Cbinsights-29條商業(yè)護(hù)城河幫助塑造了世界上最龐大的公司（英）-2023.2-98正式版

2023

29businessmoatsthathelpedshapetheworld’smostmassivecompanies

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Abusinessmoatisakeycompetitiveadvantagethatsetsacompanyapartfromitscompetitors.FromAmazonandTeslatoStarbucksandCoinbase,hereishow29oftheworld’sbiggestcompanieshavebuiltanddefendedtheirmoats.

WhatdocompanieslikeAmazon,Uber,andStarbuckshaveincommon?

Amongseveralsharedcharacteristics,thesecompaniesthrivebyunderstanding,building,andstrengtheningtheirbusinessmoats—thekeycompetitiveadvantagesthatsetthemapart.

WarrenBuffetthelpedpopularizetheconcept,sayingacompany’smoat(orlackthereof)meanseverythingwhendecidingtoinvestinit:

“Thekey…isnotassessinghowmuchanindustryisgoingtoaffectsociety,orhowmuchitwillgrow,butratherdeterminingthecompetitiveadvantageofanygivencompanyand,aboveall,thedurabilityofthatadvantage.”

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Companiescanbuildmoatsbystrengtheningtheirbrands,achievingeconomiesofscale,orevenlobbyingforspecialstatusfromthegovernment.Inreturn,theycanreceivecustomerloyalty,pricingpower,andlegalprotectionsthatmakeitdifficultforothercompaniestocompetewiththem.

Inthe20thcentury,thebiggestcompaniesintheworldwerebuiltonmoatsofeconomiesofscaleorgovernment.StandardOil,forexample,builtitsmonopolybybuyingupsmallercompetitorrefineriesandbuildingaglobaldistributionnetwork.Eventually,thecompanycontrolledabout90%ofalltherefineriesandpipelinesintheUnitedStatesandcouldsetitsownprices.

Today,however,themostdurablemoatsarebeingbuiltondifferenttypesofadvantages,suchasnetworkeffects,data,andrepeatengagementwithinaproductecosystem.

Google,forexample,starteditsmoatbydevelopingabetteralgorithmforindexingandsearchingtheinternet.Thecompanyhassincestrengthenedthatmoatbyputtingthatadvantagetoworkintransportation,shopping,and,mostimportantly,advertising.

Below,welookinto29businessmoatexamplesanddiveintohowtheywork.

Theexamplesbelowwerechosenaccordingtocriteriasuchassize,businesssuccess,andabilitytoillustratethemechanicsandadvantagesofaparticulartypeofbusinessmoat.Manyofthesecompaniescouldfitintomultiplecategoriesofbusinessmoat,eventhoughweonlylistonepercompany.

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TableofContents

NetworkEffects

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Marketplace:ThevirtuouscirclethatmadeAmazonatrillion-dollarbusiness

Marketplace:HowOpenTablecreatedamonopolybygivingrestaurantsa‘single-playermode’

Marketplace:HowUberdominatedride-sharingbyowningsupplyanddemand

Marketplace:HowAirbnb’smassivenetworkofhostsandguestsmakesithardtoignore

Marketplace:HowPayPalbuilta$100Mbusinessbyservingbothonlinesellersandbuyers

Data:HowGoogleuseditssearchexpertisetobuildawidedatamoat

Platform:TheOSthatmadeAppleatrillion-dollarcompany

Platform:HowFacebook’scontrolofthesocialgraphmadeithyper-durable

Platform:HowtreatingEVsasatwo-sidedplatformhelpsTeslamaintainawidemoat

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CostMoats

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Switchingcost:HowIBMusedthepsychologyoffeartoownback-endtechnologyfordecades

Switchingcost:WhyADPisstillAmerica’sbiggestpayrollservicesprovider

Switchingcost:HowSlackretainsusersbybeingan“enterprisesocialnetwork”

Sunkcost:ThebusinessmodelthatmadeGillettea$57Bcompany

Costadvantage:WhynosatelliteradioprovidercanundercutSiriusXM

Costadvantage:WhyGEICOgoingD2CmadeitWarrenBuffett’sfavoritestock

Costadvantage:HowAmazonWebServicesbuiltanimpenetrableeconomyofscale

Costadvantage:HowWalmarthaskeptpriceslowbytakingpowerawayfromindividualstores

CulturalMoats

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Brand:HowPatagoniagrewbyunderstandingitscustomeridentity

