Consumer Insights

PayPal Finds Millennial Shoppers Aren’t Afraid Of A Little Risk

A few short years ago, the average customer’s view of the retail world was an exceedingly local one, where he or she was really only aware of what was in the immediate market. However, now that the consumer experience has ballooned from a provincial perspective to a near-global one, have consumers managed to keep pace with the bewildering breadth of options now available to them?

According to PayPal’s most recent research, millennial consumers at least are more than keeping up with what modern retail throws at them.

Key to this is a growing yet qualified acceptance of risk among younger shoppers. In an interview with MPD CEO Karen Webster, Melissa O’Malley, director of global merchant and cross-border trade initiatives at PayPal, explained how millennials are embracing and exploiting elements of the evolving retail landscape that might seem too unproven or unfamiliar and end up driving older customers away. For example, cross-border commerce has emerged as a particular favorite of the millennial generation, with all young consumers much more likely than their Baby Boomer parents to have dabbled in some overseas purchases. In fact, about half of all millennials have engaged in some form of cross-border commerce.

Why the preference for internationally sourced goods?

O’Malley explained that it might not be strictly out of desire but rather that millennials are more comfortable operating in a modern and global retail economy that, in some ways, places more risk on the individual consumer.

“They’re very adventurous consumers,” O’Malley told Webster. “Forty-one percent of millennials have made purchases on websites that aren’t even in their own language. They’re trying to fulfill that need of getting the best price that they can, whether they buy it from a store in Canada or the U.S. or France. Millennials are being driven by wanting the product that they want at the best price they can find.”

While millennials might be comfortable throwing themselves and their dollars headlong into cross-border commerce, it’s not out of some kind of naive blindness to the troubles that await them if things go wrong. On the contrary, O’Malley noted that millennials have proven incredibly savvy at exploiting the value-added resources of global retail to minimize the chances of lost purchases and delayed shipments. PayPal found that 46 percent of millennials have used some kind of freight forwarding system to get their overseas purchases more quickly and reliably, and 63 percent regularly check currency conversion sites before purchases to make sure they’re not getting hosed by sudden surges in exchange rates.

O’Malley identified this as the dominant dynamic driving millennial activity in the cross-border space. Millennials are more risk-centric than their older generational counterparts, but they won’t jump headlong into an uncertain purchasing situation if they don’t see the tools there to mitigate the potential damages. After shipping speed, safe payment options were cited as the second most important driver of cross-border commerce millennials, so if a new startup doesn’t do the necessary work to shore up its digital security, millennials are smart enough to reign in their purchases until a more responsible option comes along.

That’s not to say that millennials are about to take the slings and arrows of modern retail’s failings lying down. PayPal’s research found much more aversion to shipping delays and cancellations among millennial consumers; as creatures of the Amazon age of home good delivery, the expectations around speedy and on-time deliveries among these younger shoppers are much more painfully broken than for Baby Boomers still adjusting to free two- and one-day shipping as the norm.

O’Malley explained that PayPal was careful to avoid false confirmations of millennial consumers, but, in this case, it really did play out that millennials’ oft-quoted preference for what they want as soon as they can get it holds true when it comes to shipping delays and cancellations.

“Millennials sort of leap ahead of the general population in terms of how important [on-time shipping] is for them,” O’Malley said. “They want what they want, how they want it, and they want it really quickly.”

That’s the picture of millennials as they are now, but will this data and these insights hold true as the generation passes from a role as disruptors and innovators to one where, more like their parents, they value safety and security in their purchases above all else?

“Millennials are so open to finding a better way to do something,” O’Malley said. “I think you see this from an entrepreneurial perspective as well. It may be that, as they get older, they become a little bit more entrenched in what they consider acceptable behavior. Maybe they are less likely to adopt the innovations of 10 or 20 years from now.”

For the moment, retailers can rely on the fact that millennials are more than willing to engage in a new method of commerce when profit margins are shrinking faster than ever before. Although as PayPal and O’Malley know, millennials’ peculiar tastes, as well as their possible shifting priorities, could be as much of a liability to retailers’ futures as they could be panaceas.


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