Rearden/MasterCard Take Slices from Amazon, Staples, Orbitz With SMB Marketplace/Purchasing Suite

Earlier today, Rearden and MasterCard announced the launch of the MasterCard Business Network, a private label and customized instance of Rearden's Deem at Work platform. In the coming weeks on Spend Matters and Spend Matters PRO, we'll provide a detailed review of Deem at Work, including its functional footprint, strengths, weaknesses and competitive position in the market (relative to alternative options rather than direct competitors, since it really doesn't have any). In short, Deem at Work and the new MasterCard Business Network represents a procurement, travel and T&E application for small and medium sized businesses (SMBs) to leverage as part of their commercial relationship with their card provider. It goes beyond technology to include MasterCard/Deem negotiated pricing with suppliers as well (across a range of categories which we'll explore in our full review).

Here's the Rearden and MasterCard spin on the news (taken from the press release): "Taking feedback from small and-mid-size business owners, the MasterCard Business Network addresses the most critical needs of today's businesses. The site, powered by Rearden Commerce's Deem commerce platform, creates a personalized and highly-relevant purchasing experience to enable small and middle-market business owners to better manage their cash flow and expenses ... The MasterCard Business Network offers free registration for MasterCard business cardholders and will soon include a mobile app available on Android, iPhone or Blackberry devices for access while on the go. To begin taking advantage of product discounts and offers available on the MasterCard Business Network, small and mid-size businesses can register online at"

Here's our quick analysis (but stay tuned for much, much more):

  • As far as we know, MasterCard is the first out of the gate to get a full Deem at Work site into production on a large scale. The amount of work that went into the platform build-out, including technology (eProcurement, travel, shipping, expense management), content (catalog content management including SKU details, negotiated pricing, etc.), mobile enablement, and more is huge. Based on the massive platform investment, the key is how much is leveraged across Rearden's Deem network and what competitive advantages MasterCard may have negotiated with its open private label instance
  • Since Deem and MasterCard will make money from suppliers through the MasterCard Business Network (in commissions paid for transaction volume similar to GPO fees), volume will be key to drive success and additional investment in the model (which if it works, could be truly disruptive for all buying and non-financials/ERP cash management automation for the SMB market). How much oomph MasterCard puts behind the marketing push to drive adoption and usage in its corporate card member base will be critical to monitor (our parent company holds a business MasterCard so we hope to report back on this from our own perspective)
  • If the MasterCard Business Network gains transaction in the SMB market, Amazon, Staples and Orbitz (plus other merchants like them) have the most to lose, as the card company attempts to move up the food chain beyond financing and acting as middleman in card transactions, getting paid from suppliers for driving volume in their direction (and buying organizations for upgrading to premium solutions such as expense management in the suite). Amazon, especially, will need to examine whether it plays ball (it is not currently a merchant on the Deem network, nor is Staples). Orbitz and other business travel providers are in a different position, as there is really no place for them in the Deem ecosystem (unless they use, as some do, the underlying Rearden travel technology in a white label manner)

Here at Spend Matters, we have no idea how we'd handicap the success of Deem at Work and the MasterCard Business Network (and others like it which may be to come, as we expect, given Rearden's other investors). But if it does succeed early on with the acceleration it might realize -- 2013 will determine if this things scales fast -- Amazon should use its war chest to take Rearden out as early as possible, before Rearden becomes more than just a threat to its core model in selling to small and medium sized business. And that despite only those in the B2B marketplace and card industry knowing Rearden's name rather than SMBs themselves! And with this, we'll leave you with one line that Amazon may find itself having wished it asked earlier based on the history of the name behind the platform: Who is John Galt?

- Jason Busch

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