Investors want to find the next mobile Amazon

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As retailers scratch their heads to find ways to counter Amazon's ongoing disruption of their industry, investment is flowing to technology companies that meld shopping, payments and fulfillment.

"Amazon has set the bar for customer expectations around fulfillment. Consumers demand quick and seamless customer service, payment and delivery," said Stephan Schambach, founder and CEO of the Boston-based NewStore, which on Tuesday announced a $50 million investment in Series B funding from lead Activant Capital and returning investors General Catalyst and Schambach himself.

NewStore's mobile retail platform is designed to connect consumers to store staff and products, integrating with e-commerce platforms such as Salesforce Commerce Cloud, SAP Hybris, Oracle ATG and Magento.

Activant focuses on commerce investments. It was an early investor in Hybris, a desktop commerce platform acquired by SAP. It has also invested in RetailNext, Celect, New Stand and Turvo, which operates on the logistics side.

As Amazon dabbles in cashierless stores, delivery drones, mobile and voice-controlled ordering, traditional merchants have little choice but to compete with Amazon on a growing number of digital devices.

"We've seen mobile traffic take the lead in terms of traffic and transactions," said Steve Sarracino, founder and partner of the Greenwich, Conn.-based Activant Capital. "Existing ecommerce platforms and mobile solutions simply cannot manage omnichannel from end to end."

As payments becomes a service industry, the business of processing has become more competitive and it’s becoming harder differentiate, according to Sarracino. "We believe there will be a proliferation of payment providers bringing in additional software offerings to boost their cache in the market to merchants."

This could be in the form of providers offering point of sale systems like First Data with Clover, or more financial type services around lending to the business owner or allowing for APIs to embed payments in other apps, Sarracino said.

NewStore contends Amazon's high bar for customer experience can be matched, if not surpassed by leveraging brick-and-mortar locations to offer modern fulfillment options such as same-day delivery, "buy online, pickup in store" (BOPIS), and ship from store.

"But the industry is lagging," Schambach said. "Brands must move to a mobile-first mindset to match the experience customers expect. Embrace the simplicity and convenience that mobile offers, such as payment, communication, etc.; and supplement that with rich and unique branded content that will keep customers coming back."

NewStore's fees are based on improvements at the retailer, a "shared success model" as Schambach calls it. It has "several clients" including Adidas. NewStore is the technology behind Adidas' Glitch football (soccer) shoe shopping and ordering app, which is currently available in London and Berlin via an iOS app.

"We're seeing two major trends in retail right now. First, a true omnichannel experience is now table stakes," Schambach said. "Customers want the convenience of dictating their own customer journey, from choosing the channel they purchase to how their items are received. And second, the smartphone is the centerpiece of society, yet brands still haven’t figured out how to leverage mobile to connect customers with associates and products."

These trends also contribute to a permanent change in merchant acquiring, as the industry evolves away from providing payment hardware and software toward selling a full range of products to retailers.

"Traditional 'acquiring' is rapidly becoming merchant servicing, where payment acceptance is only part of a broader value proposition to merchants," said Zil Bareisis, a senior analyst at Celent.

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