Keystone Law’s financial services partners Simon Deane-Johns and Simon Jackson are advising a creditor involved in the administration of UAB Payrnet. This failed e-money institution was formerly a subsidiary of failed Railsbank Technology Ltd and host of the old EU-based Wirecard prepaid programmes. The case has been the subject of a Regulatory Intelligence report, published by Thomson Reuters. A key issue in the Lithuanian administration proceedings is whether the ‘asset pool’ available to the administrator of UAB Payrnet extends to money held with Payrnet Ltd, a UK e-money institution in the Railsbank group. According to the Lithuanian regulator, UAB Payrnet appears to have held its customer funds with Payrnet Ltd under a controversial ‘intra-group’ arrangement. “Instead of keeping the funds in a dedicated account of a credit institution or central bank, it kept funds at another electronic money institution,” the Bank of Lithuania said, according to the Thomson Reuters report. The former group’s parent company, Railsbank Technology Ltd, entered administration in 2023. In March of that year, an arranged ‘pre-pack’ arrangement saw the FCA approve the change in control over Payrnet Ltd to a newly funded parent, Embedded Finance Ltd. UAB Payrnet was omitted from that deal and was then under restrictions imposed by the Lithuanian regulator. Its e-money authorisation was later revoked by the Bank of Lithuania. The administrator’s case is being heard in Vilnius County Court in Lithuania, with an initial decision expected on 8 July 2024. Simon Deane-Johns said: “The rarity of an electronic money institution abandoned to its fate in the insolvency courts highlights the significance of this case for not only creditors concerned, but also the safeguarding structures of prepaid card programmes throughout Europe and the UK. “The asset pool available to the administrator should include both relevant funds that were appropriately safeguarded, as well as sums equal to relevant funds that should have been – but were not – safeguarded in compliance with the regulations implementing the E-money Directive.” To read an analysis of the issues raised in this case, click here.
The Rise of Neo Banks: Revolutionizing the Future of Banking
As technology continues to advance at an unprecedented rate, the financial industry is also undergoing a major transformation. One of the most significant developments in recent years is the rise of neo banks, also known as digital banks or challenger banks. These innovative financial institutions are disrupting the traditional banking landscape and changing the way people interact with their money. In this blog post, we will explore what neo banks are, why they are gaining popularity, and how they are revolutionizing the future of banking. What are Neo Banks? Neo banks are fully digital, branchless banks that operate entirely online, without any physical branches. They offer financial services and products, such as checking and savings accounts, loans, payments, and more, through mobile apps and web platforms. Neo banks are built on cutting-edge technology and leverage data analytics, artificial intelligence, and automation to provide seamless and convenient banking experiences to their customers. They typically have lower overhead costs compared to traditional banks, allowing them to offer competitive fees, better interest rates, and unique features that are appealing to consumers. Why are Neo Banks Gaining Popularity? Neo banks have gained significant popularity in recent years for several reasons: Convenience: Neo banks offer a fully digital banking experience that can be accessed anytime, anywhere through a mobile app or web platform. Customers can manage their accounts, make payments, and perform other banking tasks with just a few taps on their smartphones, eliminating the need to visit physical bank branches. User-friendly Interfaces: Neo banks are known for their user-friendly and intuitive interfaces, which make banking easy and accessible, even for those with limited financial literacy. They often offer sleek, modern designs, and personalized features that provide a seamless and enjoyable banking experience. Competitive Fees and Rates: Neo banks typically have lower fees compared to traditional banks, and may even offer fee-free banking options. They also tend to offer competitive interest rates on savings accounts and loans, providing attractive incentives for consumers to switch to a digital bank. Innovative Features: Neo banks are known for their innovative features that go beyond traditional banking services. These can include real-time transaction notifications, spending insights and analytics, budgeting tools, automatic savings, and more. These features are designed to help users better manage their finances and achieve their financial goals. Flexibility and Agility: Neo banks are often more agile and flexible compared to traditional banks, as they are not burdened by legacy systems and processes. This allows them to adapt quickly to changing customer needs and preferences, and rapidly innovate and update their offerings. How are Neo Banks Revolutionizing the Future of Banking? The rise of neo banks is fundamentally changing the future of banking in several ways: Increased Competition: Neo banks are