The reinvention of commerce for mobile

Commerce reinvented on mobile

2014 was a huge turning point for the mobile commerce ecosystem. From 2010 to 2014, most of the retail, payments and technology industry’s mobile commerce focus was on turning the last moment pre-purchase in traditional retail and services industries — payments — into a mobile-enabled experience. The focus on mobile payments obscured a much larger and more fundamental shift — the reimagination of commerce in a mobile world. For the past 5 years, the most forward-looking companies have been focused on a much higher leverage opportunity than mobile payments: re-inventing the entire customer purchase journey with the mobile device as the centerpiece.

The entrepreneurs reinventing commerce have the potential to create a plethora of billion dollar-plus businesses across the globe and spur a massive shift in how consumers discover and purchase goods and services. The best mobile commerce apps and services created end-to-end customer experiences including discovery, selection, fulfillment, payment and customer support enabled by a well-trained, high quality, curated group of providers. Industry pioneers such as Uber, Airbnb, GrubHub, Instacart, Postmates, Handy and Shyp are only the leading wave of a large number of mobile companies constituting the The On-Demand Economy, a sector that Button believes will be 1,000x larger than anyone could have imagined in 2010.

Search and discovery reinvented on mobile

In parallel, there has been a shift away from traditional search as a means for commerce and discovery. In Q3 2014, 39% of shoppers began the purchase process on Amazon vs 11% on Google, a reversal from 2009 when only 18% started with Amazon and 24% with Google. But it wasn’t just Amazon — a number of mobile-first companies were sprouting and rapidly growing since purchasing via Google requires far more steps than purchasing from a dedicated commerce app. The traditional mobile purchase flow — 1) spend time consuming media or content in one app, 2) see advertising, 3) click or tap, 4) leave app or page via redirection, 5) enter new app, often to standard home page, 6) browse, 7) put cart together, 8) purchase — needed improving. The highly focused mobile commerce companies were meeting consumer demand in Google’s core revenue-generating segment, the small share of user search sessions with purchase intent that lead to the majority of advertising revenue. Dedicated apps were increasingly becoming the starting point for commerce rather than Google or sites & apps with advertising models ported from the desktop.

As the traditional search model struggles to find its place on mobile, where so much intelligence resides in apps that are far more difficult to index, it has become equally clear that traditional mobile ads aren’t working for advertisers or publishers today. Inflated click through rates due to fat thumbs are costing advertisers money while ruining mobile user experiences. And mobile ads that do work are sending users to suboptimal sites and apps that don’t meet their needs. Finally, the cost of the most effective mobile ad unit (app installs) continues to rise, making it ever more challenging for advertisers to achieve a positive ROI.

Button: Mobile apps as a new discovery and engagement channel

Fast forward to early 2014, and the individual members of the Button team saw a new phase of app discovery and engagement emerging — the mobile apps themselves. We came together in Q1 2014 with a vision of enabling smart connections between apps that drive installs, increase engagement and facilitate mobile commerce utilizing powerful deep linking technology. We wanted to provide a new channel for mobile apps to acquire and engage their users outside of the App Store, Play Store, Facebook, Google and ad networks. As Button co-founder Chris Maddern wrote, “apps are increasingly becoming thin wrappers around use cases, not weighty shells around brands.” By connecting these use-case focused apps with one another via deep links, Button makes the app world feel more like the web — we help capture intent in one app that can be fulfilled in another, complementary app. While doing so, we help to shorten the 8-step traditional mobile purchase flow fueled by advertising to a few simple taps. And any mobile app can now offer an extended experience via a lightweight Button integration, while simultaneously unlocking access to the largest category of mobile revenue growth: commerce.

Button has made a very specific decision not to become “just another mobile ad network” sending traffic from one app to another via generic ad placements. Rather, Button is focused on providing connective experiences as rich as the best mobile apps themselves, facilitated by deep link technology. Apps are far more functional than their mobile web counterparts and predecessors, taking advantage of deep operating system functionality (camera, accelerometer, microphone, GPS, etc). Additionally, in a mobile environment, it is possible to send more than simply intent to a recipient app. Utilizing deep links and layering intelligence on top of them, it is possible to pass intent plus context plus information and get ever closer to a “one-tap” experience that extends an experience beyond one mobile app into another.

A period of growth and momentum at Button

In the 10 months since the amazing Button team jumped at the opportunity to work together, the market has grown faster than even our optimistic team’s wildest expectations:

  • More than $10 billion in new funding flowed into the mobile commerce economy since the beginning of 2014
  • The mobile commerce economy is fundamentally reshaping industries and supporting new careers for millions of workers
  • International expansion has accelerated with Airbnb in 190 countries and Uber in 50
  • Scaled mobile on-demand verticals grew revenue and fulfillment at unprecedented pace across transportation, hospitality, food delivery and restaurant reservations. Uber provided more than 140 million rides in 2014, Airbnb surpassed 25 million guests all time, GrubHub Seamless had more than 4.57 million active diners in Q3 2014 and OpenTable seated more than 15 million diners per month
  • Significant scale was achieved in additional on-demand verticals: grocery, prepared food, tickets & events, general delivery & logistics, home services and care — baby, elder & pet
  • On-demand services in new verticals were introduced: shipping, storage, office space, health & beauty, laundry/dry cleaning, parking, curbside pickup
  • Technically, the leading on-demand companies are turning into platforms, opening up their APIs for 3rd parties to access “X as a service” with X being rides, general delivery, food delivery, home services, hospitality and much more.

At the same time, Button has grown in a number of ways and hit some very important milestones. Here is a quick sample:

  • Grew our team across all functions, which is comprised of talent from some of the most respected businesses in the world, including Google, Venmo, Braintree, Rakuten, PayPal, Meetup, Facebook, AdRoll, Unified Social, and Rocket Internet
  • Grew the number of partners in the Button Commerce Network, including some of the largest “Audience” apps and the largest mobile commerce company, Uber
  • Served as Founding Member of The On-Demand Economy as a leading organization to empower companies that are redefining commerce
  • Raised a Seed Round of $2.25M from some of the finest angel, seed and institutional VC investors in the world
  • Added the fantastic team at Redpoint as an investor in our A Round to accelerate growth in 2015 and beyond, bringing Button’s total capital raised to $14.25M

We couldn’t be more excited about what 2015 has in store for the mobile app ecosystem, app connections fueled by intelligent deep links and for Button. 2014 was an amazing year of foundational building for many companies and breakout growth for a select few. As we enter 2015, there is more consumer intent to purchase being generated on mobile than ever before. 2015 is the year that the new, superior end-to-end model of mobile commerce goes mainstream. It is the dawn of a new era in which purchase intent is captured and consumer demand is fulfilled via any mobile app at any time in any place at the touch of a button.

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