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OpenTable’s taking initiatives to improve customers’ experience with bill settlements at restaurants
In the previous part of this series, we discussed how the U.S. online travel market is important, and how OpenTable (OPEN) could help Priceline (PCLN) increase its presence in the U.S. market. Here, we’ll discuss how OpenTable’s mobile technology initiatives would help Priceline. During the conference call to announce Q1 2014 earnings, OpenTable mentioned that it had identified check settling as a major irritation for diners as well as restaurants, and that it has recently started a mobile payment initiative through which customers can settle their bills at the restaurant using their mobile phones without the help of a server. The company also mentioned that its plan is to introduce mobile payments to at least 20 new markets in the second half of the year.
The mobile commerce market shows strong growth
According to eMarketer and as the chart above shows, the U.S. retail mobile commerce market will grow from $42 billion in 2013 to $58 billion in 2014 at a growth rate of 37%. The report also predicts that this market will grow to $133 billion by 2018, accounting for nearly 27% of retail eCommerce sales and 2.4% of total retail sales in the U.S. Interestingly, the report also mentions that two-thirds of these mobile commerce transactions will come from tablets in 2014, which will increase further to 75% by 2018.
eBay (EBAY), Amazon (AMZN), and Apple (AAPL) are some of the bigger players in this market. For example, eBay recently announced mobile partnerships with Samsung (SSNLF) and Deutsche Telecom (DTEGY), under which Paypal will be the first global payment company to enable fingerprint authentication for payments on the Samsung Galaxy S5 smartphone. It will also allow Deutsche Telecom’s 144 million customers to make purchases to their mobile phone account with PayPal.
How would OpenTable’s mobile technology help Priceline?
As we discussed, OpenTable has just started to take initiatives to leverage the growth of the mobile commerce market. Priceline could extend OpenTable’s technology for making payments on mobile to its online travel services such as flight, hotel, and car rental booking. Having its own mobile payments system would help it avoid paying commissions to third-party payment processing platforms and thereby improve its margins.
© 2013 Market Realist, Inc.