challenging the traditional banking model by offering competitive and innovative products and services. This has forced traditional banks to adapt and evolve to stay competitive, leading to increased innovation and customer-centric approaches in the industry. Financial Inclusion: Neo banks are helping to bridge the gap of financial inclusion by offering banking services to underserved or unbanked populations. Digital banks are often more accessible, affordable, and convenient, making banking services available to a wider range of people who may not have had access to traditional banking services before. Customer-Centric Approach: Neo banks are known for their customer-centric approach, focusing on providing personalized and convenient banking experiences. They leverage technology to better understand customer needs and preferences, and tailor their offerings accordingly, creating a more customer-centric banking relationship. Technological Innovation: Neo banks are at the forefront of technological innovation in the financial industry. They leverage advanced technologies such as artificial intelligence, machine learning, and big data analytics to automate processes, improve efficiency, and provide better customer experiences. Disruptive Business Models
Neo Banks in E-commerce: Revolutionizing Online Payments and Financial Services
In the fast-paced world of e-commerce, innovation and convenience are key drivers of success. One area that has been rapidly evolving is online payments and financial services, and neo banks are at the forefront of this revolution. In this blog post, we will explore how neo banks are disrupting the e-commerce landscape, and revolutionizing online payments and financial services. What are Neo Banks? Neo banks, also known as digital banks or challenger banks, are fully digital financial institutions that operate entirely online. They offer a range of financial services, including checking and savings accounts, payments, loans, and more, through mobile apps and web platforms. Neo banks are built on advanced technology, such as data analytics, artificial intelligence, and automation, to provide seamless and convenient banking experiences to their customers. Neo Banks and E-commerce Neo banks are making a significant impact on the world of e-commerce, transforming the way online businesses manage their payments and financial transactions. Here are some key ways in which neo banks are revolutionizing e-commerce: Seamless Payment Experiences: Neo banks are known for their smooth and seamless payment experiences. They offer fast and secure online payment processing, with features such as instant transaction notifications, real-time spending insights, and quick fund transfers. This helps online businesses to provide a seamless checkout process for their customers, leading to higher conversion rates and improved customer satisfaction. Competitive Fees and Rates: Neo banks often offer competitive fees and rates compared to traditional payment processors. They may offer lower transaction fees, reduced foreign exchange fees, and better exchange rates for international payments, which can save e-commerce businesses money on transaction costs. Cross-border Payments: Neo banks are well-equipped to handle cross-border payments, which can be a major pain point for online businesses. They can offer faster and more cost-effective international payments, with transparent and competitive foreign exchange rates. This enables e-commerce businesses to expand their customer base globally and engage in international trade more efficiently. Business Banking Features: Many neo banks offer specialized business banking features tailored for e-commerce businesses. These can include virtual business accounts, merchant services, customizable payment links, and automated accounting integrations. These features can streamline financial management for e-commerce businesses, making it easier to track and manage payments, and reconcile transactions. Flexible Financing Options: Neo banks may also offer flexible financing options for e-commerce businesses, such as business loans, lines of credit, or invoice financing. These financing options can provide much-needed capital for businesses to grow, invest in inventory, or expand their operations, without the lengthy and cumbersome loan application process often associated with traditional banks. Enhanced Security: Neo banks prioritize security, using advanced encryption and authentication measures to protect customer data and transactions. This can help reduce the risk of online fraud and unauthorized transactions, providing added peace of mind for e-commerce businesses and their customers. Conclusion In conclusion, neo banks are revolutionizing the e-commerce landscape by providing seamless and convenient online payments and financial services. They offer competitive fees and rates, specialized business banking features, flexible financing options, and enhanced security measures. As e-commerce continues to grow and evolve, neo banks are poised to play a significant role in shaping the future of online payments and financial services for businesses of all sizes. By leveraging technology and customer-centric approaches, neo banks are empowering e-commerce businesses to thrive in the digital economy.
