhere, the journeys involved in your service may not require high performance levels. It is also important to bear in mind that there may well already be firmly established competitors in your market. In short, a web app can meet your requirements if it offers an attractive ROI.    

I once conducted a study for a tourist office that was considering the need to provide a mobile app. Based on the expectations of target users and the client (finding a route, restaurant, etc.), I advised against producing a mobile app, in particular given the fact that major players (such as Google Maps and TripAdvisor) already covered the needs expressed. I recommended capitalising on the website and social networks in order to win over and keep new users.  

 

Smartphones are unquestionably a key means of reaching your target audience. You therefore need to think mobile! However, having a mobile strategy does not necessarily mean providing a mobile app. It is necessary to take into account aspects related to acquiring and keeping users, user experience and, above all, ROI, in order to target the right area and opt for the most relevant distribution channel. Progressive Web Apps (PWAs) can offer an interesting alternative, but they need to continue to prove themselves.   

 

Sources: Médiamétrie, App Annie 

Venmo: the fintech that is making American banks sit up and take notice

Venmo: the champion of millennials 

The favourite money-sending app among millennials is as widely adopted as Google and Uber. When people eat out, they no longer say: ”Pay me back”; they say: “Venmo me”. This simple service used to transfer money between users is making American banks sit up and take notice. 

Venmo is a mobile payment service belonging to PayPal. It enables users to send money to other users of the service via a mobile app. The sender and recipient must live in the United States. In the first quarter of 2018, transactions between users of the fintech app represented a total amount of more than USD 12 bn. Over the course of 2017, nearly 37 billion US dollars were exchanged via Venmo.  

 

How does Venmo work?

Users create a profile on the mobile app or website using their bank account. They can find transaction recipients using their telephone number, username or email. 

Users have a Venmo balance for their transactions. They can link their bank account(s), debit card(s) or credit card(s) to their profile. Payment using a bank account or debit card is free, while credit card payments are subject to a 3% fee per transaction. In the United States, when consumers use a debit card, the sum is debited from their account in real time. If they use a credit card, the purchase is billed subsequently. Venmo therefore charges a transaction fee when a credit card is used, as the money is not immediately transferred. 

If the balance is insufficient to make a transaction, Venmo automatically withdraws the required amount from the registered bank account or card.  

 

Collaboration between Venmo and Mastercard 

Users can also apply for a Venmo card that operates through Mastercard.  The card offers ATM access and overdraft protection. It can be used anywhere that accepts Mastercard and allows withdrawals of up to $400 a day. There is, however, a $2.50 withdrawal fee at ATMs belonging to banks that are not partnered with Venmo. 

Also, the service includes a reload function that, when enabled, pulls funds from the user’s bank account in $10 increments if the Venmo balance is insufficient to cover a purchase. 

These features make the card similar, in many respects, to a conventional debit card. Users can track their expenditure directly on the app, which meets the preferences of consumers for digital banking tools, in particular millennials. In addition, the card can be personalised when it is acquired. 

 

Venmo card

The social aspect: a major part of the Venmo service 

When users make a transaction, the details (except for the amount) are shared on their feeds and with their network of friends on the app. When Venmo was launched, new users were encouraged to register via Facebook, which made it easier to search for contacts to send money to. At the same time, this enabled Venmo to market its service for free by appearing on users’ news feeds.  

Transaction notifications on the Venmo app are either publicly visible for all users of the app, limited to the user’s list of contacts or totally private.  All transactions are shared publicly by default. Confidentiality settings can be changed so that publications are shared only with the user’s contacts or made private.  

Each transaction is accompanied by a description in the form of text or an emoji. This description is required to complete a transaction, but Venmo lets customers choose its form. Globally, 30% of transactions include at least one emoji. Entire studies have been conducted on the use of emojis in Venmo.  

Users make payments in the same way they communicate with their friends, getting away from the seriousness of conventional banking apps. 

 

Venmo social

What lies ahead for Venmo? 

