Are retailers without an omni channel retail payment strategy in place setting themselves up for failure?
Today, consumers see no separation between shopping online, in-store or on mobile. From their perspective, each is an interchangeable, often simultaneous, experience. Shoppers are increasingly looking for the most convenient solution, and this often involves at least one digital touchpoint. In fact, research shows that nearly a quarter of shoppers expect to be able to use their mobile device in some capacity during their in-store purchases.
For retailers, extending across many consumer-facing channels is a profitable business decision. These buyers are too valuable to ignore, with omni channel shoppers spending up to 300 percent more than traditional shoppers. Retailers have finally aligned with consumer desire for seamless shopping across channels and, as a result, are building digital products that can enhance their brick-and-mortar offerings. In the very near future, the most successful companies will be those that can break down the barriers that currently exist between in-person and online transactions. Still, many have yet to install a corresponding payment strategy. As a result, these omni channel experiences are broken.
The Power of Omni Channel
Consumers who can interact with the brand from discovery to purchase on any channel (independently, consecutively or simultaneously) spend at greater scale and frequency. Several major brands, such as REI, are already harnessing the potential of a complete omni channel experience. On a broad scale, three-quarters of their customers interact with their brand digitally before buying in-store. Complementary payment strategies across mobile, tablet, web and interactive displays unlock the true potential of omni channel retail, bolstering the customer’s ability to buy on any channel, regardless of in-store inventory. As a result, REI’s cross-platform strategy now accounts for 23 percent of all sales. Despite these benefits, PCM Research and ACI Worldwide report that only a fifth of merchants support omni channel payments. Even more startling, 46 percent of the group have no plans to pursue omni channel payments in the next year.
Why the Hesitancy?
If brands are so receptive to omni channel, why do so few build supporting payment platforms? The road to an REI-type of omni channel experience is not without its challenges. For retailers, building a capable omni channel payment system is daunting, though attainable. For many, the perceived challenges of modern payments are too intimidating to tackle. To leverage the coming opportunities, retail brands must tackle some key challenges.
Back-End Data Silos
Customer interactions are often fragmented in modern retail. A customer may explore products on their desktop, test sizing in-store and complete the sale on mobile — an unpredictable path that could include any combination of available channels.
Most retailers struggle to track the holistic customer across all channels, and instead view each as a vacuum. In the omni channel age, retailers will have to let go of outdated legacy systems and inefficient processes that simply cannot address the needs of more comprehensive solutions. Retailers should track purchases and payments across channels by linking disparate back-end systems. Tracking this customer behavior creates opportunities to provide an enhanced overall experience.
Expanded Payment Methods
The number of consumer payment methods has continued to expand since the early 2000s. Today’s consumer carries at least three, including credit cards, cash and mobile devices.
Trending in-store payment methods include touchless technology that only requires the swipe of a phone. Digital wallets and online payment processors are becoming increasingly popular as well.
These methods will eventually consolidate, though not in the near future. Instead, a diverse range of payment types will continue to expand across new platforms while majority groups will bring mobile wallets and payments to the forefront. Early adopters, meanwhile, will explore new methods through wearable technology and biometrics. Even as these options expand, users will continue to expect an omni channel payment strategy that seamlessly adapts to individual need. Retailers must create a system that is accessible and receptive across all possible channels.
Security Vulnerabilities and Threats
Consumers are increasingly calling for personalized experiences, but they’re not willing to sacrifice privacy or security to achieve this end. They expect that their sensitive data will remain safe from hackers, as well as third-parties, such as marketers. They also want to be sure that the payment processes a retailer uses conform to legal and regulatory standards. For merchants, making sure that all of this goes off without a hitch across numerous online, mobile and in-store channels is often an arduous undertaking.
Growth in payments makes brands, and their corresponding data, more vulnerable to attacks and error. Customers are wary after disastrous information leaks at major brands like TJX and Target. Still, sales data is invaluable to retailers that interact with the customer throughout their life cycle. As they collect data, brands need to reassure that they will protect it with the utmost scrutiny. Companies will need the best data security partners and tools to protect their assets and reputation.
Funneling all transactions through a single portal regardless of the touchpoint will simplify regulatory compliance and ease security and fraud prevention efforts. In addition, omni channel payment functions like tokenization will ensure utility while protecting customer identity. There is no doubt that retailers can generate significant returns from successful omni channel strategy. To do so, however, brands must cover every potential step of the discovery and purchase path. All too often, payment is forgotten in the process. Consumers are unable to fulfill their needs, and brands are unable to benefit from their investments. By following this guide and coming up with a full digital strategy, brands can finally create a holistic omnichannel experience.