The world’s largest social network is barreling into e-commerce through an expanded relationship with e-commerce platform Shopify. It will allow Facebook users to buy products directly from Shopify merchants on their Facebook pages, the companies announced this week.
Stores with Shopify accounts can create a new Shop section on their Facebook pages, which can handle the transaction within Facebook or refer them to the store’s Web page outside Facebook, with the logistics handled by Shopify.
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The mobile-compatible service is available to roughly 175,000 small businesses that have signed up with Shopify and presumably, the Facebook partnership will help recruit even more.
Facebook first revealed it was experimenting with Shops in Facebook pages, enabling brands to transact e-commerce directly from the Facebook platform, back in July.
The new Shop section builds on Facebook’s previous introduction of a “buy” button by giving products their own section on the vendor’s main page, adding product discovery for a more complete shopping experience.
Facebook is also testing a new mobile ad format that allows users to interact with several layers of advertiser content without leaving Facebook’s app; demo versions of the new ad showed users engaging with in-depth product profiles.
Of course, Facebook has plenty of competition in the e-commerce arena.
In July, Google began testing “buy” buttons in its mobile search results. After a limited test period beginning last September, Twitter is also rolling out its new “Buy” buttons more widely through a partnership with Shopify, as well as other e-commerce platforms. Finally, Pinterest has partnered with Shopify to create shoppable Pins.
While social-media companies have big ambitions in e-commerce, so far their share of the total business remains small, according to a study by Business Insider’s BI Intelligence. Citing data from Moovweb, BI Intelligence found that Facebook accounted for 1.32% of all referrals to mobile e-commerce sites, representing half of all traffic from social media sites and 64% of total revenue from social referrals.
By contrast, Pinterest generated just 0.16% of all referrals to mobile commerce sites, and Twitter contributed a paltry 0.04%. Pinterest accounted for an outsized share of revenue from social referrals, at 16%.
COMMENTARY: Shopify Inc. has also partnered with AMAZON to replace the ecommerce giant's Amazon Webstore software.
Shopify Inc shares soared after the Canadian software maker teamed up with online retailing giant Amazon.com Inc. to help merchants create their own online stores.
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The shares rose 23 percent to $35.55 at the close in New York on Thursday. The stock has about doubled since going public in May.
Amazon advised the users of its own Amazon Webstore software to move their online stores to Shopify, before it shuts down the Webstore service. Shopify merchants will be able to use Amazon’s payments system and warehouses, and the companies are working to let Shopify merchants list their products on Amazon.com, according to astatement. Terms of the deal weren’t disclosed.
For Shopify, the deal advances plans to let its more than 175,000 merchant customers sell goods on as many platforms as possible. The company already has similar arrangements with Pinterest Inc., Facebook Inc. and Twitter Inc.
Harley Finkelstein, chief platform officer for Ottawa-based Shopify, said in a phone interview.
“Shopify really wants to be the platform that allows merchants to sell wherever they have customers.”
Amazon started Webstore in 2006 to enable small-business owners to set up their own Internet stores. Since then, however, startups like Shopify and Austin-based Bigcommerce Inc. have come to dominate the market.
It sure appears that Shopify shares are rebounding considerably with the announcement that they are partnering with both Facebook and Amazon.
Courtesy of an article dated September 18, 2015 appearing in Social Media & Marketing Daily's The Social Grafand an article dated September 17, 2015 appearing in Bloomberg
Commercial drones will reach $4.8B by 2021. Agricultural robots will reach $16.8B by 2021 and $73.9B by 2024. And demand for healthcare robotics to show "tremendous growth" in the next 5 years.
According to a recent Wintergreen Research report, the worldwide industrial robot market will grow at 11.5% annually and reach $48.9B by 2021. But another area of robotics is growing at a much faster rate: service robots, i.e., non-manufacturing robots for professional use, for defense, in the field, for logistics, medical, personal, entertainment and household use, are becomming a booming segment of the global robotics industry with a 20% or higher year-over-year growth rate.
Global Service Robotics Market - 2012 Through 2020 - Grand View Research (Click Image To Enlarge)
An Allied Market Research report covering the combined robot technology market (service and industrial) forecasts the combined market to reach $82.7B by 2020, a lower figure that Wintergreen and Tractica but still indicative of exponential growth.
Global Technology Robotics Market - 2013 through 2020 - Allied Market Research (Click Image To Enlarge)
Demand for robotics in healthcare, especially surgical procedures, is increasing. Safety, better clinical outcomes, and reduced labor costs are leading to an exponential growth in demand not only for robotic-assisted surgery, but in many other segments of healthcare such as sanitation, sterilization, lab processing and materials handling. Limited to economies that are heavily invested in medical care, growth is seen to be exponential to 2020 and steady thereafter. This report is projecting "tremendous growth."
U.S. Medical Robotic Systems Market by Product (US$) - 2012 Through 20122 - Grand View Research (Click Image To Enlarge)
According to market research firm Grand View Research, the medical robotic systems market was valued at $1,781 million in 2013 and is expected to reach $3,764 million by 2018, growing at a CAGR of 16.1% from 2013 to 2018.
Demand for the robots involved in various agricultural processes like harvesting, pruning, weeding, pick-and-place, sorting, seeding, spraying, and materials handling has increased significantly. This demand is being driven by the global trends of population growth, increasing strain on the food supply, availability of farm workers, the challenges and complexities of farm labor, the rising overall cost of farm workers, shrinking farmlands, climate change, the growth of indoor farming, and the automation of the agriculture industry.
Worldwide Agricultural Robotics Market (Millions USD) - 2015 Through 2024 - Tractica (Click Image To Enlarge)
Tractica anticipates that the overall agricultural robot market will reach $3 billion by the end of 2015 and anticipates a healthy growth rate to reach $16.8 billion by the end of 2020. Tractica also forecasts that the market will continue its momentum and reach $73.9 billion by 2024.
Next generation commercial drones will replace existing commercial airfreight delivery systems. Other uses include 3D mapping, commercial pipeline observation, border patrol, package delivery, photography, and agriculture. Drones markets offer more economical visualization and navigation. Visualization includes mapping, inspection, surveillance, and package delivery. Unmanned aircraft with cameras are able to do things that cannot be done in any other way which bodes well for sales. Unmanned aerial systems were $609 million in 2014 and are forecast to reach $4.8 billion dollars, worldwide, by 2021.
COMMENTARY: Growth prospects for the industrial robotics industry depend on market opportunity metrics relative to the different industries. Automotive investment levels globally have remained at historical highs. Increasing usage of robotic automation by non-automotive companies is driving the usage of industrial robot automation to a new level.
Increased adoption of industrial robots coupled with a huge push from the industry for collaborative robots, opens opportunities for robotic solutions. In the immediate future industrial robots strengthen the position of every industry, promising more manufacturing efficiency at every level.
The industrial robots have not yet achieved economies of scale, illustrating the market opportunity that will come quickly after economies of scale are achieved. New technology and improved controllers open the path to economies of scale for industrial robots. As this occurs a new industrial revolution will occur. There are massive numbers of products offered by each major industrial robot vendor. Product consolidation is occurring in the market. Customization of a few products to increase product volume hold the promise of changing the market so it functions at a level that means devices that basically have eluded economies of scale in the past, will now be able to be mass produced.
Robots bring a new industrial revolution. Adoption of industrial robots in non-automotive applications is occurring in the electronics, chemicals, pharmaceutical, and food & beverages industries. Industrial robots have opened up new market opportunities. High installation costs have been largely overcome, making industries in developing markets available to vendors. The adoption of robots in underdeveloped countries occurs because of the unavailability of skilled labor.
industrial robots are set to bring a new industrial revolution more important than anything seen before. Industrial robots perform repetitive tasks efficiently, they do not eat, they do not make mistakes, they do not get tired, they do what they are told.
Manufacturing plants are frequently long aisles of nothing but robots, no human in sight. Beyond industrial robots that repeat actions, more intelligent robots loaded with sensors, cameras, and intelligent software are able to automate process using controllers to manage action. Use of microprocessors provides a measure of intelligent control over the activity of the robot based on input from the sensors and the cameras.
Think about the current industrial revolution. Before the invention of the automobile, buggy whip manufacturing was a thriving business. No longer. In the same vein, industrial robots hold the promise of eliminating many of the existing jobs in manufacturing. Innovation, centers of excellence. New enterprises promise to replace many of the existing jobs. People need to be flexible, to develop new industries.
Increased adoption of industrial robots coupled with a huge push from the industry for collaborative robots, opens opportunities for robotic solutions. In the immediate future industrial robots strengthen the position of every industry, promising more manufacturing efficiency at every level.
The issue becomes creating jobs and building economies worldwide so people can afford to support a family and a lifestyle and buy the goods that are manufactured so efficiently. This new job creation market thrust will come from industry and government investment in innovation and centers of excellence.
Industrial robots promise to replace 70 to 90% of existing manufacturing jobs. People will learn new ways to achieve an economy, to achieve economic development. An economy needs to adjust, to be flexible if you gave pink slips to more than half the labor force.
According to Susan Eustis, principal author of the market research study, “Industrial robot vendors have discovered that with intelligent use of new technology, they can dominate an aspect of some manufacturing automated process for a particular sector. As the early adopters in the auto industry have proven, robots do the work cheaper and better than humans once a repetitive process has been evolved. Industrial robots make the difference between winning competitive advantage or losing it. Solutions offered by vendors are creating market growth opportunities .”
Industrial robots can perform tasks faster and more accurately than humans. Increases in productivity are provided by industrial robots. Robots help reduce overall manufacturing costs in developing and developed countries. Markets are expected to rise 11.5% annually through 2021. Industrial robot markets at $22 billion in 2014 are anticipated to reach $48.9 billion by 2021.
Lululemon, the maker of expensive yoga apparel, has just given their stretch pant department a complete overhaul. In addition to offering four brand-new designs, the Canadian retailer is now categorizing their leggings by "engineering sensation"—meaning that you can now shop the pants based on their feel as well as their style.
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These "sensations" (yep! that's what they're going with) exist on a spectrum ranging from Relaxed ("nothing in your way") to Tight ("locked and loaded") with four others of varying tightness in between. They've adapted their current selection of pants in accordance with these new categories and also added four new styles. These include the Align pant ($98) in the Naked sensation and the All The Right Placespant ($128) in Held-In.
This was all taken into consideration during the redesign, Lululemon’s design director Antonia Iamartino tells Refinery29. She says.
"A lot of the things that we had experienced with that in the past never should’ve happened, and we really learned a lot from that [translucent-pants recall] experience. We have new processes, new ways to monitor our fabrics, and new checks-and-balances to just really monitor and keep our eye on that. All of our new pants went through those same procedures and steps to have that not be an experience."
That will should comforting news for Luluheads. Finding out you're bearing it all during downward dog is never a pleasant sensation.
COMMENTARY: I last covered Lululemon in a blog post dated March 21, 2013, when the company announced that it was recalling $20 million of 'see-through' yoga pants. In spite of that scandal, Lululemon customers remain stubbornly loyal to the company.
Lululemon's shares crashed,dropped nearly 10 points on September 9 after it reported that profits fell from the year earlier.
