The Introduction of Matrix Commerce

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There is no doubt that meeting customer expectations has become more complicated. Customers are shopping at all hours of the day and night and via multiple channels, and they want their items delivered quickly, with a dose of personalization thrown in as well.

Meeting these demands requires a Herculean effort, or what Constellation Research calls matrix commerce: the intersection of an omnichannel experience, demand signals, payment technologies, supply chains, frictionless enablers (e.g., digital signature providers), and big data.

"The challenge is to deliver the perfect order," Ray Wang, principal analyst and CEO of Constellation Research, says. That "can mean a lot of different things to different people, so what the seller needs is more complicated than just software; it requires getting down to the individual level…and making it look simple."

Delivering a seamless experience goes beyond B2B and B2C categories, Wang adds, and should instead be thought of as a "people-to-people" (P2P) approach. So far, only a few companies have come close to achieving the competitive edge of matrix commerce.

Not surprisingly, one of those companies is Amazon. "Amazon is affecting everyone's business," notes Forrester Research analyst Sucharita Mulpuru in a blog post. "Its tentacles extend far into digital and physical goods; it is vertically integrated but also a distributor; it is unafraid to spend money to gain market share, and it can successfully compete on price with retailers far bigger than itself."

Amazon is still extending its tentacles. The company continues to pump money into distribution centers and warehouses, and has introduced electronic lockers to brick-and-mortar stores, making it more convenient to pick up ordered items. It is also a huge provider of cloud-based services and is even going after one of its largest clients, Netflix, building its own library of streaming television shows and movies.

Despite its many offerings and resources, Amazon is not perfect. Amazon Web Service's repeated outages and the company's reputation for low profit margins are potential chinks in its armor. Amazon is "coming at [matrix commerce] from a lot of different directions, but they&'ve got a lot to do," Wang says.

Earlier this year, online payments provider PayPal and NCR, the self-service and point-of-sale solutions and hardware maker, took steps to close gaps in their respective services by joining forces and offering consumers more payment options. Through the partnership, the two companies agreed to integrate PayPal's mobile payment capabilities into NCR's Mobile Pay app and Aloha online ordering system. PayPal is also adding its mobile payment options to NCR's Convenience Go app, which can be used at gas stations and convenience stores, and the Netkey Endless Aisle app, an in-store shopping app.

As companies move from traditional business models to a buyer-centric approach, we can expect to see more partnerships like the one between PayPal and NCR, Wang predicts. "Companies are asking themselves, 'How do I add other components [to my services] to make it easier for the customers?'" he says.

Other trends are also becoming more apparent, according to Constellation Research's "Introducing Matrix Commerce" report. Mobile will continue to play a major role in customer-oriented business strategies. The research firm predicts that more than half (57 percent) of the predicted $100 billion in mobile sales will occur on smartphones by the end of the year. Businesses need to improve supply chain collaboration among partners, suppliers, and vendors, and invest more in big data insights to gain a competitive edge, according to the report.

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