Profiting from the cracks in Amazon's global e-commerce platform
Many companies in the payments industry position themselves as the answer to the competitive threat of Amazon. But that's not the only option out there.
"We do position ourselves as Amazon experts," said Richard Gilbert, director of strategic partnerships in North America for Payoneer. "It's core to our strategy to work with Amazon sellers, and it is the bulk of my business as well as a significant percentage of Payoneer's overall business."
Small e-commerce businesses — the ones that sell within Amazon's ecosystem rather than try to compete with it — are vital to Payoneer's international expansion strategy as the vendor works to go beyond facilitating mass digital payouts on its wholesale business side.
Payoneer's ability to convert 150 currencies as part of its money transfer and e-commerce payments services puts it in a position to stake a claim as the largest provider of those services for Amazon sellers.
Even though it is not the only marketplace in which New York-based Payoneer enables sellers to expand to entire new markets of consumers, Amazon represents a major enabler of Payoneer's business model.
"It all starts with a marketplace like Amazon, and we have been able to reduce the barriers to entry by enabling a foreign seller to enter another country and sell goods and services," Gilbert said.
In that manner, Payoneer facilitates the payouts to sellers in 25 currencies that Amazon does not support, working through the relationships the company has established with a network of nearly 50 banks.
Payoneer does not stray far from its focus as a money transmitter and converting of one currency to another. It is not a merchant processor like Stripe and others, so Amazon and other marketplaces act as the merchant of record.
Payoneer has a different niche than what other providers seek from China and other markets, such as Stripe's recent collaboration with WeChat and Alipay to make it easier for merchants around the world to accept payments from Chinese consumers.
Mostly, Payoneer comes into play when a seller on Amazon's U.S. site wants to make the move to Amazon U.K., Amazon China or even other non-Amazon global marketplaces.
And it keeps Payoneer in a good spot, as it has found one of the few pain points that Amazon doesn't address on its own, said Gil Luria, director of research for equity capital markets at D.A. Davidson & Co.
"I believe there may be limited opportunities to add value as a payment provider on Amazon," Luria said. "These opportunities may be capped by the fact that Amazon broadly handles most payments aspects and if an opportunity became too big they would address it internally."
In addition to currency conversion, Payoneer offers a Mastercard debit card to enable the payee to receive funds in its local currency and to use at an ATM or conduct e-commerce transactions. Payoneer is a registered member service provider for Mastercard.
The spread of Amazon's presence and prowess bodes well for Payoneer, which had already been contemplating how to best use its strength in non-European markets in the wake of the Brexit vote in the U.K.
Specifically, and despite some political tensions, Payoneer would like to facilitate Amazon sellers' transition into the Amazon China market.
"I work with the Amazon China team because they are interested in U.S. sellers and the China market is a hyper competitive market," Gilbert said. "It's of strategic importance for Amazon to expand market share."