Lululemon's net income fell to $47.7 million in the Q2 2015 ended Aug. 2 from $48.8 million a year earlier. Earnings per share, however, rose to 34 cents from 33 cents as there were fewer shares outstanding. Revenue grew about 16% to $453 million.
Analysts on average had expected earnings of 33 cents per share on revenue of $445.8 million.
But the company's possible fix for this problem might be helping competitors.
The price hikes come at a time when Lululemon is facing more competition than ever, Neil Saunders, managing director of industry research firm Conlumino told Business Insider.
Competitors like Gap's Athleta have entered the space in a big way (Click Image To Enlarge)
With emerging rivals like rapidly expanding Under Armour, Gap's Athleta, and shoe brand New Balance entering the women's athletic sector, Lululemon will have to stay on its toes to attract customers.
This means offering a value that is better than competitors.
Saunders explained to Business Insider.
"Five or so years ago, this would not have been so much of a threat. Now, with much greater levels of competition, this is a far riskier move. Higher prices run the risk of alienating some customers who can easily defect to other brands."
Lululemon's pants were already more expensive than many competitors. Now, most of its pants range from $88-$98, compared with $31-$89 for Athleta pants.
Courtesy of an article dated September 3, 2015 appearing in Fast Company Design and an article dated September 12, 2015 appearing in Business Insider and an article dated September 10, 2015 appearing in the Toronto Sun
When a California judge ruled earlier this month that a lawsuit brought by Uber drivers could go forward as class-action, it re-opened the biggest question about the hottest company in Unicornland: Is its business model legal? And if not, can Uber survive?
The ruling has also reignited questions about whether the sharing economy, of which Uber is by far the largest participant and its poster boy, is fair to workers. Last week, workers’ advocacy group the National Employment Law Project released a report that equated Uber and other sharing economy companies to “turn of the century sweatshops”because of a lack of employee benefits and protections.
Investors think that Uber will not just survive, but thrive. They have driven Uber’s valuation up to $51 billion, much higher than what Facebook was worth when it was a six-year-old private company. But the recent lawsuits against Uber raise questions about what seemed like its inevitable success.
By now, many people know the debate. Uber currently classifies its drivers as independent contractors, or “1099” workers, rather than (W-2) employees. Uber says its drivers prefer the flexibility of being independent contractors. But that classification also allows Uber to avoid the taxes and insurance and other administrative expenses that companies usually have to pay to have a workforce.
How much would it cost Uber if it was forced to reclassify its drivers as employees, rather than independent contractors? By my calculations, with help from some experts, I crunched the numbers and got an answer, and it’s a huge amount: $4.1 billion.
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Uber declined to comment on Fortune's calculations. A spokesperson for the company said it’s difficult to know what additional costs Uber would have to pay if it were required to turn all of its drivers into employees because doing so would force the company to completely change its business model, which is exactly the point.
The California lawsuit was brought by four former drivers who think they deserve the status of employees and reimbursement of their driving expenses. But by certifying it as a class action, the judge said the eventual ruling in the case will apply to all of Uber’s California drivers, excluding only those who had specifically waved their right to participate in the current suit. Uber is fighting the lawsuit, as it has other efforts to force the company to put its drivers on its books. On Tuesday, Uber filed an appeal in the California case, asking the court to reverse the class action status.
Uber critics say the real reason Uber has opposed the shift is that it can’t afford it. Miriam Cherry, a St. Louis University law professor who has long followed the sharing economy, says Uber’s current business model is one part technology company and one part labor law workaround. The question is which part is bigger.
To figure that out, Fortune spent the past two weeks digging into Uber’s finances, employment law, and payroll realities. It enlisted the help of experts from two companies that specialize in payroll costs, Paychex and StaffOne. It also talked to SherpaShare, a third party application that helps ride-share drivers track their work, for data on the size and composition of Uber’s workforce, which SherpaShare estimates at around 200,000 drivers. (Uber says it has 160,000 drivers, but those numbers were from the beginning of this year.)
To get the $4.1 billion figure, Fortune started at the top. Uber’s recently leaked numbers—the company is private, so it doesn’t disclose its financials, but some have emerged—put the company’s expected sales this year at about $10 billion. Uber splits what passengers pay 80-20. Uber takes a 20% cut for allowing drivers to use its platform. The rest, $8 billion, is what the drivers get, which would be their salaries if they were employees, though Uber currently does not include that figure in its finances.
Two caveats: Uber has licensing deals for its technology with other companies, and those deals may be contributing to its $2 billion in revenue. So Fortune may be overstating driver salaries by a bit—but not by much. And, just to clarify, Fortune's calculations are based on what it would hypothetically cost Uber if it had to hire all of its drivers as employees. But even a legal loss in California won’t automatically mean it will have to change the status of all of its drivers, though it will add to the pressure on the company to do so.
Let’s move on. As 1099 workers, Uber drivers are responsible for paying all of their payroll taxes. If they were employees, Uber would have to split those taxes with its employees. Uber’s share: 6.2% of what it pays its drivers for Social Security and another 1.45% for Medicare taxes. And it has to pay those taxes for both its part-time and full-time workers. Uber's share of Social Security and Medicare taxes, one of its largest new costs, would total $612 million a year.
The next biggest cost: workers’ compensation insurance. Workers’ comp is regulated by each state, and not all states require it, though most states where Uber is active do. The one exception is Texas—but even there, a worker can demand that his or her employer pay for any work-related injuries, so Uber would be smart to have insurance. Rates vary by state and occupation. Those tend to be relatively high for taxi drivers, and particularly high in California, where about 20% of Uber’s drivers are based, according to estimates by SherpaShare. Total workers' compensation insurance bill: $512 million a year.
Next up, medical insurance. Under Obamacare, employers don’t have to provide medical insurance, but starting next year that decision comes with a $2,000 penalty per employee per year. Paychex says that on average employers spend $5,000 for single employees and $12,000 for family coverage medical insurance. But employers can provide basic medical insurance (and not pay a penalty) for about $3,000 per employee. According to a filing with the federal government, Uber spent $1,275,066 on its healthcare plan, which included prescription drug benefits, for the workers (non-drivers) that it does classify as employees from July 2013 through June 2014. The filing said the plan covered 442 employees, which means it cost $2,885 per employee.
The good news for Uber is that companies only have to provide healthcare to full-time employees. Uber says that many of its drivers log less than 10 hours a week, though it’s not clear if Uber is counting just the hours when the drivers have passengers, or total drive time. SherpaShare estimates only about 20% of Uber’s drivers work more than 40 hours a week. (Some might even qualify for overtime, but Fortune hasn't factored that cost in.) Nonetheless, providing medical insurance for its full-time drivers at the same rate that it paid in 2014 for other employees would cost Uber $115 million a year.
NerdWallet, which published an earlier story looking at what Uber drivers stand to gain from becoming employees, said that the company would likely have to provide drivers with nine vacation days, based on what it currently offers its employees. Paychex says providing vacation days and sick leave typically costs employers 6.9% of a workers salary. For Uber, again only for its full-time drivers, providing vacation days and sick leave would be another $110 million a year.
Unemployment insurance varies by state. The average of what employers pay in the four states with the most Uber drivers, according to SherpaShare, was $363 per employee. Unemployment insurance would cost Uber an additional $72 million for Uber a year, plus just over $8 million a year for federal unemployment.
Let's recap Uber's exposure to additional costs as a result of the California ruling classifying drivers as employees:
Additional Social Security and Medicare payroll taxes per year: $612 million
Additional workers' compensation insurance per year: $512 million
Additional medical insurance for full-time drivers per year: $115 million
Additional vacation days and paid sick leave for full-time drivers per year: $110 million
Additional unemployment insurance (California) per year: $72 million
Additional federal unemployment insurance (Federal) per year: $8 million
If you tally all of the above, the total so far comes to: $1.429 billion.
OK, we’re nearly there.
Companies don’t have to provide a retirement plan. But if they do, they have to provide it for all of their full-time employees. According to Glassdoor, Uber has a 401(k) plan for its current employees, and offers a 3% match, meaning it will match its employees’ 401(k) contributions up to 3% of their salary. If all of Uber’s full-time drivers-turned-employees contributed at least that much, that would be another $72 million in 401(k) plan costs for Uber.
The last one is a big one: millage reimbursement. Not all states require companies to reimburse their employees for using their personal car for business. But California does. And since that is where Uber is based, there is a good chance that it will have to reimburse all of its employees, not just the ones based in California. Calculating this figure is tricky. Based on survey data from SherpaShare, the average Uber driver, full-time and part-time, puts in nearly 24 hours a week for the ride hailing company. The average speed in cities around the country where Uber is most used appears to be around 20 miles per hour. That means the average Uber driver covers about 475 miles a week. The IRS’s mileage reimbursement rate is 57.5 cents per mile. If Uber were to reimburse its workers at that rate, which it has been ordered to do in some cases, that would be an average of $273.13 a week, or just over $13,000 a year per driver. The total mileage reimbursement bill for Uber: $2.6 billion a year.
Add all of those costs up and you get to just over $4.1 billion. Sound too high? Fortune thought so, too. So it had StaffOne’s Donna Meek, a payroll and HR expert, run her own independent calculation. Meek estimated the costs from the bottom up, looking at what it would cost Uber per worker, rather getting the total figures for each cost as Fortune did. Meek’s conclusion: nearly $1.5 billion before the cost of reimbursing drivers for their miles. So pretty close to what Fortune estimated. Fortune also calculated how much more Uber's operating costs would increase if all its drivers were classified as employees.
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Could Uber afford an additional $4.1 billion in costs a year? Depends on how you measure that. Based on profits, no. Uber, by its own admission, is not profitable. So it really can’t afford its current expenses, let alone another $4 billion. But as Uber has told others, startups aren’t run on profits—they’re run on investors’ money. And they can afford their losses as along as those people are willing to keep funding them.
How long will investors be willing to fund Uber? According to leaked financial statements obtained by Gawker, Uber was on track to lose about $300 million a year, though those losses appeared to be growing. It had about $1.2 billion of cash at the end of June 2014. And it just raised an additional $1 billion this summer. That means Uber will likely have about $1.75 billion in cash in the bank at the end of this year.
Sounds like a lot. But if Uber had to swallow an additional $4 billion in costs, they would need to raise more money by the middle of next year, possibly sooner, or face extinction. And that doesn’t include any money it might have to pay out in damages, or past compensation. Uber could force its workers to take a pay cut. Many of them will be getting new benefits. And Uber would be covering some expenses, like gas and payroll taxes, that its workers are covering now.
But James Kimbrough, who drives about 20 hours a week in Austin as a second job, says that Uber has already cut what its drivers make by nearly a half in the past year in order to attract more customers. Any further reduction in rates—”even just a few more cents,” says Kimbrough—and driving for Uber is probably no longer worth it for him. He believes other drivers would feel the same way. So Uber doesn’t have a lot of wiggle room with the drivers.
At a $51 billion valuation, investors obviously believe that, given enough time, Uber is going to make money, and likely a lot of it. The question is how much longer will that take if the company faces an additional $4 billion in expenses—and are investors prepared to stick around for that long. Uber’s cash meter is running, and it’s running fast.
COMMENTARY: If you missed it, the California Labor Commission ruled on Wednesday, June 17, 2015 that an Uber driver who brought suit was an employee, not an independent contractor. The decision was made after a San Francisco driver, Barbara Ann Berwick, filed a claim against Uber. The commission sided with her largely because it deemed Uber was "involved in every aspect of the operation."