Brand:WhyconsistencyhasbeenkeytoCoca-Cola’ssuccess

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Brand:HowStarbuckschangedAmericans’relationshipwiththeircoffee

Tradition:HowMarmitebecamecondimentkingintheUK

Tradition:HowHarley-Davidsonbuiltaculture

thatwithstoodwars,recessions,andnegativepress

ResourceMoats

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IP:HowPfizerturnedLipitorintothebest-sellingdrugintheworld

IP:TheuniverseofcharactersthatmadeDisneya$300Bcompany

IP:HowQualcommuses130,000patentstogeneratebillionsinrevenue

Knowledge:HowIntelusesrapiddevelopmenttomaintaindominanceinitsmarket

Knowledge:HowCanonturneditstechnicalexpertiseintoacompoundingbenefit

Regulatory:HowtheKingsburyCommitmentgaveAT&Ta71-yearmonopoly

Regulatory:HowyearsofregulatoryandcomplianceeffortsarepayingoffforCoinbase

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Networkeffects

Aproducthasanetworkeffectwhenitsvaluetoitsusersincreasesinproportiontoitsuseandthenumberofusersusingit.

Forexample,thetelephonewasn’tveryusefulwhenonlyahandfuloffirstadoptershadone.Themorepeoplethatacquiredtelephones,however,themoreusefultheygot.Oncevirtuallyeveryonehadatelephoneintheirhome,itbecameindispensable.

Thesamelogichaspoweredthegrowthofsocialnetworks,whichareextremelystickyifallofyourfriendsareonthem—anduselessifthey’renot.

Becausenetworkeffectscanallowaproducttogainwideutilityfast,theycanhelpcompaniesbuildformidablebusinessmoats.Aproductwithstrongnetworkeffectscanbeextremelydifficulttodislodge,thoughnotimpossibleifacompetitorprojectisbetteratleveragingnetworkeffects(MySpace’sfalltoFacebookisonehigh-profileexampleofthis).

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Companiesthatbuildproductswithnetworkeffectscangenerateafewdifferentkindsofbusinessmoatsaroundtheircompanies,dependingonhowtheirnetworkeffectswork.

MARKETPLACENETWORKEFFECTS

Amarketplacenetworkeffectexistswhenacompanyderivesadurablecompetitiveadvantagefrombringingtogethercustomersandsuppliersinsomekindofmarketplace.

Inthebest-casescenario,aggregatingthesupplyanddemandforagivengoodorservicecreatesaself-reinforcingcycleofgrowthbuiltonnetworkeffects.Asmorecompetingsuppliersjointhemarketplace,customersfindthatitprovidesmoreefficientandlessexpensiveservice.

Asmorecustomersaredrawntothemarketplaceforitsqualityorlowprices,moresuppliersjoin,drivingfurthercompetitionandgrowth.

AMAZON’SFLYWHEEL

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Leveragingmarketplacenetworkeffects,Amazonwasabletoreduceprices,expandinventory,anddecreaseshippingtimes,growingfromasmallonlinebookstoretothedominantglobale-commercemarketplace.

DATANETWORKEFFECTS

Adatanetworkeffectexistswhenacompanycangainacompetitiveadvantagebygatheringuserdataandmakingthatdatamorevaluable.

Inaproductwithadatamoat,thereisa“centralrepository”ofdata,asAndreessenHorowitz’sAlexRampellcallsit.Themorepeopleaddingtothisrepository,themoreusefulitbecomes.

Companiescanusethatdatabothtoattractotheruserstotheplatformandtobuildbetteralgorithmstoprovideabetterproduct.

Google,forexample,builtitscompetitiveadvantageonitssearchalgorithmsandthenbuiltamoatbyapplyingthatadvantagetoitsadvertisingcapability.

PLATFORMNETWORKEFFECTS

Aplatformnetworkeffectexistswhenacompanybuildsadurablecompetitiveadvantagebykeepingitsusersengagedinitsproductecosystem.

Platformmoatsaregenerallybuiltononeproduct—forexample,theiPhoneorWindows—thatbecomescoretoauser’slifeorwork.Newproductsthatarereleased—suchastheAppStoreorMicrosoftOffice—bothreinforcethecoreproduct’sinitialvalueandlayermorevalueontopofit.

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Eachsuccessfulnewproductmakesstayingintheecosystemmorevaluable,increasesthecostofswitching,andkeepsusers’attentionandmoneywithintheplatform.

