Taking advantage of new trends post-COVID
Checkout recently brought together payments and ecommerce experts for a three-part series called Embracing Changing Trends in Connected Payments: Thriving in the Post-Pandemic Ecosystem. Hosted by Dan Simon of communications agency Vested, the series looked at industry developments driven by the COVID-19 pandemic.
In the first episode, Dan explored how merchants and payment providers can take advantage of some of these trends with insights from Vivek Rastogi, Head of Ecommerce at Colgate Palmolive in the US, Pankaj Asthana, Vice President of Digital Payments and Labs at Mastercard (MENA) and Checkout’s Moshe Winegarten, Senior Vice President of Sales for the UK and Ireland.
Dan kicked off the discussion by asking about the biggest changes over the last 12 months. All three experts agreed that decades’ worth of transformation had been condensed into a matter of weeks. Rastogi estimated the pandemic accelerated growth in ecommerce by as much as seven years, while Winegarten quoted a McKinsey report showing online shopping increased by 20% in the first few months of lockdown, the equivalent of ten years of growth.
Some of the regional differences also started to emerge. Asthana saw laggards switch to ecommerce because they had no choice during lockdown. But in the US, the majority of growth came from online shoppers who expanded to new items such as groceries. Winegarten agreed that opportunities exist with these early adopters as innovation has led to a change in behaviour. Consider how quickly the use of in-app ordering in the hospitality sector accelerated as a result of the pandemic.
Coping with the speed of change
Rastogi pointed out there have been winners and losers in the US. The winners were the merchants with existing infrastructure as they were better positioned to take advantage of the shift to ecommerce, while those that didn’t lost revenue and customers.
On the subject of customer loyalty, Rastogi suggested delivery experience was one of the biggest factors influencing the decision to switch merchants during lockdown. That presented an opportunity for firms to take over the last mile delivery (the final step of the process), a service Instacart provided for Costco’s US customers.
In terms of patterns among broader industries, demand varied by country, according to Winegarten. In the UAE, meal delivery services became more popular, while in Egypt and Pakistan demand grew for basic necessities such as groceries and fashion. In MENA, Asthana highlighted health and beauty as a sector that particularly benefited from the shift to ecommerce, with customers showing brand loyalty despite the presence of platforms like Amazon.
A quantum jump among shoppers
In the MENA region, Asthana described how most ecommerce transactions took place on a mobile device during the pandemic, which meant laggards were embracing digital payments. In fact, many of these consumers had never used a physical debit or credit card.
Meanwhile, small and medium-sized merchants suffered the most during lockdown because they typically rely on a single channel, such as a shop visit. However, banks and aggregators provided some innovative solutions to help them establish an online presence. Asthana believes demand for marketplaces will remain nonetheless because merchants are willing to pay a higher cost for the wider reach they offer. SMEs should also benefit from customers becoming more comfortable with ‘card on file’ transactions (where a cardholder authorises a merchant to store their payment details).
Will every merchant become an ecommerce store?
Rastogi praised last-mile carriers as they provided a short-term solution which would normally take months or even years to build. However, he wasn’t convinced they’ll work in the long term because merchants want to access and control the data they gather by dealing with customers directly. A winner could emerge over the next four or five years, with an omnichannel world the likely outcome. Winegarten added that a key consideration for merchants is whether they can use the same channels across multiple markets, although he agreed most will opt for a blend.
Connecting the payments dots
Winegarten then explained the concept of connected payments and why it’s important in 2021. A merchant’s payments tend to be siloed based on geography, provider, tech platform and currency. Breaking down these siloes has become critical as the shift to ecommerce has unlocked a global marketplace. Merchants need to consolidate their payments through a single platform, but many banks are limited by geography. That’s where providers like Checkout come in because they bring together local acquiring from each region, while delivering an optimal customer experience.
Looking ahead
To conclude, the experts shared one way merchants can remain competitive in 2021.
Rastogi returned to the trend of last mile delivery. With customers becoming accustomed to instant gratification, any merchant that gets it right will have a considerable advantage.
Asthana reiterated his point about the dominance of mobile payments and how ‘card on file’ transactions can build trust in ecommerce. He also emphasised the importance of partnering with a provider that can cater for a global customer base. Winegarten expanded on this theme, arguing merchants must customise the payment experience for local markets or risk losing market share.
Watch the on-demand webinar to learn more about how COVID-19 is creating opportunities for innovative merchants to transform and grow their businesses.