Four more drivers subsequently sued Uber citing the case of Uber driver Barbara Ann Berwick, that won her case with the CLC. A judge finally ruled that Uber drivers could file a class action suit, paving the way for all Uber drivers to file suit as a group. Uber is appealing the ruling. This case is so important to Uber, that losing at the appellate courts, and if necessary, in the US Supreme Court (if necessary), could become very costly for Uber.
I have actually been involved in a case similar to Uber where the State of California ruled against a former employer mine. California applies the economic realities test or amount of control the employer exerts over employees in the performance of their work. In applying the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:
Whether the person performing services is engaged in an occupation or business distinct from that of the principal.
Whether or not the work is a part of the regular business of the principal or alleged employer;
Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
Whether the service rendered requires a special skill;
The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
The length of time for which the services are to be performed;
The degree of permanence of the working relationship;
The method of payment, whether by time or by the job; and
Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary.(Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288).
In conclusion, if you utilize the services of independent contractors in your workplace, are providing workspace facilities (offices, desks, equipment, supplies, etc.), set specific work hours and work schedules, set specific guidelines and instructions for the performance of the work to be completed, provide regular supervision and guidance, and control as to where, when and how the work is to be performed, your indepndent contractors are probably employees. Wow, this describes most of Silicon Valley employers, particularly startups, who as a general rule, employ many independent contractors, in order to avoid paying payroll taxes and providing employee benefits.
The panic at Uber HQ after the latest California decision ruling their drivers as employees is probably something like this:
Twitter’s effort to find a new CEO is the latest struggle in a long list of challenges that the micro-blogging site has faced over the years. When the company launched its IPO in late 2013, Wall Street held out expectations that Twitter would one day rival social networking behemoth Facebook, which went public just 18 months earlier. But Twitter has stumbled and has yet to come close to rivaling Facebook on a number of key metrics and, more importantly, it appears increasingly unlikely that it ever will.
Twitter’s current travails are an interesting saga for a company that once was an Internet highflier and whose service is used by many notables including heads of state. But after a promising start, shares have tumbled below its IPO price of $26 per share as investors turned sour on the company. It did not help that some key executives have left, most recently its senior vice president of strategic investments, Mike Gupta, who also ran Twitter Ventures. Gupta follows other notable exits, including Rishi Garg, who led the company’s mergers and acquisitions team, as well as team colleague Jessica Verrilli, who is now at Google. The firm’s CEO, Dick Costolo, stepped down on July 1.
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The pressure Twitter is facing largely revolves around its closely watched monthly average user (MAUs) figures, which is a key metric because Wall Street considers it a harbinger of the firm’s future financial outlook. Since the first quarter of 2013, Twitter has increased its user base by only 19.2% to 304 million in the second quarter of 2015, according to the company’s earnings report. Facebook, however, has soared 35.5% to 1.49 billion monthly users during the same period, according to its financial results. Its growth is reflected in the stock price: Facebook shares have ascended 132% since its IPO.
Indeed, Twitter’s challenges include monthly average user growth and user engagement figures that look anemic compared to Facebook, as well as an inconsistent increase in advertising revenue. Wharton marketing professor Jonah Berger says part of Twitter’s problem has been trying to uncover a strong revenue stream.
“In addition to ads, Facebook has much more data on its users’ preferences, which allows the company to target more effectively.”
Difficulty in using the service, as well as mediocre adoption by the mass market, are some reasons why Twitter’s user growth has not taken off, said Anthony Noto, Twitter’s chief financial officer, during the company’s second quarter earnings conference call. He noted that Twitter does not expect to post meaningful user growth until it can offer more mass market appeal — something that will “take a considerable period of time,” according to a report by Evercore ISI analyst Ken Sena.
A reduction in user engagement on the site is also adding to Twitter’s challenges. During the second quarter, the ratio of engaged daily Twitter users to its monthly active users was 44%, compared to the preferred higher ratio of 48% last year, according to Sena’s report. Twitter’s Noto believes the micro-blogging site stumbled in the way it communicates to users regarding the value of using the service, according to a recent Reuters story.
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Although Twitter’s second-quarter advertising revenue reportedly beat Wall Street’s expectations when it soared 61% year-over-year to $502 million, investors were concerned that the company’s user growth may have reached its peak, which in turn could affect its ability to push advertising revenue higher, according to the Motley Fool.
In May, Facebook debuted its Instant Articles feature — a rich mobile news service that is expected to compete with Twitter’s Amplify. Sena noted that Facebook was responsible for 25% of referral traffic from more than 200,000 publications at the end of 2014, compared to Twitter’s 1%.
Apples to Oranges?
While it is clear Twitter’s monthly average user growth falls far short of rivaling Facebook’s performance, some question whether it was ever a fair comparison to begin with. For starters, Twitter’s product appeals to a more professional audience, whereas Facebook’s product has more widespread appeal, says Kartik Hosanagar, a Wharton professor of operations, information and decisions.
Twitter is primarily limited to news-related tweets and professional exchanges, whereas Facebook’s offering is broader and allows users to organize their photos and memories, Hosanagar says. As a result, he adds, the monthly average user growth numbers reflect the companies’ product positioning to a large extent. Hosanager says.
“Given all that, there is no surprise in seeing Facebook’s superior numbers, and I would not necessarily blame Twitter’s management practices entirely. We just have to acknowledge that it’s not an apples-to-apples comparison.”
Dan Niles, a founder of asset management firm AlphaOne Capital Partners, points out that Facebook is primarily about sharing what users’ friends and family are up to, so it is a form of two-way interaction. Twitter, however, is more like another news source, so it involves primarily the passive consumption of content — a one-way interaction. He says.
“There are a lot of other news sources providing content in the world. There are not a lot of competing social networks like Facebook.”
“Twitter’s expectations are out of whack with reality. It struggles with thinking it has to be as good as Facebook and Instagram, but they are not the same product.”
Consequently, some investors had high expectations that Twitter would become bigger than Facebook, which was a mistake to begin with because the two companies serve different purposes, he says.
Turnaround Tweaks
Innovation, the lifeblood of technology companies, could provide a path to redemption for Twitter as it hunts for its new CEO. Twitter co-founder and director Evan Williams told Fortune recently that the company’s next CEO should have the capability to form a definitive strategic vision for the company. Twitter’s engineers reportedly complained that former CEO Costolo was hardly a visionary.
Hosanager says.
“I agree with Evan Williams’s view that [Twitter] will need a strategic rethinking. That might involve repositioning Twitter as a crowd-sourced media company” — a risky move — or looking at complementary assets that will allow Twitter to better monetize its user base. I’d personally look into the latter. Specifically, what acquisitions will allow Twitter to learn more about its users and improve its monetization efforts?”
Facebook, for example, has a lot more data about its users than Twitter, which means it has superior monetization potential per user. Hosanager says.
“Twitter’s acquisition strategy has been more typical and lacking the aggressiveness or long-term view that Facebook has had. Facebook has, in general, made several brilliant acquisi-tions. Instagram, Oculus and WhatsApp are excellent examples. Even before one could say that these have potential to be Facebook killers, they were already part of Facebook. … Facebook has been aggressive and willing to pay huge sums to acquire these companies that could have been threats to Facebook in the long-term.”
Evercore’s Sena, meanwhile, noted that while Twitter’s platform does not generate as much revenue as one might imagine based on its scope of influence, the company is looking to address the Facebook challenge. That includes launching growth-building initiatives such as a new homepage to serve people who do not log in and Instant Timeline, which makes it easier to find people to follow. Twitter also has video apps such as Vine and Periscope. But the video effort still pales in comparison to Facebook’s four billion video streams a day, which is up four-fold from a year ago, the analyst wrote.
At least, Vine provides two-way interaction, similar to Facebook’s photo sharing site Instagram. Vine also has a following among millennials and teens, a target market with advertisers. Niles says.
“Vine is something Twitter should focus on. Facebook is also focusing on videos, too, and video advertising.”
But even with Vine, Twitter is unlikely to beat Facebook. Niles says.
“Vine is more of a product and not a platform. Facebook is a great product, platform and company.”
A silver lining, though, is Twitter’s Google partnership, which is poised to help the micro-blogging site build up its user growth as tweets appear alongside search results, he adds.
But Niles raises the question of whether Twitter needs to be fixed at all. After all, the company posted year-over-year revenue growth of 61% to $502 million in the second quarter. Niles says, pointing out that Facebook grew 39% and the PC market’s revenues are shrinking in comparison.
“That’s amazing growth. Twitter has a great product, but people confuse a great product with a great stock. If the valuation and expectations are too high, much like with Cisco’s stock back in 2000, it does not matter. The last time Twitter was at this stock price, it was doing $250 million in revenue.”
Revenue has now doubled, but not the stock.
Hosanagar says it is too early to be negative about Twitter. He explains.
“Twitter and Facebook are different products, and [it doesn’t make sense] to compare their growth and revenues. I think Twitter has a good and viable business, but will likely be in Facebook’s shadow always in terms of the number of users and monetization per user.”
COMMENTARY: I agree that it does not make sense to compare Twitter and Facebook user and revenue growth curves. They are two entirely different platforms that serve different types of users. Facebook is more general purpose and serves a broad range of users. Facebook is more of a general purpose communications medium between connected users. Twitter, on the other hand, serves mostly professionals, celebrities and power users. Twitter is a global newsfeed which is great for spreading news and information. It's great for entertainment and sports, has often been used to analyze and measure where stock prices and voter loyalties are going in real-time. Barack Obama was the first President to utilize social networks like Twitter to engage with his voter base. Donald Trump is doing the same thing now, and this seems to be working well for him.
The biggest problem that I see with Twitter is that many users feel restrained with the 140 character limit placed on newsfeed posts. Another problem is the massive volume of newfeed content. It is impossible to read it all. Twitter needs to provide users with built-in filters and search tools that present newsfeed information in an organized manner and pre-selected format. Twitter Lists are useful, but provide only a minimal solution.
Another problem that has evaded Twitter: Actual profits continue to elude the service, however. It posted a net loss for Q2 2015 of $136.66m on gross revenues of $502 m, compared to a net loss of $144.64m for last year's quarter. You have to believe that stockholders are becoming more impatient as each year passes by.
It has also been mentioned before that Twitter's revenue per user is highest in North America, but much smaller internationally, particularly in Asia, where revenues per user are about one-fourth those in the U.S.
Courtesy of an article dated September 9, 2015 appearing in [email protected] and an article dated July 28, 2015 appearing in The Register
YOUR 2-MINUTE GUIDE TO THE MOST IMPORTANT THINGS APPLE ANNOUNCED AT THEIR NEW PRODUCT UNVEILING ON SEPTEMBER 9, 2015
The iPhone 6s is here. And it brought with it several bigger cousins.
As expected, Apple unveiled the iPhone 6s and iPhone 6s Plus today at its annual fall product launch event in San Francisco. Despite their familiar looks, the phones sport a new aluminum exterior, new colors, and a new feature called 3D Touch (essentially Force Touch for the iPhone). 3D Touch allows the phone to recognize the degree of force being used in touch gestures—a mini-tap vs. a full tap, for instance—and respond accordingly. While navigating the iOS interface, 3D Touch can serve as a new sort of "right click" functionality, calling up menus and allowing users to preview content from outside of a given app. It also opens up new possibilities for playing (and developing) mobile games.
