Not long ago, the digital shift was something people speculated about. The tools were in place, the tech was in line and the only question that remained was when lagging merchants would jump on the digital bandwagon.
The COVID-19 pandemic — and the many changes it carried — brought the answer to that question, Checkout.com Vice President of Global Partnerships Tracy Meng told PYMNTS in a recent conversation. Instead of wondering when merchants would leap across the digital divide nearly overnight, the question became how to get them over that divide right away.
Now there is no going back, and what the world will see over the next 12 to 18 months, she said, is that the trends embraced in the pandemic period aren’t a passing fancy — they are here to stay.
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“I expect to see these trends continue to grow,” Meng said. “The shift in consumer behavior during the pandemic — from ordering via QR codes to ordering household goods online and through subscriptions — will be sticky even post-pandemic, across people of all age groups and demographics. Businesses that have made the digital economy more seamless for consumers have greatly benefited, and will perpetuate the trends of digital adoption.”
Tapping The Power Of Payments
We tend to refer to regional payment methods as “alternative payments,” Meng said, which is in many ways not quite right and can be a bit misleading. Because she noted, in the region where consumers want them, they are quite primary, and merchants who want to successfully capture conversions as they expand regionally need to carry that kind of hyper-local perspective to payments processes if they have hopes of being able to convert consumers.
She said that business model innovation and expansion aren’t just about doing more, but about doing it right and custom-fitted to the audience, a merchant is actually targeting. For example, data shows 45 percent of European merchants will use digital payments — via consumers’ personal devices — to drive hybrid retail experiences such as pop-up shops, showrooms and curbside pick-up services.
When we think about business model innovation, it’s really about enhancing the advantage and the value creation in two ways. One is enhancing the value proposition to customers, and the second is enhancing the underlying operating model,” she said.
In looking at payments through those two lenses, she noted, it becomes clear that merchants need to think beyond their legacy systems and offerings toward building enhanced optionality for their customers when it comes time to transact.
Customers want to use their preferred method to pay. She said 80 percent of consumers plan to use a digital wallet in the next 12 months. Of those, 40 percent of Europeans plan to regularly shop with them.
Customer needs are increasingly diverse, she pointed out. Beyond access to preferred local methods, consumers want a lot of things. They want to be able to enter into subscription relationships that are customized to their needs. They increasingly want to target their spending on sustainable brands — 54 percent of Europeans will only buy from brands working on becoming more sustainable, she said. They want to be able to pay in contact-free stores and don’t require lining up at an old-fashioned point-of-sale (POS) system.
Meng noted that the modern merchant isn’t thinking about how to add one of these things, but all of them, because the retail world coming back online is different from the one that existed pre-pandemic.
Building Advanced Optionality
The world to come will still greatly resemble the world that came before the pandemic in many ways. Consumers are still going to shop in physical stores and dine in restaurants. But the how and why of those experiences have already started to change and will only evolve from here. Going forward, she said, shopping in a store will be more experiential and designed to engage with customers. New operating models to support this will be “really key” going forward as this will change the dynamics of a physical retail experience for consumers.
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The name of the game going forward for merchants that want to stay competitive in a highly active environment, she said, will be flexibility and a readiness to adapt quickly to the only real north star in the retail environment at this point: what consumers need and want.
“If you don’t have a flexible operating model or an underlying payment stack that can adapt then again, you’ll lose out on customers, and you won’t be able to compete as effectively,” she said. “So this is really critical to the success of merchants as the eCommerce landscape continues to evolve.”