DURABILITYISKEY

Thesethreetechniques—aggregatingsuppliersandcustomers,collectingvaluabledata,andbuildingaproductecosystem—won’talwaysresultinamoat.Historyisfullofcompaniesthathavebuilttemporaryadvantagesbasedonnetworkeffectsthatthenfell.

Moatsaremadeofdurablecompetitiveadvantages,anddurabilityhingesonanumberoffactors,including:

Useracquisition:whetherthecosttoacquirenewusers,customers,orsuppliersdecreaseswithscale

Switchingcosts:whetheritiscumbersomeorexpensiveforcustomerstoswitchtoanothercompanyforthesameservice

Engagement:whethertheproductbecomesstickierandmoreengagingasitgrows

Thebetteranyproductwithnetworkeffectscanoptimizeitscostofuseracquisition,capitalizeonhighswitchingcosts,andincreaseengagement,themorelikelyitistobeabletomaintainitsuserbaseandfendoffcompetitors.

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Marketplace:ThevirtuouscirclethatmadeAmazonatrillion-dollarbusiness

WhileAmazon’sdominancehasbeenbuiltonavarietyofmoats,itscentralbusinessadvantagederivesfromharnessingthemarketplacenetworkeffectsthatcomefromaggregatingsuppliersandcustomers.

Amazonrecognizedearlyonthatthemorepeopleinitsnetwork—bothsuppliersandcustomers—thelowerthepricesitcouldoffertobuyers.Lowerpricesmeantabettercustomerexperiencethatattractedmorecustomers;morecustomersattractedmoresellers;moresellersmeantabetterselectionofgoodsandprices;bettergoodsandpricescreatedabettercustomerexperience;andsoon.

OvertimeAmazonhasexpandedintonewretailverticals,addedfeatures,andevencreatedmarketplacesthatcompetewithitsownmarketplace—allinthepursuitofincreasinguserengagementandfuelingavirtuouscircleofgrowth.

Inthelate1990s,Amazonfirstbeganexpandingfrombookstoothermediaproducts,likeCDs,movies,andotherelectronics.Afewyearslater,Marketplacelaunched,givingthird-partysellerstheabilitytosellproductsalongsidetheAmazonlisting.

WhiletheMarketplacetechnicallymayhavecannibalizedAmazonsales,itservedthepurposeoftheAmazonflywheelbyreinforcingforcustomersthatAmazonwasthebestandcheapestplacetoshop.

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Bringinginmorecustomersthroughbetterfunctionalityandgrowthintonewverticals,Amazonusedthegrowththatresultedtobringinmoresuppliers,whobegantoseeAmazonasthebestwaytoreachaglobalcustomerbaseandincreasetheirrevenues.

In2005,AmazonuseditsnewfoundcapabilitiesinshippingandlogisticstostartitsPrimeprogram,offeringfree2-dayshippinginsidethecontiguousUnitedStatesforanannualpriceof$79.PrimemadeAmazondeliveryfasterthanvirtuallyanyothere-commerceoutletandcreatedaninflectionpointinthecompany’sgrowth.AsofApril2021,membershipinthePrimeprogramisover200Mworldwide.

“Iwanttodrawamoataroundourbestcustomers,”BezossaidwhileAmazonwasplanningPrime.“We’renotgoingtotakeourbestcustomersforgranted.”

In2006,AmazonlaunchedAmazonWebServicesinearnestwiththereleaseofElasticComputeCloud.Afterimprovingitsownback-endinordertobetterscaleupitscomputingpower,Amazonwasthenabletomakethatsamepoweravailabletostartupsandothercustomers.

Today,AWSisAmazon’sthird-largestsourceofrevenue.WiththegrowthofAWS,Amazon’scomputingpowerrose,anditsunitcostsonrentingthatpowerouttoothersfell.

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Amazoncontinuestouseitsprofitstolowerprices,increasesupply,andbuildabettercustomerexperience—feedingthefundamentalflywheelthathelpeditbecomethebiggestonlineretailerintheworld.

Forexample,inJune2017,AmazonannouncedthatitwasacquiringWholeFoodsfor$13.7B.Immediately,thecompanyloweredpricesonhigh-volumeWholeFoodsitemsandthreadedinPrimemembershipdiscounts.

WhenAmazonentersanewmarket,itdoessowithitsformidablescale,massiveuserbase,andawillingnesstodukeitoutinindustrieswithrazor-thinmargins—astrategythathasallowedittogrowfromasmallbooksellertoatrueEverythingStore.