The iPhone 6s will ship with Apple's new A9 chip, which promises to be 70% faster than the A8 chip found in the iPhone 6.
As expected, both phones are getting camera upgrades. The iSight camera now packs 12 megapixels and shoots super high-def 4K video. Meanwhile, the front-facing FaceTime camera is now at 5 megapixels and has a front-facing flash. Apple is also debuting a new feature called Live Photos, which turns still photos into mini-animations.
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As usual, both new iPhone models start at 16 GB (somewhat surprising, considering the growing footprint of iOS and the amount of extra space Live Photos must eat up) and come in 64 GB and 128 GB models. The pricing of the new phones is the same as that of the iPhone 6 and 6 Plus: The iPhone 6s starts at $199 (16 GB) and ranges up to $399 (128 GB), while the 6s Plus starts at $299 (16 GB) and gets as pricey as $499 (128 GB). And for the first time, Apple is offering an upgrade plan that lets users buy unlocked phones and upgrade them every year, starting at $32/month.
The iPhone 6s and 6s Plus will be available for pre-orders on September 12 and start shipping September 25. Meanwhile, iOS 9 will be available for download on September 16th.
Apple CEO Tim Cook before unveiling the new Apple TV said.
"Our vision for TV is simple, and perhaps a little provocative. We believe the future of television is apps."
The device also has a redesigned remote, which includes a touch pad and can be used as a game controller. As predicted, the device now also supports Siri voice control. It will ship with universal search, which will allow users to search for content across apps like Netflix, Hulu, HBO Now, and Showtime.
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While the overall user interface looks very familiar, the functionality of the Apple TV appears poised to change substantially, thanks to the integration of Siri and universal search. For instance, viewers can ask Siri for a specific episode of a specific show, or even an episode guest-starring a particular actor. As is typically the case with Apple, the name of the game here is usability. And with this update to Apple TV, the company is taking its most sincere crack yet at the fractured, imperfect design of Internet-based television and movie watching.
The Apple TV operating system now has a name: tvOS. The new OS, which Eddy Cue says is "based on iOS and built for the living room," also has a new suite of software development kit to let developers build new TV apps, including games—a use case Apple is pushing pretty hard, given how popular games have proven to be on the iPad and iPhone.
Apple also partnered with MLB to create new Apple TV-specific sports apps, promising to help scratch an itch often cited by those hesitant to cut the cord from cable. But the Apple TV won't be limited to video content, music, and games. Shopping app Gilt also demoed its upcoming Apple TV app on stage at today's event, and Cue mentioned the impending arrival of an Airbnb app on the Apple TV.
The new Apple TV, which comes in 32GB and 64GB versions, will ship in late October.
Apple TV specs:
Redesigned remote control featuring a touchpad, accelerometer, and gyroscope
Siri voice control
Developer kit and third-party app store
Universal, cross-app video search
tvOS operating system
Bluetooth 4.0
64 bit A8 chip
Apple's New iPad Pro Tablet Offers Desktop Performance, Huge 13-inch Retina Display and Built-In Apple Pencil Stylus
Click to view a video of the new Apple iPad Pro
As expected, Apple previewed the latest addition to its tablet lineup as well: the iPad Pro. It sports a 12.9-inch screen with 5.6 million pixels, which is a higher resolution than the display on the MacBook Pro with Retina. Its new A9X chip promises "desktop class performance" that is faster than 80% of portable PCs on the market. The iPad Pro will ship in November.
For the first time, an iOS device will have a physical keyboard. In addition to a case that includes a keyboard, the iPad Pro will also support the Apple Pencil, the first Apple-built stylus for an iOS device. The Apple Pencil can be charged using the iPad Pro's lightning connector port. Both the iPad Pencil and the keyboard ship separately as add-on accessories.
The launches of iPad Pro and Apple Pencil present new opportunities for developers. One early partners is Microsoft, which shared the stage with Apple to show off new productivity features in Office for iPad. Apps like Word and Excel have been fine-tuned to work specifically with the iPad Pro and Apple Pencil.
The iPad Pro comes with a built-in digital keyboard, but this lacks the feel of a physical keyboard, so Apple is offering an optional keyboard called the Smart Keyboard which serves as a protective case for the iPad Pro and folds out into a stand and full-size keyboard with sensitive touch keys.
Speaking of Apple rivals, Apple has also been working with Adobe to build apps for the iPad Pro. Adobe announced Photoshop Fix, a new app that was built for the iPad Pro first. Eric Snow, the director of design for mobile apps at Adobe, demoed how Fix can work with other Adobe mobile apps like Comp and Sketch, which have been custom-tweaked for the iPad Pro as well. The new iPad-only Adobe workflow will be available in October. TypeKit fonts are now available on a mobile device for the first time.
Apple also added the iPad Mini 4 ($400), which is essentially the iPad Air 2 but smaller. The iPad Mini 2 is now available for $269.
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iPad Pro specs:
12.9 inch screen ("The biggest we've ever built in an iOS device," says Phil Schiller)
The display sports 5.6 million pixels
A9X chip (double the memory bandwidth and 2x faster storage performance of the previous chip, the A8X)
10 hours of battery life.
Four-speaker audio system with 3 times the audio volume of the iPad Air 2.
6.9 millimeters thick (vs. the iPad Air 2 at 6.1mm)
New cover that has a built-in physical keyboard
Apple Pencil, the first Apple-built stylus for an iOS device
Touch ID
8 megapixel iSight camera
Up to 150 mbps LTE connectivity
Comes in silver, gold, and grey
The New Apple Watch OS2
Before beefing up its lineup across bigger screens, Apple gave a quick update on the Apple Watch, which now boasts over 10,000 apps, including new additions like Facebook Messenger and a GoPro app. The company also announced new watch bands and product designs, including a strap co-created with Hermes. The Apple Watch will come in two new finishes: rose gold and gold, both in anodized aluminum. There are also new Sport models available, which start shipping today.
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Apple is also pushing the medical use cases for Apple Watch pretty hard. Apple invited Dr. Cameron Powell to demo an app called AirStrip, which promises to "change how doctors interact with their patients." Doctors can view live feeds of patients' medical data (including their heart rate), as well as their schedules, using the AirStrip app for Apple Watch.
Watch OS 2 will be available for download on September 16.
COMMENTARY:
Apple Is A Great Copycat, But Did They Improve Anything?
It used to be that Apple was, without a doubt, considered the king of innovation. Steve Jobs delivered products that changed our lives. Think: iMac. Think: iPhone. Think Different–-you get the gist.
Apple events nowadays, however, are known as much for innovation as they are for copycatting. And yesterday's annual September iPhone event included several products that—while they may still be on my Christmas list—look awfully familiar.
It could be argued, of course, that Apple can only iterate on their own devices so much each year. And as Jobs biographer Rick Tetzeli pointed out, it took a quarter century to move from the personal computer to the mobile computer, and it could take just as long before we see the next major breakthrough. This shifts the debate from being about whether or not Apple ought to be copying the hard work of others (and to be fair, plenty of companies have copied from Apple over the years) to a more salient question: Whose product does it best?
APPLE PENCIL (SEPTEMBER 2015) VS FIFTYTHREE PENCIL (NOVEMBER 2013)
The name alone caused a flurry of Twitter outrage among the techno-savvy hipster artist elite. Apple outright lifted the "Pencil" name from, well, a real pencil—but that wasn't the issue. There's an existing stylus with that same name, FiftyThree’s much-praised Pencil.
Is Apple’s reinvention better?
Apple’s Pencil, judging from the demos during the keynote, is impressive. There's a virtually undetectable latency–-the time between when you begin pressing the Pencil to the screen and the time the iPad knows you’re doing this. But besides this latency improvement, Apple's Pencil itself doesn’t actually offer any noticeable drawing features that FiftyThree’s Pencil doesn’t. Both detect varying degrees of pressure to create thick or thin lines, both allow you to draw with the point of the tip or with the tip at an angle.
Apple’s hardware design does, however, seem to have some improved benefits when it comes to power. Apple’s Pencil plugs into a Lightning port for charging. FiftyThree’s Pencil requires you to take the battery out and plug it into a USB port. Also, it’s impressive that you can charge Apple’s Pencil for only 15 seconds and get 30 minutes' worth of use from it. Then again, Apple’s Pencil only lasts for 12 hours per charge, while FiftyThree’s Pencil lasts for up to 90 days–-that’s handy if you're sitting in a field sketching sunflowers for days at a time. Also in FiftyThree’s court: Its Pencil has an eraser at the other end. Apple’s Pencil? Nope.
As far as cosmetic design, Apple’s Pencil is what you would expect: a cold-looking sliver of white plastic (Steve Jobs might use it to impale himself if he saw it). FiftyThree’s Pencil, on the other hand, while trying a bit too hard to appeal to the Brooklyn hipster, at least offers a few varieties such as a nice black, brushed aluminum to give you more style options.
Engadget spoke with over a dozen professional artists, illustrators and designers to gauge the reaction to the new Apple Pencil stylus. Many use styli in their everyday workflows through options including dedicated Wacom graphic tablets, all-in-one solutions like the Surface series or capacitive options like FiftyThree's Pencil for iPad -- and they've got a lot to say about Apple's entry into the market.
"I've tried [Wacom's capacitive] Bamboo stylus on my iPad and it was rubbish. This looks much better. I can't see using it for sketching, though, because it's missing the software. The iPad versions of Adobe's Creative Suite aren't as good. ... I'd rather buy the [Wacom] Cintiq, and have full Photoshop with a sensitive pad."
Mike Messina, senior UX/UI designer at [Engadget's parent company] AOL says.
"It (Apple Pencil) doesn't look to have many practical applications in terms of a professional design tool as it's not possible to use full Creative Suite and other industry-standard applications on a tablet device."
Messina uses a Wacom professional tablet and stylus for his work in combination with Adobe apps like Illustrator and Photoshop. He says.
"I don't think [the Pencil] compares to traditional [graphics] tablets and is more of an expensive toy -- albeit a nice one."
Although Apple's dedicated developer community will undoubtedly create great apps that support the Pencil, the chances of these apps being useful for more than the average consumer are low. Many creative industries are entrenched in Adobe software, while other studios, such as Disney, have their own tools like Meander, the program that was used for the Oscar-winning short Paperman. Adobe's apps for iOS are useful for certain tasks, and they will sync through Creative Cloud to the regular desktop apps, making the iPad Pro a potentially useful companion device.
"Where I could see a big advantage is in this replacing my sketchbook. I like to go around the city and have a coffee while sketching out new ideas. The hassle with that is that I'm always carrying a variety of pens, pencils, rulers, a sketchbook, a lightpad, etc. If it's as accurate as said, this could potentially replace that whole bag of tools for me."
Winner: Close call, but FiftyThree did it first and offers a better design–-and that eraser.
APPLE SMART KEYBOARD (SEPTEMBER 2015) VS MICROSOFT SURFACE PRO TYPE COVER (FEBRUARY 2013)
Apple’s got a bold tagline on the page announcing their new Smart Keyboard page: "The only thing we didn’t reinvent was the alphabet."
