The ecosystem of eCommerce is changing, and it’s changing rapidly. With the COVID-19 pandemic having had a large part to play in the shift from offline to online retail, we speak to Paul Marcantonio, Executive Director of UK & Western Europe at ECOMMPAY, about how merchants have been impacted and where eCommerce is heading post-COVID-19.
PM – There has been a big digital shift due to the COVID-19 lockdown. Bricks and mortar stores are being forced online. This has resulted in businesses having to re-focus their attention, from a physical to a digital marketplace. This has presented several challenges for traditional stores, including new customer expectations, a change to the way stock and orders are managed, and a need to address the end-to-end customer journey.
Take abandoned shopping carts as an example. Retailers now have to consider things like payment flow and user experience, all of which can affect the number of shopping carts are abandoned. The abandonment rate also be impacted by things like delivery times, lack of stock (due to COVID-19) and other issues. Any new online business is going to have to find out about these the hard way.
It’s not all bad news however. As most of the transaction can take place online, the delivery aspect can still be managed if “click and collect” methods are used. Since the start of the pandemic, there has been a 443% increase in the number of orders for click and collect. In fact, up to 50% of shoppers make a decision about buying from a particular store, on the basis that it offers click and collect.
These numbers all point to taking an omnichannel approach to your business.
This shift in focus has not only affected the offline businesses. Those who were already online have also found it difficult to adjust, especially with the increased level of orders. Were those businesses ready?
PM – Obviously there has been an increase in demand, with businesses now having to cater for a sharp rise in customer orders. They also need to cater for the individual payment needs of their customers.
As a result we are seeing a rise in demand for localised payment methods. eCommerce doesn’t know borders, and now one in seven online transactions are made cross border. Failure to offer localised payment methods can result in losing customers.
It’s important to understand that consumers now have less disposable income, and are therefore now buying more cautiously. This has resulted in them doing more research and more shopping-around to find the deals that work best for them.
What are the tendencies in cashless transactions and how do you see the future?
PM – During the course of the pandemic, the number of cashless transactions has spiked: the UK has seen an increase in cashless transactions which have grown from 10% to 60% of in-store purchases.
There is no doubt that we are heading toward a society where cash is used less. With the likes of Google Pay and Apple Pay, this type of transition is being made easier and easier, and it makes total sense.
As soon as the lockdown was eased, and customers were able to go to restaurants, shops and even bars, almost all venues were only accepting contactless payments. This has accelerated the move towards a cashless society. It’s believed that Sweden could be cashless by 2023 and, quite surprisingly, the US could be cashless by 2026.
As the payments industry adapts to keep up with demands, have you seen any changes in demand from merchants?
PM – It’s a really good question and it’s something that I am quite passionate about. The user experience is key. No matter if we are in a pandemic or in a normal situation, user experience has to be as fluid and frictionless as possible. With heightened demand and tightened scrutiny on how customers are spending money, user experience is critical.
For example, as customers fill up their baskets, you don’t want to give them the chance to reconsider their purchases. In essence, as a merchant, you need to make the checkout process as fluid and user-friendly as possible.
There is also the issue of payment security. If your checkout doesn’t inspire confidence, then the user will leave without making any purchase, and almost certainly won’t come back.
As a result of the Wirecard case, have merchants become more selective over choosing their payment providers?
PM – Yes, and it’s not necessarily been a good thing for the industry because there is now more scrutiny on payment providers. If a company the size of Wirecard can collapse in the way it did, what does that mean for the smaller, more exposed providers? This additional barrier to trust makes merchants more wary of partnering with payment providers.
In many ways, merchants are stuck between a rock and a hard place. In order to do business, they need to work with a payment provider and that means trusting them with pay-outs and a safe reliable payment system.
Other than a slick UX, safety and a broad variation of payment options, is there anything else that merchants look at when choosing a payment provider?
PM – Speed of implementation is absolutely vital. By that I mean building their online proposition. Usually, this takes months. But because of the shift to online, this now needs to be done inside a few weeks. This involves everything from the integration of gateways, to the payment processes and understanding the merchant’s demands and requirements. Both parties have had to readjust and streamline the processes involved.
As more offline businesses move online, there has been an increase in fraud: how are ECOMMPAY managing this?
PM – This is about education. For any business that has been operating mostly offline, there is a lot to take on. We now have to teach merchants what online fraud is and what processes we put in place to prevent it. We even have to educate them on the terminology of the industry.
I believe that the best way to be prepared for the current up-tick in criminals looking to exploit online merchants and their clients is to establish efficient fraud-prevention systems. This requires a two-part strategy: machine-learning fraud systems supplemented by good old-fashioned professional human overview.
The machine-learning system is there to detect and identify suspicious or fraudulent activity. The professional risk managers keep their beady eye on flagged transactions as well as on financial activities as a whole: machine technology will identify the majority of threats but it lacks the natural intuition and knack humans have for spotting certain kinds of malicious activities.
Some businesses have seen major growth during the pandemic. What kind of demand is there for expansion solutions from payment providers?
PM – In my opinion, the best time to take stock and realign your business is during a time of crisis, especially for eCommerce and digital services. Take a look at training for example: companies that had been providing offline lessons have been forced to offer online classes. Failure to do so could mean the end of their business.
If your business doesn’t deal in the movement of goods, and you haven’t looked at expanding internationally, then you might be missing a trick.
We have all made changes to our online behaviour; but what payment trends do you think will still be around, post-COVID-19?
PM – There are three trends that really stand out for me.
The first is people’s tendencies to shop online. We have seen a whole new demographic shopping online and I think that this trend will stick.
Following on from this we will also see a reduction in physical cash transactions: there will be far greater adoption of digital wallets and contactless payments.
The final trend, and it’s a real game-changer, is open banking. This is designed to make banks work harder for their customers through payment and data sharing.
According to figures recently released by the UK’s Open Banking Implementation Entity (OBIE), usage of open banking has grown exponentially in the last 9 months. This will allow businesses (and private individuals) to better understand their finances. It will be easier for third party apps to offer services and solutions to make your money work better for you.
What advice would you give to eCommerce businesses for 2021?
PM – Be agile. We have all seen how fast the landscape can change. You have to be flexible to make changes to your business strategy, operations and even markets. You will need to create resilience to your business and take an omnichannel approach that builds in technology to support and help you grow.
Interview with Paul Marcantonio, Executive Director of UK & Western Europe at ECOMMPAY