Venmo stands out for sharing information about payments with a list of user contacts, but it is not a social network in the same way as Facebook or Twitter.  

The company’s revenue comes from transactions made using credit cards and, eventually, it could monetize its social space. Last summer, Venmo signed partnerships with a dozen brands, which enable users to pay for purchases and orders directly with the app. These brands include the meal delivery service Munchery and the fast food chain White Castle. 

 

 

This is where the social network aspect can come into play. If customers pay for a burger at White Castle using Venmo, their friends can see where they have eaten, like on Foursquare or Facebook. Venmo could therefore further profit from this brand visibility potential. 

Above all, the company has access to a wealth of information on the purchasing behaviour of its customers. The payment app is based on banking infrastructure. If more and more brands accept payments via Venmo, banks will lose visibility of consumer spending information. They will only see requests from Venmo to credit or debit their accounts.  

Banks naturally fear Venmo’s popularity. They have responded by launching Zelle. 

Zelle is a similar payment solution, but has two different features: 

  • Since it was developed by banks, Zelle appears in the money transfer tab of users’ mobile banking apps. Transactions therefore appear in users’ bank accounts in a matter of minutes, whereas with Venmo, this currently takes several days.  
  • Zelle does not have Venmo’s social aspect.  

Zelle

Given Venmo’s incredible popularity, as well as the growth and level of engagement of its user community, it is difficult to see it being overshadowed by Zelle.  

This app’s unique social structure has made it an unprecedented cultural phenomenon in the area of payments. Patience will undoubtedly be needed for PayPal’s management to unlock its profit potential without harming the user experience. Venmo’s main attraction is its ease of use, its low usage cost and the social aspect, which makes it easy to pay friends without having to specify an account number. If PayPal wants to make this tool profitable, it will very likely need to increase revenue from stores. The risk is creating user discontent by filling their feeds with brand logos. 

Thanksgiving and Black Friday: A look back at the online shopping madness

Over the last few years, the big American family holiday has become the big shopping holiday. “Thanksgiving”, “Black Friday”, “Small Business Saturday” and “Cyber Monday” are the key words of the period starting on the 4th Thursday in November every year. 

A few US online shopping statistics 

The following figures are from Adobe Analytics, which measures the transactions of 80 of the 100 main US online retailers. 

Thanksgiving 

Online spending for Thanksgiving 2018 hit $3.7 billion. i.e. nearly 28% up on 2017 (18.3% between 2016 and 2017). This is the highest growth seen since 2014.  

Nouveau call-to-action

One reason for this is that many retailers have changed strategy, by charging the same prices on Thanksgiving Day and Black Friday for the first time. Average order value was up 8% on Thanksgiving Day 2017. 

Black Friday 

On Black Friday, online sales were up 23.6% on 2017, hitting $6.2 billion. More than $2 billion of this revenue came from m-commerce. Average order value was $146, up 8.5% on 2017. 

Cyber ​​Monday  

This day of online sales was the biggest of 2018 with revenue of $7.9 billion, up 19.3% on 2017. Mobile transactions made up more than half of visits (54.3%), up 55.6% year on year. 

Amazon issued a press release saying that it had sold more items on Cyber Monday than on any other day in its history, including Prime Day 2018. 

When consumers are spending 3

When consumers are spending 2

Who was the winner over this period? 

The in-store shopping frenzy during Black Friday seems to have subsided. People don’t queue outside stores early in the morning to be the first in any more. 

What’s more, many brick-and-mortar stores aren’t open on Thanksgiving or are only open certain hours. So customers make do with buying using their smartphones 

Nevertheless, online buying still hasn’t eliminated the traditional trip to the shopping centre… A lot of buyers go for click-and-collect on Black Friday. In addition, despite the unusually low temperatures seen across much of the US, footfall in stores during Thanksgiving and Black Friday fell by only 1% in 2018 according to ShopperTrack estimates. 

So online buying and click-and-collect remain a popular option, up 73% for Thanksgiving and Black Friday, according to Adobe. Target, Macy’s, Kohl’s and Walmart are just a few of the stores that offered this option. Their strategy? Encouraging additional in-store purchases when customers come and pick up their orders. 