Eh, that’s not exactly true. I mean they didn’t reinvent the other fabric covered tablet keyboards that came before this one. Microsoft’s Surface Pro Type Cover is the most obvious example. That keyboard cover has been around for years and works exceptionally well as both a keyboard and a cover for a tablet. That’s not to say Apple’s new Smart Keyboard for the iPad Pro won’t work just as well, it’s just not super innovative (though it is welcome to finally have an Apple-sanctioned keyboard cover).
Winner: The Microsoft Surface Pro Type Cover. Apple, talk to us when you add some kind of trackpad so we can slide the text cursor around the screen inside word processing apps.
SIRI REMOTE (SEPTEMBER 2015) VS WII CONTROLLER (NOVEMBER 2006) VS FIRE TV REMOTE (APRIL 2014)
The new Apple TV remote–-officially called the Siri remote-–features a glass touch surface across the top with physical buttons below it. Apple does deserve props for the glass touch surface, that is truly innovative on a television remote. However, two other big features of the Siri Remote–-Siri voice control and its use as a gesture-based game controller—are something we’ve seen before.
First, Amazon’s Fire TV has had voice control for a while now. You can press its mic button and speak what you want to watch. That being said, Fire TV's voice controlled remote only searches across the Amazon Instant Video library, while Apple's new remote will crawl across all apps and channels—including HBO, Hulu, Netflix, and Showtime—for what you want to watch.
As a game controller, the Apple TV has clearly borrowed from almost every other digital media player as well as games consoles, including the Roku and Wii. It’s still cool, just not original.
Winner: The new Apple TV and its Siri Remote beats what came before it. The fact Siri can handle more advanced commands other than simple movie search queries, such as fast-forward and check the weather, makes Apple the innovator in this department.
LIVE PHOTOS (SEPTEMBER 2015) VS GIFS (1987)
Apple managed to keep one small iPhone feature from getting leaked: the introduction of Live Photos on the iPhone 6s. Live Photos are pictures that automatically record a few seconds on each side of the still frame. When viewing the picture on your iPhone 6s it looks like a still image until you force-touch it. Then it comes to life.
Sure, this is a pointless eye-candy feature—but it’s one that I think offers surprise and delight. Of course, that’s not to say Apple has innovated here. I mean, wizards have had this technology for a long time. And seriously, CompuServe beat Apple to the animated GIF by about, oh, 38 years.
Winner: I’m going to say GIFs, because some can keep me laughing for hours. Then again, GIFs generally are low-res and don’t look anything close to as beautiful as the Live Photos the iPhone 6s allows you to take.
APPLE WATCH (SEPTEMBER 2015) VS A WATCH (1570S)
Apple began its iPhone event by showing off the latest iteration of the most expensive iPhone accessory ever: the Apple Watch. Though it didn’t unveil the Apple Watch 2 (that’s likely for 2016) it did unveil some pretty cool new anodized aluminum color options: gold and rose gold.
The Apple Watch is no doubt a computing marvel and it deserves its praise-–but I mean really, is it better than a regular watch? Take Storm watches, for example: They’re beautiful, come in a wide array of colors and materials, and have more band options than you could ever need–-and they, you know, tell the time exceptionally well while featuring a battery that lasts for years.
The Apple Watch is a great, tiny computer, but as far as a timekeeping piece? I like my watches to keep on ticking without needing to be recharged every 18 hours.
Winner: Regular watches.
Courtesy of an article dated September 9, 2015 appearing in Fast Company, an article dated September 10, 2015 appearing in Fast Company and an article dated September 10, 2015 appearing in Engadget
From Facebook to Snapchat to Instagram, your brand can reach new audiences many ways via social media. As you go through your marketing segmentation strategy, it's important to review who is your target customer and which social platform will best. Sprout Social, a social media software management company, shares how marketers can decipher their social customer base in the infographic below.
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COMMENTARY: Picking the right place to connect with your followers, fans, and customers isn’t easy. There are a ton of possibilities. Each social network has its own perks and perils, not to mention guidelines to follow. And you’re probably worried about making mistakes or wasting your time, especially if your new business is small or has a limited number of resources available.
Here are some great tips to help brand marketers decide which social media platforms are the right fit for marketing your eCommerce business and communicating your brand message. We’ll cover why it’s so important to choose carefully, and then look closely at major platforms like Facebook, Twitter, Pinterest, and more so you can evaluate whether or not they’re a good fit for you.
The importance of choosing the right networks
As a store owner, your time is precious. There are plenty of other things you have to do without throwing social media into the mix. But because it’s become such a crucial part of any well-rounded marketing plan, and your presence is expected by your customers, it’s a necessity for your business.
There’s no rule that says you have to have a presence on each and every social media network, however. In fact, for some stores, it would be considered a waste of time to have a Pinterest page or a LinkedIn profile, because their customers simplydon’t use those apps or networks. And wasting time is something you absolutely need to avoid, because it keeps you from focusing on the activities that earn you the most amount of money.
That’s why it’s so important to choose the right social media networks for your business. Choosing the networks where you have the best chance at connecting with your target audience, or even your existing customers, means you’ll waste less time and make more money. You won’t have to fight as hard to see results, either. Think of it as picking the “path of least resistance” — where can you go that you’ll have to do the least amount of work to see the most return?
By evaluating each network carefully, and choosing the right ones for you — where your customers already are, and where your business fits best — you’ll be able to maximize your time and ensure your efforts result in a return on investment. With that in mind, here are some things to consider for each major social media platform, from who uses each one to what kinds of content succeed on them.
Facebook: ideal for targeted advertising of your products
According to the Pew Research Center, 71% of all adult Internet users say they use Facebook. As you no doubt already realize, this network intended for connecting friends and family members together has an enormous reach and vastly widespread usage. However, for brands using it to connect with their customers, things are not always so easy.
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Over the last two years, Facebook has slowly reduced the organic reach of Pages. This has drastically limited the exposure that their posts receive in the News Feed, a change so ire-inducing that the network had to publish a FAQ about it. Some reports estimate that most organic brand posts are now able to reach just 2% of their users. This means fewer views, fewer clicks, and far less revenue from the products or content you post about on your Page.
This doesn’t mean that you should give up on Facebook, however. If you’ve built up a Page full of Likes, or you’re finding that your existing page is still accumulating new fans at a steady clip, you can certainly take advantage of this audience. But the best way to do it is through promoted posts or remarketing ads.
Now that Facebook has become unreliable for delivering even your most interesting content and product news to customers, the best usage of this platform is to deliver your most important news through paid means. This might mean boosting a post on your page — that is, paying to push it into News Feeds. Or it might mean specifically targeting website visitors with an ad urging them to return to your site so they don’t miss out on a good deal.
The good thing about this kind of Facebook usage is that any brand can do it with about the same chance of success. Also, boosted posts and remarketing ads are shown to existing fans and those who have already visited your website, respectively, so it’s highly targeted, relevant content — much more relevant than an ad shown to someone who has never heard of your brand before.
The downside, of course, is that you have to pay for advertising. But with the right content, these ads can convert very well, and potentially make you a lot of revenue.
Twitter: best for clever content, conversations, or social support
19% of the entire adult population currently uses Twitter, according to Pew research, and most of them under age 50. This network, which limits your updates to 140 characters, has long been used by brands if only because so many of their customers use it. But does every brand need to be on Twitter? Or do certain companies find more success here than others?
Rather than specific types of brands finding success on Twitter, it appears that specific types of brand content determine how successful you are on this network. One study found that images outperformed video, links to how-to and list blog posts outperformed all others in terms of the number of retweets received, and that users who tweeted quotes had 43% more followers than those who did not.
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So if your eCommerce brand — regardless of what it is you actually sell — tweets links to interesting content, posts images, and occasionally offers inspirational quotes (provided they have something to do with your company, that is), you seem to have a better chance at attracting clicks, retweets, and followers than brands who do none of this.
All this aside, Twitter is really the best place for a brand to have a conversation with its customers. Because the platform is so accessible and widely-used, and it takes far less time to compose a tweet than an email, you’re likely to receive questions, comments, and complaints here. If you answer quickly and appropriately, research shows that this good experience may help motivate more sales. Be prepared to watch those @mentions and respond appropriately!
Finally, due to the speed factor mentioned above, some brands choose to use Twitter as a dedicated support channel. This isn’t for everyone, but if you sell electronics or other products that have a high risk of needing service, you might find it useful to set up an account if only so you can help your customers solve their problems efficiently.
Pinterest: perfect for food, beauty, and fashion brands
Pinterest, the network that allows you to search for, discover, and save “creative ideas” in the form of pinned images, continues to grow year after year. The latest statisticsindicate that approximately 28% of adult Internet users use this site.
This may seem unimpressive on its own, but what’s really significant about Pinterest is who uses it. According to eMarketer, 85% of Pinterest’s total audience is made up of women.
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Finally, take a look at this Millward Brown research, which shows that Pinterest users — 87% of which have purchased something they found on the site! — say they use the site to find products to buy from five main categories: food, home decor, clothing/accessories, hair/beauty, and health/fitness.
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What does this mean for your brand? Well, if your online store offers products in any of these five categories, you’re probably going to find that Pinterest is a natural fit for you. Users are mostly likely to discover and repin content from these categories with the intent of later making purchases, so if the pins you’re providing are attractive and unique, you have the potential to see higher purchases from Pinterest than any other network.
Additionally, because so many of this network’s users create long-lasting wishlists and inspiration boards, you’re likely to see the same pin get passed around and clicked on much, much longer than you would a Facebook or Twitter post. So if your brand falls into one of these five categories,try some advanced tactics to improve the data included with your pins to ensure they last as long as possible, and drive a high amount of clicks and conversions for your store.
Instagram: best for brands with attractive physical goods
Almost half of Instagram‘s 300 million monthly active users log in daily, according to the latest research on this growing photo-based social media network. Instagram’s frequent usage by consumers, simple system for publishing photos, and relative friendliness to brands — no posts are ever filtered, hidden, or shown out of order in your feed — make it an ideal pick for many eCommerce companies.
But what kinds of brands will find the most success on Instagram? Much of any user’s popularity on this platform will depend on the content and quality of their photos. As such, if you lack physical goods, have trouble taking photos of your products, or only sell a few items, you may struggle to find success after joining this network.
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What does this mean for you? Well, if you offer clothing or accessories that can be modeled, products that can be staged, or items that go together in a collection (as IKEA’s do, shown above), you’ll have no trouble taking beautiful photos for this network. You can also find success if your product lends itself well to “stories,” like GoPro, or attracts customers to share their own photos using a unified hashtag.
If you don’t sell physical goods, or have a limited number of products, all hope is not lost. But you’ll need to invest in some creative strategies if you want Instagram to work for you. User generated content is usually the way to go in this case, and you can read more about how to curate and use it here.
LinkedIn: suitable for culture, company news, and careers
LinkedIn is currently used by around 28% of all online adults. It’s the only social network where its users are more likely to be age 30-64 than in the 18-29 range, and it’s mostly populated by those who are college graduates.
This network is tricky for brands. Because most users rely on LinkedIn for career-related items — connecting with colleagues, finding jobs, and occasionally reading content — content that isn’t related to your company may fall flat. LinkedIn’s Company Pages are actually intended to attract job seekers and those interested in your brand, so this is the one time that it can be beneficial to talk about yourself a lot.