Northern Ireland Protocol: the UK’s solution
Updated 14 July 2022 The Government has set out the range of issues caused by the Northern Ireland Protocol. These include trade disruption and diversion, significant costs and bureaucracy for traders and areas where people in Northern Ireland have not been able to benefit fully from the same advantages as those in the rest of the United Kingdom. This has contributed to a deep sense of concern that the links between Great Britain and Northern Ireland have been undermined. This document outlines the UK’s solution—fixing the problems so that Northern Ireland can move forward, while protecting the UK and EU markets so that no-one loses out. The UK approach Our preference is to negotiate solutions to the problems being faced by businesses, citizens and communities. Unfortunately, after eighteen months of talks we have not so far been able to agree on an outcome that provides a sustainable basis for operating the Protocol. But we have made clear and comprehensive proposals which would deliver that sustainability, address the full range of issues raised by the Protocol and restore the balance of the Belfast (Good Friday) Agreement. This document outlines those proposals. In short they would: We have also been clear that there are elements of the Protocol which are operating well and which should be preserved—such as on the Common Travel Area and North-South Cooperation. Given the urgency and seriousness of the problems in Northern Ireland, we will be bringing forward legislation that will enable the sustainable operation of the Protocol in line with these proposals. In parallel we will seek proactively to achieve the same objectives through a negotiated settlement. Our legislation allows us to implement a negotiated agreement. In all scenarios we will remain committed to avoiding a hard border on the island of Ireland, and to respecting the EU’s legitimate interest to see its Single Market protected. 1. Trade: customs and agrifood What is the problem The UK has always accepted that special arrangements are necessary for the unique situation of Northern Ireland. But NI’s place in the UK internal market is being undermined due to the unnecessary checks and paperwork imposed by the Protocol. The Protocol confirms Northern Ireland’s place in the UK’s customs territory and internal market. But it imposes burdensome bureaucracy and paperwork, including full customs processes and onerous SPS import requirements, even for goods staying in the UK and not going to the EU. This has had impacts on costs for businesses and availability for consumers – with the prospect of further disruption for key sectors if existing grace periods are removed. Why we need to change the Protocol The Protocol treats goods going from Great Britain to Northern Ireland as if they were going to another country. Full international trade processes apply no matter where the goods are destined. Articles 5(3) and (4) of the Protocol apply full EU customs, and animal and plant health rules as goods move into Northern Ireland – with only very limited tariff easements for goods ‘not at risk’ of going into the EU under Article 5(2). Businesses in Northern Ireland agree that this framework does not work for internal UK movements and needs to change. The EU has made proposals in October 2021 for an ‘express lane’ which were a response to the very significant challenges faced by businesses and consumers. But the conditions and limitations around these ‘non-paper’ proposals mean that they do not go far enough to make the Protocol sustainable for the future, still leaving: These are only the most visible and burdensome requirements, there are many others which individually and collectively have a chilling effect on trade, and affect the viability of East-West trade. UK solution A new green and red lane approach backed by commercial data and a trusted trader scheme – removing burdens on internal UK trade while avoiding a border on the island of Ireland, protecting both markets and vastly reducing burdens for people and businesses. Green lane for UK goods Goods staying in the UK would be freed of unnecessary paperwork, checks and duties, with only ordinary commercial information required rather than customs processes or complex certification requirements for agrifood products. This reduces checks on agri-food goods; removes tariffs on UK trade; and lifts unnecessary bans on goods. Red lane for EU goods Goods going to the EU, or moved by traders not in the new trusted trader scheme, would be subject to full checks and controls and full customs procedures—protecting the EU Single Market. Trusted trader scheme overseen by UK authorities The green lane would be reserved for those in a new, trusted trader scheme covering all goods movements. Traders will provide detailed information on their operations and supply chains to support robust audit and compliance work. Non-commercial goods, such as post and parcels, will automatically go through the green lane without the need for