X.commerce: designing a lingua franca

"The face of commerce is going to change more in the next three years than the last fifteen," said John Donahoe, President & CEO of eBay

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He's right. Until e-commerce arose, the way we bought things had not seen major innovation since the advent of the department store. Sure, global corporations, increasing use of credit cards and international business changed what we bought and who made money from the process, but most consumers still purchased in stores or via catalogs. We all know how e-commerce changed things starting in the late 90s, with PayPal and eBay at the center of creating cottage industries for online sellers and trusted online payment for brands of all sizes. 

Now, X.commerce, the new unified brand behind eBay and PayPal, wants to create a unified platform for the biggest changes commerce has seen in decades. 

Social, local, mobile: SoLoMo

These days, SoLoMo is the hottest new term—a confluence of social, local and mobile commerce. Social commerce can be roughly framed as the confluence of recommendations by people who actually matter to you, more relevant promotion, and a highly-responsive buzz engine that lets small, disruptive brands like TOMS shoes reach breakthrough sales figures in months or years, not decades. Local commerce, long limited to in-person interaction, joins mobile commerce—in-store price comparisons, location-sensitive coupons, reviews and even handheld checkouts. The innovations of e-commerce are getting far more personal and even better at empowering consumers—at least tech-savvy ones.

So far, though, the hodgepodge of services—Groupon, PayPal, Yelp, Milo, online shopping carts, small- and big-business inventory systems and the like—have not been integrated. Using SoLoMo innovations has meant a strong commitment to remembering passwords and peering into your smartphone in store aisles—or committing to one basic ecosystem, like Amazon.

X.commerce: a digital commerce lingua franca

X.commerce is planning to change the landscape of SoLoMo and retail at large. "Today, in almost half of all retail transactions, the consumer accessed the web at some point of their shopping experience," Donahoe told attendees at the X.commerce Innovate 2011 Conference. Citing smartphones enabled with apps like RedLaser and Milo, Donahoe describes the paradigm shift: "Consumers are taking the e out of e-commerce."

X.commerce is the merger of three key services—eBay, PayPal and the open-source online commerce platform Magento—via an ecosystem called X.commerce Fabric. This collection of synchronized backend tools integrates basics like inventory, shipping and payment information with site visitor analytics, advertising optimization, recommendations and more. By making X.commerce open and accessible, the big leagues are leveling the playing field—because it's good for business.

The Ecosystem 

Merging PayPal's electronic payment processing, eBay auction marketplaces and Magento's online shopping cart tools is only the beginning. Using X.commerce Fabric, small and large developers can create tools empowering merchants of all sizes to bridge the online/offline commerce divide. Suddenly, mom-and-pop soccer shops can access the same shopping cart and visitor-tracing tools industry giants like Target use.

X.commerce has an idealized clip that sums up how small merchants take advantage of this new ecosystem. [Jump to 7:16 in the video embedded below or click here]. In it, we see a transition from frustrated in-store customers, missing inventory and slow product changes to an idealized (and tech-centric) world of responsive commerce with happy merchants and consumers.

During the keynote, Matthew Mengerinck (VP and General Manager of X.commerce) demos the platform for a small shop called Soccer Pro in a cheeky makeover-special-themed clip. Check it out:  

In the video, a small shop's inventory is instantly integrated with any marketplace (like eBay) which opts into the X.commerce Fabric. At the same time, the owner's local foot traffic is integrated with local shopping service Milo and online marketing analytics from Adobe's SiteCatalyst (42:02). In one system, small merchants have access to new ways to sell and the ability to know how effective their online advertising is—a formerly challenging intersection of many, many systems.

Playing well with others: PayPal Access & Facebook

PayPal announced a big change in their user experience during the X.commerce Innnovate 2011 conference: the ability to sign in with one click. Much like the single sign-on tools offered by Google and Facebook, PayPal Access will allow merchants to work with PayPal and its users with less back-and-forth to the PayPal site and more integration. For example, verified shipping addresses can be automatically imported into a merchant's site once a PayPal user has signed in. 