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Due to this, LinkedIn is best used for the purpose of attracting people to your company from a business standpoint. It’s not likely that users will follow you here because they want to buy from you — they are much more likely to follow you because they want to work at your company, or do business with you in some other way. Posting company news, information on your culture, or sharing job openings will help you create the right image here.
Niche networks like Vine, Snapchat, and Meerkat: proceed with caution
It’s easy to get caught up in social media trends. With each new and emerging network, you’re probably curious and eager to try each hot new app for yourself. But before you start sending snaps to customers or streaming live video for your website visitors, think carefully about the long-term benefits of each of these emerging or niche networks.
One important fact that you should especially be aware of is that new social networks often emerge without any kind of brand standards, guidelines, or features. Because they’re created with users in mind, not companies, brand features are often introduced much later, and they might restrict the your activities, or even put an abrupt end to a new source of revenue you’ve come to depend on.
Again, as we said before, your time is precious. Don’t invest in a social media network simply because it sounds cool or is trending. Invest in one that your target audience is attracted to, has set standards for brands, and has clear long-term benefits for your company, like increased revenue or easier communication with customers.
The best way to pick the right networks for you
Choosing the right social media platforms on which to promote your eCommerce brand can be tricky. Going into it, you might be fearful of investing a lot of time and seeing little to no return, or spending advertising dollars that don’t result in purchases. But by doing your research beforehand and knowing what each platform can do for you, you stand a much better chance of succeeding on social than a brand that signs up for every option under the sun.
We hope the tips in this post have given you a good starting point for choosing how to launch your social media presence. If you have any additional questions about picking the right networks for your business, or want to offer some tips of your own for fellow business owners, please feel free to do so in the comments below. We always love hearing your feedback and suggestions!
Courtesy of an article dated September 11, 2015 appearing ineMC and an article appearing in WOO Themes
Although Apple has been touting its Watch’s ability to track everything from minutes of brisk activity to glucose levels, it has been vague about its own sales data for the device since it went on sale in late June. A new report, however, suggests that it burst off the blocks and trails only the much-simpler and less-expensive Fitbit in the wearable-devices race.
According to the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker study.
“Apple shipped a total of 3.6 million units in the second quarter of 2015 (2Q15), just 0.8 million units behind Fitbit’s 4.4 million units.”
And it sprinted to the lead in the “smart wearables” subcategory of devices capable of running third-party apps, according to IDC.
Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, said in the news release.
“About two of every three smart wearables shipped this quarter was an Apple Watch. Apple has clearly garnered an impressive lead in this space and its dominance is expected to continue.”
Ubrani also points out the basic wearables category — Fitbit’s’ bailiwick, at least to date — is expected to lose share in the future, “leaving Apple poised to become the next market leader for all wearables.”
“Right behind Apple, Chinese firm Xiaomi came in at No. 3 on IDC's report, with 3.1 million shipments. The rest of the top five were well behind those three leaders, with Garmin and Samsung shipping less than 1 million units each.”
Some observers, however, are wary about IDC’s conclusions.
MarketWatch’s Jennifer Booton points out that the IDC numbers indicate that the “Apple Watch seems to be performing much better than the company’s earnings report led observers to believe,” as well as comments from Apple executives, including CEO Tim Cook.
Booton writes.
“Piper Jaffray analyst Gene Munster questions IDC’s 3.6 million-unit figure based on Apple’s revenue statement. Munster, who in a report in July estimated Apple Watch sales of 2.5 million units last quarter, said the kind of growth IDC is suggesting would indicate a sharp deceleration of the other sales with which Apple bundles Watch revenues.”
And Raymond James analyst Tavis McCourt “thinks IDC is mushing stuff together,” Barron’s Tiernan Ray reports. But, McCourt contends,
“The big picture here is the wearables market is growing very rapidly (+223%) y/y, which is impressive growth given the annualized volumes already at ~80 million units.”
Ray reportsin another post that R.W. Baird’s William Power feels that the Garmin Forerunner 225 and Fitbit Surge generallyoutperform the Apple Watch on running accuracy and software after personally testing them. But Apple Watch, Power concludes, “wins on most everything else” compared to the other two.
Meanwhile, Fortune’s Philip Elmer-DeWitt yesterday filed a storycontaining what he characterizes as “brave words” from Swatch CEO Nick Hayek. Among them:
“The Apple Watch is an interesting toy, but not a revolution”
“As a watch producer, I cannot accept the responsibility of whether my device warns a customer in time before a heart attack.”
Hayek’s observations were part of an interview with the Swiss newspaper Tages-Anzeiger“to hype Swatch’s new line of smartwatches, the Touch Zero One” which, Elmer-DeWitt points out, “seems to have landed in the U.S. without much of a splash.”
Surprising for a device that is said to be “your perfect beach volleyball companion,” no?
Best Buy, which rolled out the Watch at 100 of its stores, is expanding to all of its outsets by the end of September. It also is updating its stores-within-a-store concept by the holiday shopping season; they will “play an important role in Best Buy's Apple Watch strategy,” as Mike Brown reported earlier this week in the International Business Times.
Mike Brown reported what Best Buy CFO Sharon L. McCollam said during the company's quarterly earnings call on Tuesday, August 28.
“I think we can all agree the Apple Watch is certainly iconic and having it in all 1,000 stores by the end of September is a big deal for us.”
Having earned the “iconic” label after a mere three months in the marketplace, the Watch will clearly need a new goal to push it to the max. Market dominance is probably what comes to mind in Cupertino.
COMMENTARY: Don't you just love it when mobile industry experts can't seem to agree on how many Apple Watches were sold? The only person who really knows how many Apple Watches have been sold is Apple CEO Tim Cook, and he hasn't been much help, offering comments full of elation, but no exact figures during Apple Q2 2015 earnings conference call:
"We started taking pre-orders in 9 countries on April 10, and demand immediately exceeded supply by a wide margin. To prioritize those first orders and to deliver the best experience for our customers, we delayed the availability of Apple Watch in our own retail stores until mid June."
"We’ve made huge progress with the production ramp across the quarter, and near the end of the quarter expanded into 6 additional countries. And in just the past few days, we’ve been able to catch up with demand, enabling us to expand Apple Watch availability to a total of 19 countries currently, with three more countries to be added at the end of this month."
"The feedback from Apple Watch customers is incredibly positive, and we’ve been very happy with customer satisfaction and usage statistics. Market research from Wristly measured a 97 percent customer satisfaction rate for Apple Watch, and we hear from people every day about the impact it’s having on their health, their daily routine, and how they communicate."
"We believe that the possibilities for Apple Watch are enormous, and that’s been reinforced in just the first few weeks since it became available to customers. For example, doctors and researchers at leading hospitals in the U.S. and Europe are already putting Apple Watch to work in improving patients’ lives."
This all sounds good, but Tim Cook never provided any actual numbers to backup his reasons for such elation over the performance of the Apple Watch.
Consumer Interest In Wearables Fading Fast
After reaching a peak level of interest earlier this year, consumers are becoming steadily less enamored of wearable technology in general (and fitness technology specifically).
According to a new report from Argus Insights that evaluated more than 300,000 product reviews, demand for wearables reached a peak in January 2015 (when it was four times higher than in January 2014), but has since dropped significantly.
The market, which includes numerous products including smartwatches, glasses, fitness bands and other sensor-enabled devices, is in a unique position where consumers are losing interest in fitness products (which all tend to do the same things), yet they’re failing to see a purpose for smart watches that justifies their expense.
John Feland, CEO and founder of Argus Insights, tells Marketing Daily.
“[Sales] are still growing year-to-year, but interest is sliding. The fitness band market hasn’t figured out what it can do beyond counting steps, and smart watches aren’t advanced enough yet.”
Though fitness-band category leader Fitbit to gain mindshare with consumers (even weathering competing buzz from Apple Watch’s launch last year), consumer delight (measured from the volume and content of consumer reviews) is dropping. According to the report, consumers use their fitness devices for a few months before putting them aside, Feland says.
Feland says.
“They’re like a smaller, less-expensive treadmill that you use for a few months and then hang your [laundry] on. They need to stumble on a way to make people wear them on a regular basis. Maybe they need to find a way to use advertising to drive revenue, or make some use of the fitness currency beyond the water cooler.”
Meanwhile, delight is increasing for the Apple Watch and other smart watches. But the products’ consumer base is still largely limited to early adopters. Mass consumers, Feland says, have yet to be shown the killer app that makes the device necessary.
Feland says.
“It has become more of a coordination device, rather than a consumption or creation device. The second Apple Watch will tell us a lot about where the market is headed.”
Google Android Wear Raises The Stakes
Very few people have had to bother grappling with the idea of notifications and body vital readings available on their wrists, because not all that many people are buying smartwatches. There’s a real sense that everybody’s waiting to see how things shake out. Smartwatches aren’t really ready for everybody yet, not the way that smartphones are. Nothing drove innovation in the smartphone space faster than competition between Apple and Google. If competition is what it takes to get smartwatches ready for the mainstream, even Apple Watch users should be glad about Android Wear coming to the iPhone.
Android Wear smartwatches come to the iPhone (Click Image To Enlarge)
That’s right: beginning August 31, a select set of Android Wear smartwatches (and all future watches) will work with the iPhone. The app should be rolling out worldwide soon. It’s been a long time coming — and it means that Google will be challenging the Apple Watch on its home turf. Those Android Wear watches will be both cheaper and more varied than the Apple Watch — just like Android itself.
There’s an important caveat, though: when paired to an iPhone, Android Wear watches can’t do as much as the Apple Watch. Nor can they do as much as they can when paired to an Android phone. Right now, only three watches officially support the iPhone, two of which aren’t even available for purchase yet: the Huawei Watch, the Asus ZenWatch 2, and the LG Watch Urbane. Chang says that Google isn’t supporting older watches because it wants them to work right away, without software updates. Chang says.
"In order to guarantee a good experience, where out of the box it will work immediately and you don't have to do any fancy footwork, that's why it has to be the newer watches."
But I suspect that the Android community will find ways around that limitation for older watches in relatively short order.
Making Google Android Wear watches work with the iPhone has to raise some concerns at Apple. If consumers can buy a "cheaper" Apple Watch in the form of an Android Wear watch, and get most of the features they need, this could present problems for Apple Watch sales.
Apple's growth has become more dependant on China to maintain growth in the sales of the iPhone and Apple Watch. With the economic situation in China taken a major hit, you can bet that sale of both the iPhone and Apple Watches will be negatively impacted.
In any event, at some point, Apple will be forced to disclose sales of the Apple Watch. Apple shares have taken a hit, Apple shareholders are an impatient lot, and if Apple Watch sales are lower than has been forecasted, it's better to fess up, admit that the Apple Watch cannot live up to the hype and was never the gamebreaking product that Apple said it could become.
It's a rite of passage for so many tech companies: building their first wildly ambitious, kind of ridiculous, and generally stunning headquarters to accommodate a ballooning headcount as growth explodes. Uber is the latest to start working on a new HQ, and design mockups for the building were released this week.
Click Image To Enlarge
The ride-hailing company, which launched in 2009 and now operates in more than 200 cities across 55 countries, revealed plans for the plush new office space this week. The two-building complex, which’ll be linked by three glass walkways, should be open for business by early 2018.
