Interview with Casey S. Potenzone, Nexway, on key trends in the digital marketplace space

Mélisande Mual, Managing Director at The Paypers, interviewed Casey Potenzone, Chief Stategy Officer at Nexway during Monetize9, the first independent event in Europe focused on monetisation – payments, commerce, billing, and CPQ.

Could you briefly introduce Nexway to our readers? How did Nexway come to be and what is your expertise?

Nexway was originally founded in 2002 as telechargement.fr, right as the internet started to gain significant traction for purchasing software and games. Back before anyone had bandwidth, telechargement was focused on electronic software distribution (ESD) and digital goods distribution. That led to an entire business model, formed around distributing products for Adobe and Microsoft to consumers online. It started as an ESD solutions company but evolved into a full-service merchant of record-company, which is now Nexway. Nexway is about half-and-half merchant of record and digital distribution provider.

In ecommerce, one often makes a distinction between digital goods and digital services. How would you define digital goods and how would you define digital services?

It is tricky to answer this question, because there are very few authorities that can really state what constitutes a digital service or a digital good. For example, the geo-blocking legislation that was published recently, preventing companies within the EU from price restricting based on geographic location of the buyer, contains language describing what constitutes intellectual property and what constitutes a digital service. However, when looking at the geo-blocking restrictions, you will not find a definitive answer on whether an annual license to an anti-virus software is a digital service, or a digital good. The closest one can get to an authority telling the difference between a digital and a physical good or service are credit card companies, because you have to associate a code to it, and tax authorities, because you have to remit your taxes against this.

We find that often the definitions are blurry. For example, if I buy a cheeseburger from Deliveroo, there is no one that will tell me that that burger is a digital good. However, Deliveroo is selling me a digital service; facilitating the purchase and delivery of a physical product. It is very hard to describe what a digital service is, because it has become so blended; you have to do both, because consumers expect the digital processes to facilitate the access to that physical good. For us, it is ubiquitous. More and more companies find their spot within the digital/physical space, just look at Deliveroo, Uber, or Airbnb.

What would you point to as key trends in the digital goods and services market?

We live in an unprecedented age of change in how we buy and purchase things. In the US, it has become very disruptive: there are companies where you can subscribe to cars or mattresses. In France, we see a lot of companies that you would have never thought would do a subscription service; games, boats, kitchens, keyboards: every vertical is being impacted. The emergence of these new companies or purchasing models are indicators of the larger, global trend, and we promote agility in the companies that we support to manage this change. In addition, the digital marketplace space solves many of the traditional needs of a physical supply chain, so that you can sell products from a warehouse in France to the whole of Europe, for example.

While there are companies flourishing, some companies also meet their demise due to their inability to adapt to this new context of digital goods and services. I distinctly remember Toys-R-Us, a household name, going bankrupt recently because they were being outcompeted by their digital counterparts.

There is no particular requirement for digitally engaging with the consumer across the globe and this leads to a significant amount of complexity when it comes to managing an entire commerce platform. This is not only because you have to manage the customer interaction, which is mostly a digital interaction, but also because you need to manage the shopping environment, your shelves, if you wish. Then, you have to manage all your payments, or the shopping cart. And this is where the major changes and differences are happening across the world.

Every country or region is increasingly regulating the internet and digital commerce. Where the consumers are buying and where the services are consumed is driving new taxes and revenues for institutions. This is where most brands need help in managing the payment regulations and requirements, for both local and international payments. Another big difference is whether a brand or company decides to partner with someone to accelerate and simplify commerce, or whether they decide to build the infrastructure by themselves, and thus learn the hard way. But the fact remains: you have to learn or you have to partner.

What are the specific fraud-related challenges for ecommerce in the new business models?

One of the biggest fraud issues for ecommerce currently is friendly fraud, or chargeback fraud. The banks have made it so easy to request a refund through the chargeback mechanisms that there is now an increasing amount of friendly fraud occurring. This is a big challenge, because while we are trying to stop fraud, the financial institutions have made it very hard for merchants to deal with this new fraud. It is exploding in the US, and it is on the rise in Europe as well, due to the disappearance of customer service interactions. Five clicks are enough to ask for your money back (via a bank’s chargeback mechanism), and this has transformed friendly fraud into a revenue stream for some. As headless commerce really takes off, Know Your Customer (KYC) is going to be of utmost importance to merchants.

This also goes for the other side of things: big companies and brands have to maintain the ability of their customer relations, otherwise no one will return to buy something again. In the digital space, this means that companies have to be agile. Microservice platforms understand this and are more successful, and large companies will have to follow suit.

About Casey S. Potenzone

Chief Strategy Officer at Nexway, he is charged with building the company’s business portfolio on a worldwide level. He has been in the software space for 20 years, having started as a developer and engineer, and progressed into corporate management. Casey has written two patents in digital distribution and anti-hacking, and led several major innovations in software monetisation. 

About Nexway

Nexway is a leading provider of solutions to monetise digital businesses and connect companies to the worldwide digital market. Founded in 2002, the company has enjoyed rapid growth, thanks to strong and diversified partnerships. Based in Paris – La Défense, France, the company has subsidiaries in the US, Brazil, Germany, Italy, Spain, Poland, and Japan. Leading companies who rely on Nexway include retailers Orange, Yahoo! Japan, Softwareload, Best Buy, Amazon; and publishers Kaspersky Lab, Kingsoft, Adobe, 2K Games, Big Fish, ESET, Avast Software and many others.