Zuora Subscribes to New Web Business Model

By managing the infrastructure that allows e-commerce companies to offer on-demand services to their customers, Zuora intends to enable what CEO Tien Tzuo sees as a growing shift in how consumers make purchases.

"More and more, the way people buy things will change to a subscription model," Tzuo said. "We provide an online platform that allows companies to manage a subscription-based business."

The Zuora platform, rolled out March 13, enables companies with an Internet-based customer interface to manage business processes such as ordering, invoicing, pricing, and customer acquisition.

"Maybe you're a start-up with three guys who have a great idea," Tzuo said. "You could be doing business online with a physical infrastructure. Our platform allows you to set up a pricing plan that has entry-level, midtier and advanced options. It allows you to have customers sign up and then monitor their usage of your services and change their pricing plan if needed."

He said Zuora seeks to do for online retailing of services what PayPal did for online financial transactions, and what Amazon did for the online retailing of products.

"For subscription businesses, checkout is the beginning, not the end," he said. "It's like the phone company, who sends customers invoices on a monthly basis. No other product can do what is needed, except for some of the telecommunications systems, which cost millions of dollars and are often mainframe-based."

Tzuo said the on-demand subscription model will grow increasingly popular for the procurement of e-commerce services and that the Internet naturally lends itself to changes in the traditional way business is managed.

"This is a market we think will explode," he said. "This is the product we want to build."

Beagle Research analyst Denis Pombriant classified Zuora as a service that can help on-demand retailers provide optimal customer service.

"Zuora makes front-end processes easier for the customer," Pombriant said.

He also said Zuora can help enable a creative business approach.

"In a lot of on-demand situations, the product is a service which can be configured and delivered in almost limitless ways," Pombriant said. "Options are only limited by your creativity and the systems that support you."

He echoed Tzuo's comparison of on-demand retailing to providing utility services. "It's not that different than a utility," he said. "One basic product can be branded and priced differently for different customers. You may want to offer volume discounts, or a different rate to non-profit organizations."

By allowing flexible and configurable billing, Pombriant said Zuora can help on-demand retailers in offering different branding and pricing of their services to meet the needs of different customers. He said that by improving the management of internal business processes, Zuora can make it easier for emerging companies to launch public stock offerings.

"To go public, you must nail down pricing, collections and billing," he said.

Dan Berthiaume covers the retail space for eWEEK. For more industry news, check out eWEEK.com's Retail Site.