Uber is planning a towering, two-building campus in San Francisco's Mission Bay neighborhood with 423,000 square feet of office space — enough to fit over 3,000 people,reports SFGate. From the outside, the buildings look like glass warehouses: they're almost entirely transparent aside from a series of steel beams outlining their edges. The two buildings, one rising up 11 stories and the other six stories, are connected by three slanted bridges, also almost entirely covered in glass.
Click Image To Enlarge
Though it's transparent from the outside, Uber plans to have a bit more going on inside. Rather than having an open office, it's decided to set up a series of small groups of workstations and shared spaces, according to Dezeen. The architects also plan to integrate shops in the ground level of both buildings, which is important for keeping the area vibrant.
Click Image To Enlarge
Uber hopes to open the offices in late 2017 or early 2018, according to SFGate. Construction reportedly begins this fall.
Click Image To Enlarge
Click Image To Enlarge
All images credit Shop Architects.
COMMENTARY: For those of you not familiar with Uber, here are a few facts.
Uber keeps 20% of every transaction, which means Uber will be netting about $2 billion on $10 billion gross revenue.
What's more, most of Uber's revenue comes from 10 of its earliest cities, including San Francisco and New York. When its other 140+ cities mature, you can imagine that $10 billion revenue figure multiplying quickly. San Francisco alone generates hundreds of millions of dollars for Uber. Uber is operating in more than 45 countries without having made a single acquisition.
That's not to say the company is profitable. It spends tons of money on marketing tactics to recruit new users and drivers. Still, those figures for a five-year-old startup are staggering.
To put that in perspective, Facebook is expected to generate $10 billion for the first time this year, after 10 years of operation. Granted, Uber and Facebook are entirely different businesses (advertising versus transactional) but yah, $10 billion is a lot.
Blodget also learned that Uber's revenue will grow about 300% this year and it's expected to grow another 300% next year. A snapshot of Uber's financials obtained by Valleywag in late 2013 showed Uber generating about $20 million per week.
Further, Blodget's sources believe Uber will go public in a few years at a $50-100 billion valuation. Uber's last valuation exceeded $18 billion.
In conclusion, Uber management obviously believes that it has a very viable business model that is disrupting the taxi industry, creating jobs for thousands, and prospects for growth are very rosey. Hence, the need for a new corpoate headquarters. However, there is considerable controversey on whether Uber drivers are really earning a good living, or are they merely pawns for Uber to make money off their efforts.
What Uber Drives Earn
Ridesharing companies promise easy money, but how often do you have to drive to pay for car ownership costs, such as insurance? For the more ambitious, how can you make $50,000, $75,000 or even $100,000?
To find out, NerdWallet crunched the numbers to see how many rides drivers for Uber, Lyft and Sidecar would have to provide to pay for their car ownership costs such as insurance, gas and repairs. We also calculated how many rides are required for drivers to make $50,000, $75,000 and $100,000 in gross income. Using data from SherpaShare, a service that helps drivers track ridesharing income and expenses, NerdWallet analyzed 14 of the country’s largest markets for Uber, Lyft and Sidecar.
Key findings
On average, drivers make more per trip driving for Uber than they do with Lyft or Sidecar. The average fare for Uber is $15.97; average fares for Lyft and Sidecar are $11.48 and $13.35, respectively.
To make an annual income of $50,000, the average Uber driver needs to provide 60.21 rides each week, while those working for Lyft need to give 83.76 rides a week and Sidecar drivers would have to provide 72.03 rides in a week.
Lyft drivers in Dallas make the least, $9.73, per trip. Based on the city’s average annual insurance premium of $1,042.30, a driver would have to provide 97.65 rides before paying for a car insurance premium.
How much will you make?
Based on the data, Uber drivers make more with each fare than with Lyft or Sidecar. Uber drivers earned eight of the 10 highest average trip fares in the markets we surveyed.
On average, Lyft drivers make less than Uber drivers, $11.48 compared with $15.97; and average trip lengths are relatively similar, 10.2 minutes per trip for Uber compared with 13.6 minutes for a Lyft trip.
But Sidecar seems to cater to a different market. The average Sidecar ride is 22.9 minutes, which is more than twice as long as the average Uber ride. According to SherpaShare, the longer fares can be attributed to Sidecar’s marketplace feature that lets drivers set their own prices. When drivers do their own commutes, they often lower the fare below market rates to pick up passengers going their way.
How can you make $50,000?
In short, it depends on where and when you drive. For example, “driver utilization” for New York City’s yellow cabs is about 50%, which means that for each hour drivers work, they are ferrying passengers 50% of the time. SherpaShare’s per trip fare data for Uber shows that the average driver would have to drive 20.47 hours each week to make $50,000 a year. However, from anecdotal evidence and investigative reports, it is likely that the average driver utilization for ridesharing is much less than 50%.
Number of trips needed to make $50,000, $75,000 or $100,000
Market
Average annual insurance premium
Annual car ownership costs for a 2014 Toyota Camry
Ridesharing platform
Average trip fare
Number of trips needed each week to pay for car insurance
Number of trips needed each week to pay for car ownership costs
Number of trips needed each week to make $50,000
Number of trips needed each week to make $75,000
Number of trips needed each week to make $100,000
Boston
$1,174.50
$11,421.48
Uber
$16.07
1.41
5.93
59.83
89.75
119.67
Lyft
$11.22
2.01
8.49
85.70
128.55
171.40
Sidecar
$12.39
1.82
7.69
77.61
116.41
155.21
Charlotte
$815.00
$11,166.87
Uber
$11.85
1.32
7.59
81.14
121.71
162.28
Lyft
$11.49
1.36
7.83
83.68
125.53
167.37
Sidecar
$19.66
0.80
4.57
48.91
73.36
97.82
Chicago
$1,243.52
$11,981.90
Uber
$12.73
1.88
8.23
75.53
113.30
151.07
Lyft
$10.50
2.28
9.97
91.58
137.36
183.15
Sidecar
$15.36
1.56
6.82
62.60
93.90
125.20
Dallas
$1,157.10
$11,653.66
Uber
$12.66
1.76
7.99
75.95
113.93
151.90
Lyft
$9.73
2.29
10.40
98.82
148.23
197.64
Denver
$1,042.30
$11,545.78
Uber
$12.94
1.55
7.41
74.31
111.46
148.61
Lyft
$10.36
1.93
9.25
92.81
139.22
185.63
Detroit
$4,924.99
$15,608.04
Uber
$16.13
5.87
10.64
59.61
89.42
119.22
Lyft
$13.03
7.27
13.17
73.79
110.69
147.59
Los Angeles
$1,175.61
$11,890.59
Uber
$14.25
1.59
7.40
67.48
101.21
134.95
Lyft
$11.59
1.95
9.09
82.96
124.44
165.93
Sidecar
$14.14
1.60
7.45
68.00
102.00
136.00
Orange County
$988.94
$12,092.12
Uber
$16.07
1.18
6.86
59.83
89.75
119.67
Lyft
$12.03
1.58
9.16
79.93
119.89
159.86
Sidecar
$15.60
1.22
7.06
61.64
92.46
123.27
Phoenix
$1,029.49
$11,854.45
Uber
$16.31
1.21
6.24
58.95
88.43
117.91
Lyft
$12.33
1.61
8.25
77.98
116.98
155.97
Salt Lake City
$772.23
$11,372.23
Uber
$15.07
0.99
5.96
63.80
95.71
127.61
Lyft
$9.92
1.50
9.05
96.93
145.39
193.86
San Diego
$818.08
$11,696.58
Uber
$15.51
1.01
6.48
61.99
92.99
123.99
Lyft
$11.40
1.38
8.82
84.35
126.52
168.69
Sidecar
$15.58
1.01
6.45
61.72
92.57
123.43
San Francisco
$1,013.90
$11,838.03
Uber
$19.84
0.98
5.16
48.46
72.70
96.93
Lyft
$11.92
1.64
8.58
80.67
121.00
161.33
Sidecar
$12.63
1.54
8.10
76.13
114.20
152.26
Seattle
$1,016.86
$11,822.71
Uber
$16.59
1.18
6.15
57.96
86.94
115.92
Lyft
$10.64
1.84
9.58
90.37
135.56
180.74
Sidecar
$14.91
1.31
6.84
64.49
96.73
128.98
Washington, D.C.
$1,390.88
$11,490.15
Uber
$14.23
1.88
6.72
67.57
101.36
135.14
Lyft
$12.31
2.17
7.77
78.11
117.17
156.22
Sidecar
$12.69
2.11
7.54
75.77
113.66
151.54
National average
$1,099.71
$11,772.68
Uber
$15.97
1.32
6.11
60.21
90.31
120.42
Lyft
$11.48
1.84
8.51
83.76
125.64
167.52
Sidecar
$13.35
1.58
7.31
72.03
108.04
144.05
Courtesy of an article dated May 29, 2015 appearing in The Verge,an article dated November 15, 2014 appearing in Business Insider, and an article dated December 11, 2014 appearing in NerdWallet
Deloitte predicts that by end-2015, five percent of the base of 600-650 million near-field communication (NFC) equipped phones will be used at least once a month to make contactless in-store payments at retail outlets.
Deloitte expects that 2015 will be an inflection point for the usage of mobile phones for NFC-enabled in-store payment, as it will be the first year in which the multiple prerequisites for mainstream adoption – satisfying financial institutions, merchants, consumers, technology vendors and carriers – are sufficiently addressed.
We predict that by end-2015, five percent of the base of 600-650 million near-field communication (NFC) equipped phones will be used at least once a month to make contactless in-store payments at retail outlets. This compares with monthly usage by less than 0.5 percent of the 450-500 million NFC-phone owners as of mid-2014. Contactless mobile payment will not be mainstream by end-2015, but niche adoption will be a major progression from near nil in prior years.
The core advantage with any contactless smartphone transactions is the potential for greater security, when payments are made with phones featuring either built-in (via hardware or software) or SIM-based tokenization capability. When someone pays using an NFC-device, the tokenization facility creates a unique code (known as a token) which is sent from the device to the merchant’s NFC-enabled till. The credit card number is not transferred which means in the event of a breach, only card information used for traditional transactions would be exposed. The card information is either stored with the issuing networks (such as Visa or MasterCard), or is stored in the cloud (HCE), or in a secure element on the phone. The token is only good for a single transaction and unusable otherwise. A fraudster who intercepted the transaction would only get access to the single-use token but not the card details.
Using a fingerprint, an eye scan or a heart rate sensor as an additional form of authentication makes the payment more secure still. The combination of biometric authentication, an embedded secure element and tokenization may provide more robust security than card swipes or chip and PIN.
We expect the volume of NFC-smartphone transactions and the range of spend value to increase steadily over time as consumers become more familiar with the process, and more banks and merchants in more markets accept this form of transaction. However, contactless mobile payments will likely co-exist for some time with all other means of payment, from contactless credit cards to cash. It will be a long while before the majority of us can jettison our physical wallets.
Contactless Mobile Payments (Finally) Gain Momentum
Deloitte predicts that by end-2015, five percent of the base of 600-650 million near-field communication (NFC ) equipped phones will be used at least once a month to make contactless in-store payments at retail outlets. This compares with monthly usage by less than 0.5 percent of the 450-500 million NFC-phone owners as of mid-2014. Contactless mobile payment will not be mainstream by end-2015, but niche adoption will be a major progression from near nil in prior years.