registration. Strict and substantial penalties Traders who abuse the new system will face robust penalties, including civil and criminal charges – and would not be able to use the green lane in the event of non-compliance. Robust data-sharing The UK is already providing more than a million rows of data per week with the EU. In the new model we would continue to share with the EU data assured by the UK government on the operation of the trusted trader scheme and on all goods moving between GB and NI – to monitor the risk of abuse and to allow for risk-led, intelligence sharing and co-operation. Rapid risk management Where a different order of risk is posed, we will continue to apply controls – just as we did before the UK’s departure from the EU (as on live animals). UK and EU authorities would work together, under a new bespoke biosecurity assurance framework, to manage arrangements for goods that pose a different order of risk. 2. Regulations What is the problem The rules applied by the Protocol place barriers between Great Britain and Northern Ireland – barriers which will only increase as UK and
10 advantages of sourcing from China
Manufacturing products from china is considered as a practice that is recognized as a vital asset to have reduced costs in works by international businesses. Various brands utilize this opportunity, and this quality has turned Chinese manufacturing procedure into a staple to successful manufacturing. The product sourcing companies find it advantageous to source various products from China due to the low labor cost. Many small and medium-sized businesses and even some of the leading brands have understood the importance of sourcing products from China over the last few years. For example, in 2019, about 28% of the global vehicle output had been manufactured in China. Other industries have also turned to China to look for reliable Original Equipment Manufacturers. If done successfully, importing products from Chinese manufacturers can help you increase your profit margin, lower labor costs, and ensure uninterrupted supply throughout the year. Unfortunately, you can still see a lot of myths and misinformation flying around. Some say that you can’t find high-quality products made in China. The truth, however, is that sourcing from China can be your best option. We can help you as we are specialists in the Chinese market. 2019 Data Exports (China to EE.UU.) → $429B (RNK 1/209) Main product (China to EE.UU.) → $50,5B (broadcasting equipment). Economic complexity (China) → 1.01 (RNK 29/146) GPD → $14.3T (RNK 2/187) GPD Growth → 181% (6/187) Source. Let’s see 10 benefits or advantages of sourcing products from China, which will help change your mind. The Growing Chinese Economy It is noteworthy that China has set itself up as the second-largest economy of the world. Recently it has shown its credentials as the largest existing manufacturer of the world. It has been acknowledged as the most influential manufacturing country for two years. This country’s economy is increasing rapidly and sourcing the products can prove a good step for a business owner. Most international companies identify the Chinese sourcing agent’s capabilities and establish a selling-buying relationship to flourish in the market. If you are still searching for ideal suppliers, Chinese sourcing agents can provide you with the required products. Low cost country sourcing advantages : Speed E-commerce and the internet have accelerated the pace at which trends spread and vanish, and the rate at which products are copied, turning speed-to-market into a rising priority. China’s integrated supply chains are a key advantage when it comes to fast-tracking your supply chain. Its production ecosystems offer a hard-to-match concentration of input suppliers, assembly factories, skilled workers, and service providers — all at a massive scale and for a broad range of low-tech, mid-tech, and even high-tech products. According to a European Commission report, China adds 76% of the value of the goods it exports on average (close to the EU’s 87%) which shows how little it depends on imported inputs. This explains why the production of goods requiring several components, such as electrical ones, has largely remained in China. Expansive Supplier Base Western businesses can take advantage of an extensive network of suppliers in China, which is why so many of today’s successful companies import goods like electronics, textiles, toys, and more. With such an expansive supplier base at your leisure, you’ll certainly benefit from working with a sourcing agent. Companies like these can leverage years of cultural understanding, knowledge, and relationships to help you import products from anywhere in the world. We can help you. Reducing the Risks When you source products from China, you decide on a well-managed sourcing process that enables you to cut down the potential dangers while sourcing. Sourcing products from China means you will be directly involved with every step. This, in turn, will help you