According to the International Council of Shopping Centers, 64% of consumers using click-and-collect made an additional in-store purchase. Cyber Monday also saw peak click-and-collect rise by 65% between 2017 and 2018. What if the big winners of these online purchases were brick-and-mortar stores? 

How about in the future? 

Again, according to Adobe Analytics, $80.3 billion were spent online on 6 December 2018, which made it the biggest e-commerce period of all time in the US. 

Share of revenue by device

This spending was up 18.6% on 6 December 2017 and beat last year’s record by nearly $13 billion. 

Adobe estimated that for the whole 2018 holiday period (from 1st November to 31 December), there would be at least $124.1 billion in online retail sales in the US. These figures clearly show that stores are reaping the benefits of their investment in mobile sales and that the future of retail really does lie in an omnichannel approach. 

Pocket pharmacy: 3 up-and-coming concepts in the US

In 2016, the US pharmacy drug distribution market was worth more than $263 billion dollars, generated by 70,000 pharmacies. In 2020, the market should reach $300 billion. There are considerable opportunities in this sector which for many a year was the exclusive domain of physical distributors such as CVS, Duane Reade or Walmart. A number of start-ups are developing mobile solutions to totally transform the processes to exchange information with healthcare professionals and drug delivery processes. 

Home pharmacy with Capsule 

This is the opportunity seized by Capsule, a start-up specialised in e-business, which started out back in 2015 and currently operates its service in New York. It offers free, same-day, 2-hour prescription drug delivery. Its team of pharmacists can be contacted by SMS, e-mail or telephone. 

The start-up, which raised $20 million in 2017, solves several major issues for customers: waiting time and product unavailability (in 40% of cases, the desired product is not in stock when the customer visits). Customers also generally have no idea how much they will have to pay when they go to the checkout. Finally, Capsule aims to solve the biggest current issue, i.e. access to information on prescription drugs. 

Capsule

 

Capsule offers a mobile application that solves everyday issues. During their doctor’s appointment, the patient simply has to tell them that their pharmacist is Capsule. It will receive your prescription electronically. The user can then agree on free 2-hour delivery. Capsule has stocks in New York as well as a powerful internal predictive analysis tool to identify the drugs most in demand and accordingly avoid stock shortages. Plus the user knows in advance the amount to be paid based on Capsule’s catalogue and its knowledge of different US insurers. 

Finally, the start-up provides the service that sees it surfing the “third wave of e-commerce”: combining human and technology. Its communication service with its network of pharmacists actually offers the opportunity to ask any questions about a prescription remotely and totally discretely. 

 

Roman: guaranteed discretion thanks to home delivery 

In certain cases, male patients can be somewhat embarrassed to pick up their prescription from a pharmacy. The simplest example is, of course, drugs to treat male erectile dysfunction.  

The start-up Roman was set up based on this finding and is completely reinventing the prescription process for patients faced with these embarrassing situations. Patients fill in the necessary information on their medical history during the online medical examination proposed by Roman. This information is transmitted in absolute security to a doctor for analysis. If they are identified as candidates for treatment of erectile dysfunction, they can instantly obtain a prescription including major branded products or generic drugs. 

Roman

When the customer gets their prescription, Roman’s staff pack the pills by dose so the client takes the right quantity. An online examination on the Roman platform costs $15; margins are generated due to volume and the lack of retail pharmacy overheads. The speed and simplicity of the system could dissuade men from buying treatment online due to counterfeiting. 

Only 30% of men are treated for erectile dysfunction and 80% of the most bought brands online are counterfeits. This is why investors think Roman can considerably improve men’s healthcare experience. 

Roman currently employs 20 doctors and online admission forms eliminate a large amount of the time ordinarily spent by doctors on in-person examinations. These automation systems report issues and also fast-track obvious approvals or refusals so doctors can concentrate on more complex cases. 