Looking further ahead, Deloitte expects the number of NFC-enabled devices being used for making in-store payment should rise steadily over the medium term, as consumers become more familiar with the process, and more banks and merchants in more markets accept this form of transaction. We expect the volume of NFC-smartphone transactions and the range of spend value to increase steadily over time.
TMT Predictions 2015
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While usage of phones to make contactless payments is expected to increase over time, they are likely to co-exist for some time with all other means of payment, from contactless credit cards to cash. It will be a long while before the majority of us can jettison our physical wallets.
The logic of using mobile phones to make in-store payments has long been recognized, and as far back as the late 1990s prototypes of vending machines equipped to take payment via mobile phones and over cellular networks were being exhibited at trade shows. The benefit of using short-range wireless technologies over a distance of a few centimeters to transmit payment information has also long been understood. Speedpass, the first contactless payment device (a key fob for use in gas stations) was launched in 1997. In the same year, the Hong Kong metro system introduced a contactless pre-paid fare collection system .
Indeed, the combination of contactless payment and mobile phones has existed for over a decade. The first phones with any form of contactless technology were launched in 2004 and the first phone with NFC went on sale in 2006. For many years, smartphones have been used to effect financial operations, such as checking balances, transferring funds, and transacting online.
But prior to 2015 the use of phones to make in-store payments using any technology (such as QR codes, or other short-range wireless technologies) has been minimal, with only a small proportion (ten percent or lower) of the smartphone base claiming to have paid in-store via their phone at any time.
Deloitte expects that 2015 will be an inflection point for the usage of mobile phones for NFC-enabled in-store payment, as it will be the first year in which the multiple prerequisites for mainstream adoption – satisfying financial institutions, merchants, consumers, technology vendors and carriers – are sufficiently addressed.
We expect the largest card issuers in the majority of the largest developed countries to have activated NFC-smartphone payments by end-2015, although adoption patterns are likely to vary by region, due to differing economics and technical (e.g. payments processing) models. For financial institutions (card issuers and banks), NFC in-store phone payments offer continuity and improvement to their business models. They levy a commission on the transaction value, which they may share with a handset vendor or other entity. They underwrite the risk on the payment. Account holders are subject, with one of approaches used, to the same transaction limits as with a physical card and the repayment terms for credit card holders are the same.
The core advantage with any contactless smartphone transactions is the potential for greater security, when payments are made with phones featuring either built-in (via hardware or software) or SIM-based tokenization capability. When someone pays using an NFC-device, the tokenization facility creates a unique code (known as a token) which is sent from the device to the merchant’s NFC-enabled till. The credit card number is not transferred which means in the event of a breach, only card information used in traditional transactions would be exposed.
The card information is either stored with the issuing networks (such as Visa or MasterCard), or is stored in the cloud (HCE), or in a secure element on the phone. The token is only good for a single transaction and unusable otherwise. A fraudster who intercepted the transaction would only get access to the single-use token but not the card details .
Using a fingerprint, an eye scan or a heart rate sensor as an additional form of authentication makes the payment more secure still. The combination of biometric authentication, an embedded secure element and tokenization may provide more robust security than card swipes or chip and PIN.
What's In It For Merchants Adopting Contactless Mobile Payments
For merchants, NFC-equipped phones can enable fast and, with some systems, high-value transactions . All forms of payment have friction points: cash requires change and credit cards require PINs or signatures; but contactless payment requires only a card or device to be placed on a compatible reader. A fundamental benefit with some contactless smartphone payment systems is that the spending limit can be the same as the account holder’s credit or debit card limit. By comparison, contactless cards typically have a payment threshold (typically under US$50) and a transaction limit (the number of contactless payments made) before additional identification is required, so as to mitigate the impact of a stolen contactless card. As one example, the 23.8 million contactless card transactions in the UK in June 2014 had an average value of $11.03. This was about one seventh of the average transaction value of all credit and debit cards in the UK in the same month ($78.52).
Accepting NFC payment requires compatible point-of-sale (POS) terminals, and new POS terminals cost several hundred dollars. As of the start of 2015, there were already millions of NFC-ready payment terminals globally, out of the tens of millions of terminals in use around that world. Over the course of 2015 that base is likely to see a significant increase, particularly in the US where merchants are replacing their terminals to comply with the EMV mandate, these will most likely to be ones supporting NFC.
By end 2015, we expect a minority of merchants to be supporting contactless smartphone payments. These will often be retailers that have already made the investment in replacing POS systems, and will often be stores with a high volume of relatively low-value transactions, such as fast food outlets.
For most of the parties involved in the adoption of NFC mobile payments, the reason to adopt is financial. For consumers it is also behavioral. Using NFC-equipped smartphones to make payments will be adopted only if it can make the payment process simpler, sleeker or provide specific incentive in the form of digital coupons or discounts.
NFC applications covers a broad spectrum industries (Click Image To Enlarge)
The multiple components that enable NFC-smartphone in-store payments have been falling into place over the last few years. Hundreds of millions of smartphone owners have already submitted their credit card data (one or multiple cards) to a range of vendors so as to be able purchase apps, or download songs, or purchase additional cloud-based storage. Tens of millions of consumers have become acclimatized – over the course of many years – to the idea of contactless payments using their credit and debit cards, and in some markets their contactless transport cards. For most people, using a fingerprint reader is a rare requirement, typically occurring only when passing through border control in some countries. But as of early 2015 it has become an everyday action for approaching 100 million individuals using phones equipped with a fingerprint reader.
So for smartphone users who already have credit card data linked to their phone, have made contactless payments and are accustomed to submitting a fingerprint to unlock their phone or authorize an app purchase, submitting a fingerprint reading to authorize a contactless payment should not feel unfamiliar.
The existence of hundreds of millions of contactless credit and debit cards should not constrain the usage of NFC-enabled smartphones as an additional means of payment. We would expect that when offered a choice, about 30 million individuals may opt to pay using their phone instead of a contactless card.
For some, this will be because they are more likely to be holding their phone than their wallet. A few may decide to pay by smartphone to signal their status as early adopters. With some approaches, a smartphone may offer a higher payment limit than a regular contactless card.
Some NFC-based smartphone payment systems require pre-payment. We would expect these systems to remain popular, and co-exist with approached linked to debit and credit cards. Pre-pay would prevail among the under-banked.
Bottom line
Contactless payment, initially in single-vendor closed-loop systems, has already been available for decades, but it is only in recent years that contactless cards have started to enjoy a surge in adoption. 2015 should see strong growth in contactless mobile and card payments usage, but the rise will be from a small base to a slightly less small base. Customer education and marketing will be essential to increase awareness of the ability to pay using a phone .
While we expect significant growth in usage in 2015 relative to the prior base, there many challenges remain before smartphone contactless payments can become mainstream, even in developed countries.
For financial institutions, smartphone contactless payments offer an additional way to transact which also may help maintain the current ecosystem, albeit at a cost in terms of commissions.
Retailers should consider four main benefits: reducing the need to protect customer data, the higher speed of contactless transactions relative to other payment means, the ability to attract consumers with higher disposable incomes, and the opportunity to provide more personalized experiences, for example by integrating loyalty schemes .
Handset vendors can differentiate their devices through the inclusion of components, such as a fingerprint reader, or a tokenization engine, that would enable contactless payments. These functionalities need to be offered as part of a payment ecosystem, and should be easy to use. Over time, other contactless processes such as premise entry and exit could be incorporated in a handset; and contactless payment is likely to be combined with other processes at the point of transaction, such as collection and redemption of loyalty points .
All players should consider how contactless smartphone payments could be made even more secure. One possible way of doing this would be to use the location data routinely collected by smartphones as a security check . Deviations from a normal purchasing location could trigger a request for further verification, such as PIN entry.
In the medium term the impact of contactless mobile is wide: it provides the opportunity to deliver new customer experiences such as displaying special offers in store to NFC based devices, it may catalyze the removal of point of sales systems for merchants. And NFC may become incorporated into a wider range of devices beyond phones.
COMMENTARY: Although NFC technology has been around since the late 1990's, it has been tough slugging trying to convince merchants and phone users to adopt contactless payments. There are several reasons for this as follows:
Fragmentation plagues the industry, hindering widespread adoption in the near term.
Many of the top retailers have their hands tied to CurrentC, a “clunky” retailer-led mobile payment initiative that, by relying on QR codes, keeps “friction” in the supposedly “frictionless” experience of paying with a smartphone. Some of the retailers that are not bound to a three-year exclusive contract with CurrentC will attempt to build out their own mobile-payment systems in an effort to keep a tight grip on their increasingly valuable customer data. And finally, existing players like Square and PayPal are building offerings to compete with the likes of Apple. That will all lead to a very disjointed space.
The mobile payment industry will be a tangled web for some time, delaying a universal change in consumer behavior. Mobile commerce will only take off once it is a habit — when people reach for their phones instead of their wallets to pay. “Habits, rather than conscious decision-making, shape 45 percent of the choices we make every day,” the New York Timesreported, citing a Duke University study. If the stores people visit have various systems in place and differing capabilities for accepting mobile payments, consumers will simply forget to use their smartphones to pay, even when they are in a store that accepts the system they are signed up with (and people won’t use multiple systems). For widespread adoption, one or two power players that capture widespread consumer participation and work across different operating systems will need to be accepted universally.
Brands focus on integrating coupon redemption and loyalty programs seamlessly with payment.
One of the most critical things for mobile actions is simplicity. On smaller screens, every ask from a brand must be completed in one or two taps. People won’t start paying via mobile, then go into Passbook to dig out a saved offer, then go back to a brand app (or physical wallet) to pull out their loyalty card. Understanding consumer intolerance for hassle on mobile, retailers are working feverishly to automatically bring in all aspects of the transaction (offers, payment, loyalty) so that they can, say, automatically scan Passbook for a loyalty card or any usable retailer or manufacturer coupons. While this is not available publicly yet, the selling point of mobile payments to consumers is that it streamlines the checkout process. So until retailers take the thought out of it, adoption, engagement, and advocacy will suffer.
Consumer adoption and comfort level of mobile payments will be hindered as hacking continues.
“Secure” has been a word that has been pitched with every mobile payment solution, and while mobile payments may well be safer than traditional transactions, consumers are not buying it, not wholly, at least. CurrentC was hacked before it even launched, and large retailers continue to be targeted. Mobile payments combine two things with which we all feel a heightened level of susceptibility: smartphones and our credit card information. As hackers become more aggressive than ever, security breaches are only going to continue. To ease consumers’ fears, retailers and providers like Apple must amp up their lines of protection and put generous resources toward educating shoppers on the many ways they are protected.
Mobile payments hold a lot of promise for both the consumer experience and merchant operations. As adoption accelerates, it will be important for brands to not look at mobile payments as just an exchange of funds between a customer and a company. The “ability to pay” via plastic or even phone has become a commodity, and brands need to instead consider payments as part of the overall customer journey. At this point, the real value is in enabling relationships via the always-on mobile channel where consumers are willing to have a conversation if the brand or retailer offers genuine help.
Courtesy of the Deloitte report titled "TMT Predictions 2015" dated August 1, 2015 appearing in Deloitte and an article dated January 10, 2015 appearing in VentureBeat
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