Marketplace:HowOpenTablecreatedamonopolybygivingrestaurantsa‘single-playermode’

OpenTable’sdominationoftheonlinerestaurantreservationmarkethasbeenbuiltonitsabilitytoattractacriticalmassofrestaurantsanddinerstoitsplatform.

OpenTable’ssimpleonlineinterfaceoffereddinersamoreconvenientwaytomakearestaurantreservationwhilealsoofferingrestaurantsamoreefficientwaytomanagereservations,getmorecustomersthroughthedoors,anddealwiththeindustry’sfamouslythinmargins.

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Whilemostproductswithnetworkeffectsaren’tusefuluntiltherearemanypeopleonthenetwork(likethetelephone),OpenTablestartedoutbybuildingandsellingapieceofsoftwarethatdeliveredvalueevenwithoutanycustomersinvolved—astrategythata16zpartnerChrisDixoncalls“singleplayermode.”

“ThefirstmillionpeoplewhoboughtVCRsboughtthembeforetherewereanymoviesavailabletowatchonthem.Theyjustwantedto‘timeshift’TVshows–whatweuseDVRsfortoday.OncethereweremillionsofVCRowners,itbecameworthwhileforHollywoodtostartsellingandrentingmoviestowatchonthem…Thus,aproductthateventuallyhadverystrongnetworkeffectsgotitsinitialtractionfroma‘standaloneuse’–wherenootherVCRownersorcomplementaryproductsneededtoexist.”

TheoriginalOpenTableappforrestaurantswasessentiallyanelectronicreservationbookforrestaurantsthatmadetheday-to-dayworkofturningovertablesmorestraightforwardandlesserrorprone.

Theappalsobecamethenecessaryfoundationofthereservationtoolthatwouldfollowsincesofewrestaurantshaddigitizedback-ends.WhentheOpenTableteamsuccessfullypitchedrestaurantsonthissoftware,theywerealsosuccessfullypitchingtheideaofputtinganetworkedcomputerinsidetherestaurant.

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ThemorerestaurantsOpenTablegottousethatsoftware,themoreattractivetheideaofanonlinereservationsystembecameforboththedemandandsupplysideofthemarketplace.Morerestaurantsmeantmorechoicesforconsumers.Morechoicesattractedmoreconsumers,whichgaverestaurantsmorebusiness.

Theideatookoff,andbythetimeOpenTablewentpublicin2009,thecompanywasclaimingthatathirdofthe30,000reservation-takingrestaurantsinAmericawereOpenTablecustomers.

OpenTablealsobenefitedfrommakingitsproductacorepartofeverydayoperations.Thecompanyputaproprietarysoftwareterminalinthethousandsofrestaurantsthatsigneduptousetheservice.Thatterminalbecameusedforregularoperations(notjustOpenTable),creatingasignificantbarriertoentryforothercompanieshopingtoedgeintotherestaurantreservationmarket.TogiveupOpenTable,arestaurantwouldhavetotossoutamajorpieceofinfrastructure,nottomentionasourceoftraffic.

ThedifficultyofswitchingtoacompetitorplatformhasallowedOpenTabletoestablishahighlyfavorabletakerate:OpenTable’smostpopularpricingplanchargesrestaurants$249permonthforitsplatform,plus$1perreservation.

WhiletheseratesfueledOpenTable’ssignificantgrowththroughtheearlypartsofthe2000s,theyhavealsopromptedawaveofdisruptivestartupcompetitorslikeResy,launchedin2014andacquiredbyAmericanExpressin2019.

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WhileOpenTableremainsthetoolofchoiceforbookingreservationsatMichelinStarrestaurants,Resyandothertoolsaregaininggroundwhenitcomestosmallerandnewerrestaurants

—suggestingthatOpenTable’smoatwasshowingsomevulnerabilitiesamongnewerrestaurantsnotalreadylockedintoitsplatform.

Butevenasnewcompetitorsemerge,OpenTablestillhasabigadvantagewhenitcomestoscale.Foraboutadecade,OpenTablewasessentiallytheonlyplayerintherestaurantreservationmarket,givingitahugeheadstartinacquiringcustomersandrestaurants.

Marketplace:HowUberdominatedride-sharingbyowningsupplyanddemand

Uberhasbecomeanarchetypalexampleofacompanybuiltonaggregatingsupplyanddemand.

Earlyon,Uberattractedindependentdrivers(thesupply)toitsplatformbyofferingaguaranteedsourceofcustomers.Fordriverswithoutacentraldispatcher,itcouldbedifficulttofindfares,anddriverswouldoftenhavetoidlenearhotelsandairportstomaketheirliving.WithUber,thosedriverscouldpickupfaresatanytime,givingthemawaytomakemoneyduringthedeadtimebetweenpickups.