Patients are generally prescribed four to ten doses per month, costing $2 to $65 per dose, depending on whether they buy branded or generic drugs. But to prevent abuse, Roman does not send more than 10 doses per month. 

And how about physical points of sale? 

“Bricks and mortar” pharmacies are trying to digitise their services to counter these market newcomers. WalMart and CVS are developing their mobile services to keep their connected customers. 

WalMart manages 4,500 pharmacies in the US. To make sure customers really pick up the drugs prescribed, the distributor has added a “pharmacy” option to its public mobile app allowing customers to share their prescriptions with the point of sale and renew them easily. However, this type of service risks isolating WalMart from customers who have no means of locomotion or live a long way from a point of sale 

What about CVS? The chain has distributed pharmaceutical, healthcare and cosmetic products on the US market for more than 50 years, and has always strived to stay at the cutting edge of technology. 

Offering customers a simple and practical method to renew their prescriptions by using the CVS mobile application is just one of many examples. Instead of having to keep paper prescriptions, customers can save all their prescriptions on their smartphone. They can then use the ScriptSync system to synchronise their renewals so they can all be picked up on the same day. This prevents patients from travelling several times to the point of sale or waiting in line for a long time. 

According to CVS, the switch to ScriptSync saw an increase in customer sign-up to the service of more than 6% 

The mobile app also allows access to a whole series of promotional offers and information on drugs and their side effects. 

Scriptsync

The development of these applications was made possible by Americans consenting to the creation of electrical medical records, particularly via the EPIC platform. 

Epic is the electronic health record software most used in the US. The medical data of more than 50% of US patients (i.e. more than 190 million individuals) is stored in Epic, allowing doctors to directly send electronic prescriptions to pharmacies, which makes the prescription renewal process smoother.

Start-ups shaking up the US healthcare sector

Most health insurance in the US is private. Since 1950, US household healthcare expenses have increased fivefold. Back in the 50s, food was one of Americans’ biggest items of expenditure (averaging 22% of total household expenditure). Healthcare trailed far behind (averaging 3% of expenditure). Today, healthcare accounts for 18% of US household expenditure. (Source: NHE Fact sheet). 

With more than $10,000 in expenditure per year and per person, this very juicy market inevitably attracts innovators and start-ups. In the healthcare sector, many start-ups are springing up and transforming Americans’ relationships with firms in this field. SQLI Lab identified 3 firms to follow. 

OSCAR, a health insurance pioneer 

Transforming US health insurance is no small task, but the investors behind Oscar Health, the start-up co-founded by Joshua Kushner (brother of Donald Trump’s advisor), believe the firm is set for massive growth. 

The start-up, founded in 2012 to make the most of opportunities in the health insurance field created by Obamacare, raised 165 million dollars in new funding and was valued at 3.2 billion dollars at the end of March 2018. 

Oscar Health believes it can compete with the biggest insurers by focusing on customer service and technology. The principle is simple: users pay a monthly contribution of between $480 and $880 (depending on their state of health and their needs) to access a wide range of services and benefits such as major rate discounts to see a list of doctors and an “Oscar” health centre where they can take cheaper medical tests, attend yoga lessons or see a doctor without an appointment. 

Using the mobile application, there is also a service allowing customers to contact doctors 24/7. Just by clicking, users are put in touch with a healthcare professional by telephone, secure messaging or video chat. The doctor then sends a prescription to a pharmacy, saving the patient the cost of a traditional non-Oscar Health doctor’s appointment.  

Oscar - application

Another of Oscar Health’s advantages is the feature that motivates users to stay healthy by doing daily exercise. On signing up to the service, they get a pedometer calculating the distance they walk every day. If they do more than 10,000 steps in a day, they get a $1 Amazon gift voucher. The more active they are, the lower the risk of them needing to see a doctor, and spending money. 

Oscar - podometre

Finally, the application lets them make appointments with Oscar Health doctors or healthcare partners. 