get early warnings of fraud risks, undue profits, and untimely deliveries so that you can act upon them to reduce them efficiently. Cost-Value Even as other considerations gain relevance, finding good value at a reasonable cost remains a sourcing priority. China is at a stage where rising productivity and quality gains are high enough to partly offset the effects of its rising labour, property, and compliance costs (all about China executive search). Fast-paced automation is a key driver behind China’s rising productivity. In 2011, US carmakers deployed three times as many industrial robots as Chinese factories, but China reached parity in just five years, according to a Boston Consulting Group report. Better Scaling Capabilities The infrastructure in China is well established and robust. Most Chinese manufacturers also have years of experience and in-depth knowledge of global supply chain management. Both these factors allow them to scale-up manufacturing as and when required. For example, you can increase your sourcing products from a few thousand to more than a million in just a few days or weeks at the most. Of course, the time for scaling up will depend on the type of your product and the availability of raw materials, among other things. Furthermore, most manufacturers’ policies do not require buyers to invest heavily in Minimum Order Quantity (MOQ). You have to pay considerably lower costs for MOQ, allowing startups and small businesses to start sourcing products in small quantities. You can, however, scale up as your business grows. If you are a new company looking to establish your brand, there is no better alternative than taking advantage of manufacturing in China. Freedom to Choose Desirable Factory When you choose local suppliers, you don’t get the liberty to check the working terms and conditions. You just must inform about the specific product to your supplier. If they can meet your expectations, you will get the desired products else hard luck. But with Chinese product sourcing, you get the provision to visit the factories in person and check their working conditions. You also get to select from a variety of factories and discuss your requirements. Therefore, when you are sourcing the products directly from China, you get to select the appropriate products and the respective factories that manufacturers the required products. Sourcing from China: Sustainability Consumers’ growing demands for ethically
6 problems you may encounter when working with Chinese suppliers
Many people who want to start an import business often do not take the first step because they are afraid of having problems with Chinese suppliers from the very beginning. Many people who want to start an import business often do not take the first step because they are afraid of having problems with Chinese suppliers from the very beginning. Like any kind of business, starting to import from China requires knowledge and caution before we put our money on the line. Below we are going to talk about some problems with Chinese suppliers that you may encounter in different parts of the import process. Resume Lack of motivation on the part of the supplier The supplier is not able to make the product according to your quality standards Uncontrolled production costs and the supplier trying to raise prices all the time Longer delivery times Your production is made by a company you don’t know The supplier does not solve the problems found in the quality inspection Let’s see 6 problems you may encounter with Chinese suppliers. Lack of motivation on the part of the supplier It means that the supplier does not quite believe in your business idea or your product. This happens when you are developing a new product in China. The supplier says yes to everything, but once you get going and start developing the product to your liking, you notice that replies to emails are delayed, deadlines are extended, everything seems to be moving at a suffocatingly slow pace. This happens all too often when you try to over-configure a product. If it’s just changing the logo, everything is easy, but if you want to change a feature of the product and you need to make molds, you may start to notice that days turn into weeks and then into months. The supplier is not able to make the product according to your quality standards It’s more common than you might think. If your quality standards are above average, make sure you locate a supplier who understands them before you start production. If you expect production to be defect-free, be sure to indicate this when you place your order. Even the big brands accept defects in their production. The key is to stipulate everything in advance. Uncontrolled production costs and the supplier trying to raise prices all the time This is one of the problems with Chinese suppliers that often occurs when you search for suppliers and end up selecting the lowest priced one. You have closed the order in a rather informal way with the cheapest supplier and you have made a down payment of 30% of