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Atthesametime,Uberattractedusers(demand)byprovidingthemwithaguaranteeddriver.Whencabservicesdominatednon-publictransportation,itcouldbechallengingeveninmajorcitiestofindarideduringnon-optimalworkinghoursorbadweather(researchhasshownanaverageof7%fewercabsontheroadwhenitrainsinNewYorkCity).

Toensurethataridewasalwaysavailablewhenapotentialfareopenedtheapp,Uberusedamodelthatwouldbecomeknownassurgepricing.Duringtimesofhigherdemand,pricesonrideswereraised,increasingthesupplyofdriversandincreasingaccessibilityforthedemandside.

Bringingthesetwosidesofthemarketplacetogethercreatedavirtuouscircleofgrowth.

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WitheverynewdriverthatUberaddedtotheplatform,thegeographicreachoftheappincreased:thereweremoredriversinmoreplaces,meaningashorterwaitforarideforUbercustomers.

Theshorterthewaitforaride,themoreusersthatUbercouldattract.ThemoreusersUberattracted,themoredriversitattractedtoo—furtherdecreasingtime-to-rideandincreasinggeographicreach.

Uber’sabilitytoaggressivelyadddriversandriderstoitsplatformthroughmarketingandpromotionskickstartedthosenetworkeffectsineachnewmarketitentered,andthevirtuouscirclesthatresulteddrovethecompany’sfastgrowtharoundtheworld.

Uber’spoweroversupplyanddemand—theguaranteed,fast,cheaper-than-a-cabridesthatitcanofferbothcustomersanddrivers—hasbeenitskeycompetitiveadvantageagainstcompetingridesharecompanies.

AssmallercompetitorshaveemergedtochallengeUberinlocalmarkets,Uber’sabilitytomanipulateitsownsupplyanddemandeconomicshashelpeditstaycompetitive.WhenfightingJunoandGettinNewYorkCity,forexample,UbersimplyuppeditsdriverincentivesanddiscountedridesforUbercustomers.Thatbroughtdrivers—someofwhomworkedsimultaneouslyforotherservices—backtoUber,wheretheycouldmakemoremoney.Italsobroughtcustomers,whocouldeasilyuseeitherservice,backaswell.

ThatstrategyhasbeenlesseffectiveagainstLyft,whichhasbecomeincreasinglyabletooffersimilarincentiveswithinitsmarketplace,competingwithUberonpriceanddriveravailability.

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Sincethere’slittlefrictionfordriversoruserstoswitchbetweenapps,there’slittlekeepingsomeonefromchoosingoneappoveranother.

Ultimately,towinagainstLyft,Uberisbettingnotonlyonitsmarketplacemoatbutalsoreinvestinginitsbrand,hopingthatitsfamiliaritycangiveitanedgeinanewlycommodifiedrideshareindustry.Itisalsoinvestinginvariousotherservicesandverticals,suchasfreightshippingandfooddelivery.

Marketplace:HowAirbnb’smassivenetworkofhostsandguestsmakesithardtoignore

Airbnbharnessesthepowerofmarketplacenetworkeffectsbybringingtogether4Mhostsandtensofmillionsofguests.Eachnewguestprovidesmorebusinesstothehostsandincreasestheincentivetolistrentals.Andasmorehostsjointhemarketplace,theyenhancethevalueofthesystembyprovidingtravelerswithmoreoptionstochoosefromandplacestovisit.

BothgroupsareincentivizedtostickwithAirbnb.PositiveexperienceswithAirbnbhostskeepguestsusingtheplatformforfuturetrips,whileaccruedpositivereviewshelphostsattractmorecustomers.ThenetworkeffectshelpedAirbnbcapturearound20%ofallUSconsumerlodgingspendin2019,accordingtoareportbyBloombergSecondMeasure.

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Andwithmillionsofusersinteractingonitsplatform,thecompanyisabletogathervaluabledata.Airbnbgetstolearnusers’travelplans,budgets,andvariousotherdatapoints.Theseinsightsthenhelpthecompanytorefineitsproductsanddeepenitsrelationshipwithusers.