Facebookjoined the conversation, too—through their increasingly flexible Open Graph standard, e-commerce sites built with Magento will now be able to integrate with Facebook. For example, a user could click "want" next to an item and their friends would see a news feed update saying Annie wants an iPhone from ABC Merchant. Users can also click 'own' next to an item to create a similar post. 

By simplifying payment and integrating with social tools users are already familiar with, X.commerce lowers the 'activation energy,' a software user experience term referring to effort required to complete an action (or transaction). At the same time, by being first to market with these innovations and strategic partnerships, they make it harder for other online payment tools to compete with them.

Small partners (and new acquistions) mean big innovation in the X.commerce neighborhood

Small software and business services startups, especially in the Software as a Service realm (SaaS) are helping X.commerce promise (and deliver on) meaningful small business support. X.commerce is clearly committed to startups, having bought a couple and presenting funding opportunities to others through their VC Bait/VC Speed Dating events. A few key players are emerging in the X.commerce ecosystem:

Kabbageis a firm allowing online retailers to quickly access cash to purchase inventory without the complexity of big-bank loans—allowing online sellers to quickly take advantage of emerging market trends. 

Kenshoo integrates and manages online advertising, allowing a reseller to optimize their Facebook, Google and e-mail marketing budgets, for example. In the X.commerce keynote demo, we saw a user dashboard which clearly indicated how an increased spend on e-mail had the best conversion value—without custom reports or needing to toggle between reports. What's more, the dashboard allowed the user to instantly adjust their ad spend. This is a critical piece for small merchants who may be incorrectly allocating their ad spends because they don't have time to analyze the results. 

FreshBooks provides simple billing and invoicing services for small business. With PayPal's business-to-business payments, merchants realize a huge savings over traditional merchant processing—and the service is integrated into FreshBooks.

Milo, a startup recently purchased by eBay, provides a simple mobile app to browse live online and local inventory. With X.commerce integration, local merchants can easily place their inventory in front of online mobile shoppers in the same way that big retailers do. 

RedLaser, another acquisition,provides in-store purchase support via barcode scanning. Now, with X.commerce and Milo integration, users can tap into huge catalogs of products with live inventory from both local and national retailers. 

Where, another startup recently bought up by the X.commerce team,puts reviews, activity suggestions and Groupon-like local coupons alongside Facebook-integrated social tools. This means users can suggest activities (restaurants, for example) to their friends as a way to find things to do together. Where brings place information and reviews into the X.commerce Fabric. 

The challenge: adding leadership to infrastructure

Purchases of startups, a stronger brand community and a clear commitment to be the biggest commerce player in the world—X.commerce's intentions are clear. Can they make it happen?

X.commerce's constituent parts—PayPal, eBay and the like—have become business-as-usual. Their combination further consolidates critical services and makes X.commerce a formidable competitor—or ally—for anyone entering the digital commerce realm (like Google Wallet and Square). Clearly, eBay intends to see huge surges in inventory listings and PayPal could benefit from increased transaction volume.

Right now, X.commerce seems to have solid technological backing, a strong position in the market and a healthy developer community. However, thought leadership around the future of commerce is lacking. The X.fabric behind the X.commerce platform is a critical tool for empowering small businesses, emerging markets, and new forms of entrepreneurship. So where's the discussion? The Fabric is also a place where innovation around the very nature of commerce, retail and merchants can change as middlemen are cut out and complexity is reduced. Conferences like Techonomy, TED, Wisdom 2.0 and the Compass Summit should have X.commerce leaders at the table to talk about how the changing nature of commerce is affecting (and being affected by) pressing world issues.

At the Innovate 2011 conference, a track existed on the future of commerce, but the tone was a little off. Presenters from Where, Milo and other firms created a world of what was possible with SoLoMo, but their messages fell flat with an audience of developers. While engaging developers in business innovation conversations is a laudable effort, X.commerce stands to benefit from creating an in-depth, focused conversation which invites more than developers to the table. Their Trends in Commerce conference track and Crazy or Brilliant site were a great start. To really be as disruptive as it aspires to be, the brand needs to increase its presence amongst major innovators in the startup scene and leaders within progressive Fortune 500 companies.