The business model is based on the simplicity and practicality of its overall customer experience. The start-up is growing due to it offering more services than its competitors, having fully understood the impact of its mobile application on the healthcare sector. 

Parsley Health: a subscription system to see your doctor 

The WeWork co-working space in New York houses all sorts of start-ups. Since 2016, it has also featured a medical start-up. 

Parsley Health, which was created in 2016 and now has centres in Los Angeles, San Francisco and New York, is the only medical centre at WeWork. The practice focuses on functional medicine, which attempts to adopt a more global approach to treat the underlying cause of a particular disease. The functional medicine approach is about more than just giving patients more time with their doctor. The start-up also includes well-being and other elements that stimulate patient participation. 

How does it work? 

For $150 a month, Parsley Health members get a 75-minute appointment with a doctor plus follow-up visits, and nutritional advice sessions, as well as more in-depth genetic and microbiome testing. 

The monthly subscription fee is higher than with most direct primary healthcare centres, which generally charge between $50 and $70, but it’s still cheaper than concierge services, which often cost several thousand dollars a month. 

Parsley health

Subscription is annual and the subscriber has the option of paying in advance or monthly. There is also the option of subscribing for a three-month trial period for $500. These costs do not include prescriptions, supplements or lab work. 

 Well-being is an important part of Parsley Health’s solution, a trend that it highlights on its Instagram account. With more than 24,000 subscribers, the account shares training programmes, healthy meals and motivational quotes, which is unusual for a medical centre. 

10 million dollars of financing is to be invested to develop the analysis engine to process patient data collected by Parsley Health, because the real value of its solution also lies in this data. The funding is also going to be used to finance the construction of its own clinics off WeWork premises. 

For women’s specific needs: Maven Clinic 

 Maven Clinic is a telemedicine start-up specialised in women’s healthcare, so they can see a doctor without leaving home. 

The company has already raised more than 15 million dollars. Launched in April 2015, it already has 25 employees and nearly 100,000 users, including both women and employers. Businesses offer Maven Clinic as a benefit to their female employees. As with any other telemedicine network, users can make a video appointment directly via the website or the mobile application (a 10-minute doctor’s appointment costs $35).  

The solution’s USP is the experts available to users, such as breast-feeding specialists (an appointment costs $25 for 20 minutes) and midwives ($18 for 10 minutes). Employees have access to healthcare professionals and on-demand services, such as the option of sending questions to experts by text message 

For example, Snap Inc., the parent company of the messaging application Snapchat, is one of the internationally best-known businesses that offers Maven’s Maternity solution to its employees.

Maven clinic

And what about employers? Businesses particularly join forces with Maven Clinic to provide their pregnant employees with a 15-month programme called Maven Maternity. The aim of the programme is to help women enjoy healthier pregnancies and return to work after giving birth under the best possible conditions.  

The solution is financially interesting for US employers as their maternity expenses are particularly high. Furthermore, in the United States, one in two women does not return to work after giving birth, which costs companies a lot. Maternity is often one of the main expenses for self-insured employers. A report by Truven revealed that the average total amount invoiced for pregnancies and neonatal care was $30,000 on average for a natural birth and $50,000 for a Caesarean, and that commercial insurers cover on average $18,329 and $27,866 respectively.  

Katherine Ryder, the founder of Maven Clinic, is one of the women attempting to disrupt the healthcare field, which is mainly dominated by men. According to a Forbes report dating from 2012, only 4% of healthcare sector company chairs and CEOs are women, despite them accounting for 78% of employees in the sector. Women generally have higher healthcare costs than men, due to their longer life expectancy and pregnancy costs, which are very high in the United States. So Maven Clinic represents a real opportunity to transform the healthcare sector by offering women a service developed by women and fully focused on their needs. 

So there you have it: three start-ups looking to revolutionise a stagnant sector in the United States, which will undoubtedly force historical market leaders to go back to the drawing board with their solutions. Technology and innovative services have boosted a sector dominated by very large firms, which is still one of the main costs centres for both families and businesses in North America. 

Article by SQLI Lab New-York