With the acquisition of Jetlore, PayPal joins a multiplying cluster of payments companies moving into commerce software. Owning such assets brings these buyers one step up in the sales process and is a natural way to leverage their consumer data. Not to mention, software has higher margins than payments. But perhaps more importantly, it lands them in one of the more dynamic corners of the software market.
In Jetlore, PayPal gets commerce personalization software that applies machine learning to customer data to automate the layout for email, landing pages and product listings for large retailers. By catering to the digital side of the largest retailers, the acquisition stands in contrast to PayPal’s previous purchase, the $2.2bn pickup of iZettle, which was meant to expand into brick-and-mortar sales at SMBs. (Although terms of its Jetlore buy weren’t disclosed, the price paid for the lightly funded target likely contrasts with iZettle’s haul as much as the respective rationales.)
The acquirer took a small step into commerce software late last year with the launch of PayPal Marketing Solutions, which provides merchants with data and analysis about the consumers on their sites that use PayPal. That unit will now be home to the Jetlore team, where PayPal’s shopper data could potentially be used to help train Jetlore’s algorithms.
More importantly, as retailers adjust to mushrooming digital (and mobile) shoppers and search for ways to fend off Amazon’s growing dominance, commerce software is drawing an outsized share of tech budgets. In 451 Research’s VoCUL, Corporate Mobility and Digital Transformation survey, digital commerce and the closely related web-experience management were two of the three most commonly cited categories when respondents were asked about which applications their organization would deploy or upgrade in the next 12 months.
PayPal rival Square recently inked a deal for Weebly that covers both of those categories. Moreover, Vista Equity Partners’ acquisition of payments provider Fiverun, which it merged with commerce software vendors MarketLive and Shopatron, also highlights the opportunity to mix payments with commerce software. Yet, as payments companies take a natural step up the funnel with commerce, marketing software firms are taking a similar step down the funnel with commerce (see Adobe’s recent acquisition of Magento).
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