the total order. From that moment on you start receiving a series of emails telling you that such and such a material or other component has gone up in price and they can’t keep the original quote. Or you simply ask them to make a small modification in the packing and you see that the total price of the product increases by 10%. These are signs that the cost of the product was underestimated in the initial quotation and the supplier is trying to make a better profit margin. Longer delivery times Depending on the supplier you have selected and the type of order you are going to place, you may find that the delivery time is stretched out as if there is no end to it. If you are placing a small order with a large company, you should assume that your order will be delayed because your production will only start when there is a gap between their large orders. The same is true if your order is more complex than is usual for a normal production run. This is an important feature when locating suppliers in China. Your production is made by a company you don’t know This is also more frequent than it seems at first glance. This type of problem with Chinese suppliers is due to the fact that we always run the risk that our production is not carried out in the supplier’s main plant and that it is carried out in an external company where the same controls are not in place as in the main company. This problem is easily solved by carrying out the corresponding production controls and warning the supplier that such controls are going to be carried out. In this way, the supplier will be aware that an inspector may come to his company at any time and may notice the deception. The supplier does not solve the problems found in the quality inspection The risk in this case is that the supplier does not fix the problems we have found during the quality inspection. This happens very often when you work with a trading company that does not have enough control over its suppliers. If you are interested in starting to import from the Chinese market, please contact us. We are specialists in the Chinese market and are used to dealing with Western companies. Article from: https://bespokesourcing.com A sourcing company based in Shanghai with more than 12 years experience, offering medium to large international businesses a full range of sourcing services to import from China. We help you find factories, get competitive prices, follow up production, ensure quality, and deliver products to your door. At Bespoke Sourcing Global we have extensive knowledge across all industries. Our highly trained team is divided by categories and we have a carefully curated department for apparel. Throughout the years we have gained a strong network of loyal and recurring clients at an international level. We aim to develop long-term relationships based on trust, transparency and business integrity. We have expanded by opening sales offices across Asia, Europe and the Americas which means we are able to closely integrate with both our clients and their supply markets.
Check how to import or export goods
By Gov.uk Use this service to get information about importing and exporting goods for your business, including: You’ll need to know: GO TO GOV.UK Get help if you have difficulty using a computer If you have difficulty using a computer, you can call the Assisted Digital Team. Assisted Digital TeamTelephone: 0204 551 0011Monday to Friday, 9am to 5pmFind out about call charges Related content Collection Explore the topic
Why Online2Offline Commerce Is A Trillion Dollar Business
What Is Online-To-Offline (O2O) Commerce? Online-to-offline (O2O) commerce is a business strategy that draws potential customers from online channels to make purchases in physical stores. Online-to-offline (O2O) commerce identifies customers in the online space, such as through emails and Internet advertising, and then uses a variety of tools and approaches to entice the customers to leave the online space. This type of strategy incorporates techniques used in online marketing with those used in brick-and-mortar marketing. With the growth of local commerce on the Web, the links between online and physical commerce are becoming stronger. In this guest post, Alex Rampell, the CEO and founder of TrialPay, explores the forces behind what he calls “online2offline” commerce. Online-to-offline (O2O) commerce is a business model that draws potential customers from online channels to make purchases in physical stores. Techniques that O2O commerce companies may employ include in-store pick-up of items purchased online, allowing items purchased online to be returned at a physical store, and allowing customers to place orders online while at a physical store. Amazon’s purchase of Whole Foods Markets and Walmart’s acquisition of Jet.com are two examples of O2O commerce. Target, Walmart, Kroger, Nordstrom, and many other retailers have increased home delivery and/or curbside pickup services as two effective O2O strategies to meet consumer needs for safe shopping