WhatmakesAirbnb’smoatevenwiderisitsglobalreach.“Airbnbistheonlyhospitalitybrandthathastheglobalawarenesstogenerateunrivaleddemand,”writesScottGalloway,aprofessorofmarketingattheNewYorkUniversitySternSchoolofBusiness.“Whilecompetitorsmayhaveequityinaspecificmarket,nobrandsitsontheironthroneacrossallmarketsasAirbnbdoes.”

ThedepthandbreadthofAirbnb’snetworkalsomakethecompanyhighlyresilient.InMay2020,forinstance,AirbnblaidoffaquarterofitsstaffinabidtocutcostsamidtheCovid-19pandemic.CEOBrianCheskyevenconsideredpushingitsIPOto2021.

ButAirbnb’sbookingsstartedrecoveringinJune2020aspeoplelookedforrentalsclosetowheretheylived—placescustomerscouldreachwhileremainingsociallydistantandavoidingpeople-densehubslikeairports.AndAirbnbwasperfectlypositionedtoprofitfromthisdemand.Guestswereabletochoosefromawiderangeofoptionsandbookedforweeksandevenmonthsatatime.ThisboominbusinessallowedAirbnbtorecoverenoughtoevengopublicinDecember2020.

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SOURCE:STATISTA

CheskyiskeenonfurtherincreasingAirbnb’smoat.Hesaidthatthecompanyplanson“educatingtheworldabouthosting,recruitingmorehosts,simplifyingtheguestexperience,anddeliveringaworld-classservice.”Airbnbwillneedmillionsmorehoststokeepthecurrentmomentumandhandlethepost-pandemictravelboom.

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Marketplace:HowPayPalbuilta$100Mbusinessbyservingbothonlinesellersandbuyers

Intheearlydaysofe-commerce,payingforproductsonlinewasriskyandinconvenient.Buyershadtoentercreditordebitcarddetailsoneverystore’scheckoutpage.Itwasanextrastepthatfrustratedshoppersandlefttheircarddetailsexposedtodatabreaches.

Launchedin1999,PayPaloffersanalternativeoptionforonlinepayments.Userslinkabankaccounttotheirfree,securePayPalwalletandthenenjoyexpresscheckoutbyclickingthePayPaloptiononaseller’swebsite.There’snolongeraneedtogivecreditcarddetailstoeveryonlinemerchant,andfillinginpaymentinformationisaone-and-doneaffair.

PayPaldoesn’tjustbenefitshoppers.Formerchants,offeringPayPalcanleadtomoresales.ArecentNielsenstudyfoundthatPayPalusersconvert28%moreoftenatcheckoutcomparedtootherpaymentmethods.Thesamestudynotesthat,onaverage,PayPalusersbuymoreateachtransactionandaremorelikelytomakearepeatpurchasefromthesamevendor.

Ultimately,shopperswantmerchantstoofferPayPalasapaymentoptionbecauseit’sfasterandsaferthanotheralternatives.MerchantswantshopperstousePayPalbecausetheybuymorewhentheydo.Thispush/pullnetworkeffecthashelpedPayPalcontinuetoachievedouble-digitrevenuegrowthyearafteryear.Todate,PayPalisthemostwidelyusedpaymentprocessingsystemintheworld,withover40%marketshare.

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PayPal’sheadstartinonlinepaymentsgaveitasignificantmoatdefense.Thecompany’slaunchcame12yearsbeforecompetitorStripereleaseditsonlinepaymentproductand15yearsbeforeAppleannouncedApplePay.By2010,over94MpeoplewerealreadyusingPayPal.Asof2022,thatnumberhasgrowntoover400M.

Thosenumbersaresignificantbecausethere’saconveniencecosttoswitchingtoadifferentonlinepaymentapp.Userswouldhavetostartoveragainwithregisteringtheirbankaccountandcardswithanewserviceprovider.

PayPalalsowidensitsmoatsthroughrelationshipsthatstrengthenitsallureforbothsellersandbuyers.In2016,thecompanyinkeddealswithcreditcardissuersVisaandMastercard.

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TheagreementgavePayPalusersmoreprotectedpaymentoptionsandofferedcreditcardprovidersaccesstoPayPal’slargeuserbase.Morerecently,JPMorganshuttereditsowndigitalwalletinfavoroflettingcustomerslinktheirChasecardtoPayPal.

EvenotherdigitalwalletsofferPayPal.Samsungusers,forexample,canpickPayPalastheirdefaultpaymentoptionwhileusingtheSamsungPayplatform.AlphabetalsoincludesPayPalasapaymentmethodinitsGooglePayapp.AndPayPalplanstobringnewintegrationswithApplePaytomarketin20