Instant Checkout Still in Search of Its Killer App

Waiting in checkout lines at retail stores seems so 2019 given the innovations in self-directed and unattended checkout. Even with those advances, adoption still has hurdles to clear.

In a discussion for the PYMNTS Executive Insights Series, we spoke with Amin Sabzivand, senior vice president of product at Sezzle, exploring options for the future of instant checkout.

Against the backdrop of news that regional grocery chain Wegmans is replacing scan-and-go self-checkout with a pilot of smart cart technology, it’s clear that these solutions are still early in their lifecycle, and retailers are figuring out what works best in which retail setting.

“This year we are going to see more adoption overall into self-directed checkouts, but adoption depends on the sector and the market,” Sabzivand said. “For grocery shopping, when the practical benefit is clear to the consumer, the adoption on the consumer side is probably going to be higher versus luxury retail when the customer wants some sort of a luxury experience.”

Scan-and-go is more ubiquitous right now — most grocery stores of any size have already created dedicated scan-and-go self-checkout areas adjacent to staffed registers — but Wegmans cited losses from shrinkage in its decision to make the smart cart pivot.

With smart carts, payment is typically made from the cart for all items in the cart, which should be a hedge against just walking out (without paying).

Sabzivand said each has a unique value prop.

“The scan-and-go version is closer to the online shopping experience for a customer,” he said. “From the moment I open the app and scan an item, it’s basically in my basket, I can see the deals, the promos, the coupons, the recommendations, and those apps can recommend similar products. But it’s not for when the customer is in rush.”

In rushed situations — think airport stores and stadium concession stands — Sabzivand said that’s the wrong time to be receiving product recommendations and other content typically served up by scan-and-go systems.

“Each of them, on the consumer side, has [its] own value prop, and the adoption for each of them highly depends on what type of retailers are going to [use these solutions].”

Virtual Cards and Smartphones Unlock New Use Cases

With Instacart’s announcement that consumers can use its Scan & Pay tool where their smartphone becomes the scanner, the plot thickens.

“People are more comfortable [working] with the device that they have in hand when they know that they have full control of everything,” he said. “It gives them more flexibility, and even psychologically, a little bit more freedom overall when they use their own app rather than a cart and things like that.”

He said he sees it as a combination of security and flexibility, specifically as Instacart is powering the solution with an in-app virtual card, “and that virtual card being on the phone, from the security perspective, is much easier versus some other ways for the person to pay.”

Sezzle’s use of in-app virtual cards can accommodate both scan-and-go and just-walk-out checkouts, which may turn out to be a critical use case as instant checkout evolves.

“At Sezzle we think about it very strategically,” he said. “From day one, we’ve used multi-use cards, like a normal virtual card” where the customer adds a Sezzle virtual card once to the app, “and after that, they can just use it as a default payment method.”

Over time, this may push more consumers to shop online, he added, as eCommerce supports price drop notifications that consumers can order at that moment online, but this same experience isn’t as easily replicated for in-store shoppers.

For this reason, Sabzivand said, “I think that probably we are going to see more and more promotions and campaigns around how these merchants can move customers from being in-store customers to online customers.”

Try It, You’ll Like It

Because Sezzle is a buy now, pay later (BNPL) FinTech, Sabzivand said he believes the future of instant checkout also involves installments as a consumer enticement and retail operations upgrade.

“Just imagine changing price tags every other week,” he said. “It’s very operational and very expensive for merchants, [whereas] they can just add a simple widget on their product page and educate the customer that a $400 item can be purchased for four payments of $100 over six weeks interest-free. It’s going to have a huge impact on conversion rates.”

As it pertains to higher ticket items, he added that the use of self-directed instant checkout can free up human cashiers to act more as customer service reps, answering important customer questions that lead to a conversion on the retail sales floor, while still skipping the line.

Among the things retailers need to understand from Sabzivand’s viewpoint is that “these solutions are mature and ready. I feel that there are a lot of medium and small-size merchants that are going to adopt this solution. Amazon just offered their solution to normal merchants, normal vendors, and if they want to just buy the technology,” ROI is achieved faster.

Additionally, data is generated that stores can use to improve operational efficiencies, know which SKUs are being scanned but not purchased, enabling data-driven decisions on how to optimize shelf management, inventory management, and ultimately, drive purchase behavior.

“The biggest challenge is how to convince customers to … try it once and experience the benefit, and then after that, they’re going to use it,” he said. “I use the analogy with tap-to-pay. From many years ago, we had the tap-to-pay, but in the last two years, people are using it more as they had that first try and experienced the convenience.”