New Business Models
The massive potential of the Commerce of ThingsTM isn’t lost on those of us who think about business for a living. Michael E. Porter, writing in the Harvard Business Review, observes that the increasing connectivity of objects opens up “new business models for capturing value.” We agree. Right now, subscription services allow us to automate some of the transactions our lives require—but in the future, connected objects will do better. Rather than sending me coffee approximately when I need it, a smart coffee maker will send me a pound of beans exactly when I run out—never too late, and never when I’m out of town.
But making the Commerce of ThingsTM a reality will require an immense effort of innovation. To make daily purchases effortless and frictionless for consumers, manufacturers will need to assume the effort and friction of commerce themselves. Merchants will face existential challenges to traditional business models—most significantly, the challenge of adapting to the constant pressure of object-mediated micro transactions. When a company sells replacement toothbrush heads through traditional retail channels, it might sell a thousand products in a single transaction. But what happens when a thousand smart toothbrushes order their own replacement brushes individually? Rather than making a single sale, the toothbrush manufacturer will have to process a thousand tiny transactions—each of which comes with its own regulatory challenges, its own security risks, and its own payment processing costs.
Digital commerce infrastructure will be vital to manufacturers as they make the transformative shift to the Commerce of ThingsTM. Digital wallets will make it possible for refrigerators to buy milk while minimizing the risk of fraud. Servers that process payments will scale to accommodate tens of millions of transactions rather than thousands. Tax calculators will evolve to comply with local laws without requiring a human being to click a button every time. But developing this infrastructure is costly and demanding. Like all revolutionary changes in business, the Commerce of Things will not come without casualties.
How Digital River is leading the Commerce of ThingsTM
We believe that the new world of connected devices will enable the most nimble and foresighted manufacturers to thrive as never before. We are working every day to build the technological and business innovations that will liberate the potential of the Commerce of ThingsTM. We’re building the robust and easy-to-use application programming interfaces, or APIs, that will enable manufacturers and merchants and payment providers to build the commerce-enabled objects and interfaces of tomorrow. We’re constantly maintaining our deep expertise in regulatory and compliance matters to ensure that we can guide our clients through the complexities of commercial compliance wherever in the world they do business. And we’re building the next-generation Commerce Business Infrastructure that will smoothly scale to accommodate the massive quantity of micro transactions that commerce-enabled objects will generate.
At Digital River, our heritage is digital. Since our founding in 1994, we’ve enabled tens of thousands of companies to sell their products on the Internet. We started out by providing the commerce infrastructure to transform the sales of boxed software into digital downloads. Since then, we’ve evolved our SaaS offering from one-off downloads to live streaming, in-app and in-transaction product purchasing, subscriptions and pay-as-you-go models – an evolution that will help us release the transformative potential of the Commerce of Things.
In the months ahead, we’re going to share more about our vision for the Commerce of ThingsTM. Today, I want to invite you to share your thoughts. What kind of role will the Commerce of ThingsTM play in the future of your business?