6/30/2023 0 Comments Lightspeed evo lender integration![]() ![]() ![]() More broadly, if a software company knows the purchasing behavior of its customer - what, when, and how they buy - that information can and should inform its financial services offerings. ![]() Capital spent on acquisition marketing, for example, should be financed on more favorable terms than, say, capital spent on restocking the artisanal beer in the company fridge. Clearbanc, a lender to e-commerce merchants, pioneered the concept of use case-specific financing: a business deserves a different financing rate if the lender knows how the capital will be spent. There are several reasons why it makes sense for businesses to procure their supplies through software: centralization and efficiency of using a single platform, price transparency, customization predicated on past order history, and access to negotiated price discounts.īeyond those advantages, a more subtle yet powerful benefit is in the synergy between embedded fintech and procurement. Embedded procurement may represent an even larger revenue opportunity: inventory is the largest business expense after labor for most SMBs. Several vertical payments platforms are rapidly growing in their respective domains, and the embedded procurement opportunity significantly expands these companies’ addressable markets far beyond their initial payments revenue models. Lightspeed, a publicly traded POS company, announced the launch of Lightspeed Supplier Market in January 2021, becoming the first POS platform to connect SMBs directly to suppliers. ![]() Point-of-sale systems are a natural foundation for embedded procurement. Borrowing a concept from the healthcare world, vertical software companies will become group purchasing organizations in every sector. In turn, Fresha can aggregate demand from thousands of spas to place orders with their suppliers, leveraging its scale to negotiate more favorable pricing on behalf of its customers. In the future, Fresha will undoubtedly turn to embedded procurement, becoming a logical place for business owners to order and manage inventory like shampoo, scissors, brushes, and other supplies. The software is free for salons and Fresha monetizes through payment processing. Fresha’s platform is an online and mobile platform specially designed for spas and salons, encompassing appointment scheduling, reporting and analytics, marketing promotions, and point-of-sale capabilities. The salon software company Fresha is a typical embedded fintech story. If you own a coffee shop, wouldn’t it be convenient to schedule recurring orders for beans and milk from the same software portal where you process payments, manage accounting, and handle payroll? The companies that figured out how to monetize financial services via embedded fintech are well positioned to monetize through procurement, too.Įmbedded procurement is the natural evolution of embedded fintech. In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors, or an individual merchant’s website. The embedded fintech movement has just begun, but there is already a sister concept percolating: embedded procurement. Vertical apps such as Toast for restaurants, Squire for barbershops, and Shopmonkey for car repair shops will deliver financial services to businesses in the future rather than traditional, stodgy financial institutions. In 2019, my colleague Matt Harris coined the term “ embedded fintech” to describe how virtually all software-driven companies will soon embed financial services into their applications, from sending and receiving payments to enabling lending, insurance, and banking services, and that idea quickly spread within the fintech community. Originally published in TechCrunch on March 31, 2021. ![]()
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