options. What do Groupon, OpenTable, Restaurant.com, and SpaFinder all have in common? They grease the wheels of online-to-offline commerce. Groupon’s growth has been nothing short of extraordinary, but it’s merely a small subset of an even larger category which I’d like to call online-to-offline commerce, or On2Off (O2O) commerce, in the vein of other commerce terms like B2C, B2B, and C2C. Bear with me. The key to O2O is that it finds consumers online and brings them into real-world stores. It is a combination of payment model and foot traffic generator for merchants (as well as a “discovery” mechanism for consumers) that creates offline purchases. It is inherently measurable, since every transaction (or reservation, for things like OpenTable) happens online. This is distinctively different from the directory model (think: Yelp, CitySearch, etc) in that the addition of payment helps quantify performance and close the loop—more on that later. In retrospect, the fact that this is “big,” or that Groupon has been able to grow high-margin revenues faster than almost any other company in the history of the Internet, seems pretty obvious. Your average ecommerce shopper spends about $1,000 per year. Let’s say your average American earns about $40,000 per year. What happens to the other $39,000? (The delta is higher when you consider that ecommerce shoppers are higher-income Americans than most, but the point is the same). Answer: most of it (disposable income after taxes) is spent locally. You spend money at coffee shops, bars, gyms, restaurants, gas stations, plumbers, dry-cleaners, and hair salons. Excluding travel, online B2C commerce is largely stuff that you order online and gets shipped to you in a box. It’s boring, although the ecommerce industry has figured out an increasing number of items to sell online (witness Zappos’s success with shoes: $0->$1B in 10 years, or BlueNile’s with jewelry). How Online-To-Offline (O2O) Commerce Works Retailers once fretted that they would not be able to compete with e-commerce companies that sold goods online, especially in terms of price and selection. Physical stores required high fixed costs (rent) and many employees to run the stores and, because of limited space, they were unable to offer as wide a selection of goods. Online retailers could offer a vast selection without having to pay for as many employees and only needed access to shipping companies in order to sell their goods. Some companies that have both an online presence and an offline presence (physical stores) treat the two different channels as complements rather than competitors. The goal of online-to-offline commerce is to create product and service awareness online, allowing potential customers to research different offerings and then visit the local brick-and-mortar store to make a purchase. Techniques that O2O commerce companies may employ include in-store pick-up of items purchased online, allowing items purchased online to be returned at a physical store, and allowing customers to place orders online while at a physical store. FedEx can’t deliver social experiences like restaurants, bars, Yoga, sailing, tennis lessons, or pole dancing, but Groupon does. Moreover, for your locally owned and operated Yoga studio, there is little marginal cost to add customers to a partially filled class, meaning that the business model of reselling “local” is often more lucrative than the traditional ecommerce model of buying commodity inventory low, selling it higher, and keeping the difference while managing perishable or depreciating inventory. The important thing about companies like O2O commerce companies is that performance is readily quantifiable, which is one of the tenets of O2O commerce. Traditional ecommerce tracks conversion using things like cookies and pixels. Zappos can determine their ROI for online marketing because every completed order has “tracking code” on the confirmation page. Offline commerce doesn’t have this luxury; the bouncer at the bar isn’t examining your iPhone’s browsing history. But O2O makes this easy; because the transaction happens online, the same tools are now available to the offline world, and the whole thing is brokered via intermediaries like OpenTable or SpaFinder. This has proven to be a far more profitable and scalable model than selling advertising to local establishments; it’s entirely due to the collection of payment by the online intermediary. Does Groupon deserve a billion-dollar valuation? It’s easy to see a world where O2O commerce dwarfs traditional (stuff in a box) e-commerce—simply because offline commerce itself dwarfs online commerce, and O2O is simply shifting the discovery and payment online. If Groupon can grow its leadership position, I predict a multi-billion dollar valuation based on discounted cash flow alone. Groupon is not a gimmick or a game, but a successful example of offline commerce being driven by an online storefront and transaction engine. Venture capitalists and entrepreneurs would be wise to think
