Online commerce has become more sophisticated over the years, with more and more consumers using the channel in new ways to buy and research products and services. And this is bolstering merchants’ need to build omnichannel strategies that include consistent experiences across both online and brick-and-mortar activities.
Merchants, however, generally are falling short in meeting online consumers’ expectations, according to a new Vantiv Insight Series research report “From E-commerce to Omnicommerce.”
“They are focused on strengthening their eCommerce capabilities, but they also find that implementing eCommerce and integrating channels presents some pretty significant challenges,” Bill Weingart, Vantiv president of eCommerce, said in the report. “Often, they’re a little overwhelmed.”
To help merchants address these issues, Vantiv is hosting a Web seminar at noon ET on Sept. 24. During the event, key experts will discuss the findings in the Vantiv report and provide key advice on meeting emerging omnichannel challenges.
Nearly 80 percent of consumers still tend to rely on their personal computers to shop online, but that’s changing quickly, as 28 percent often use their smartphones to research products online, and 17 percent regularly use the devices to make online purchases. In fact, 60 percent of the respondents to Vantiv’s survey said they had used their mobile phones at some point as part of the shopping experience. At 50 percent of respondents, young adults are more likely than are the average consumer to use their smartphones to research, while 33 percent of respondents in that age group used them to buy products.
Payment trends also are changing, as 17 percent of respondents said they would be more interested in using a cloud account than a payment card for online payments. However, more than half expressed concern about security with such accounts, especially young adults and owners of smartphones and tablets.
But such concern applies across channels, presumably because of the recent high-profile merchant-security breaches, Vantiv noted. Confidence in using credit cards for eCommerce dropped to 44 percent this year from 49 percent in 2013, while for debit cards it fell to 34 percent from 40 percent. Consumers consider prepaid cards to be the most secure form of payment in general, and nearly half of the respondents said prepaid cards are useful for online purchases.
The rise in consumer interest in eCommerce is one part of a larger shopping experience, as shoppers are not just shifting their shopping activity to one specific channel but to multiple channels. These multichannel “omniconsumers” are quick to adopt electronic channels, but they are also very likely to keep shopping in stores as well, Vantiv notes in its report.
Indeed, while online research and purchasing is now the most common way to shop, 46 percent of respondents to Vantiv’s survey said they often conduct research online and then go to the store to purchase higher-value items. About the same percentage (47 percent) said they sometimes use the traditional approach of going to a physical store to both research and buy products.
That said, consumers generally expect both online and in-stores experiences at the same merchant to be similar, Vantiv notes in its report. “Over the years, eCommerce has brought greater speed and convenience to consumers,” Weingart commented in the report. “Consumers are now expecting that same quality experience across the board, and merchants are working to deliver the right omnicommerce experience.”
As such, it is becoming increasingly important for merchants to have effective eCommerce capabilities and to provide a good customer experience, Vantiv says. And while that means they’ll need new capabilities and tools, it also can be challenging for many merchants.
“Simply accepting payments in an online environment requires different approaches to things like interchange, charge-back management, payments continuity, and dispute resolution,” Michele Herron, Vantiv vice president for eCommerce partner sales, said in the report.
More retailers are seeing recurring billing as a means to build a predictable revenue stream and increase sales, which also suggests that sophisticated systems are needed to drive such billing needs, she added.
Both consumers and merchants are seeing security as a vital eCommerce issue.
Among the respondents to Vantiv’s survey, 20 percent reported a payment card cancelled because of a data breach, up from 16% who said so a year earlier. Such experiences likely affect consumer attitudes for card purchases conducted both online and in stores, Vantiv said.
Merchant demand for security-related products and services also is on the rise, even among those with a very small amount of card-not-present business, according to the report. “They want EMV in their stores, and they want point-to-point encryption, advanced fraud-detection capabilities and tokenization that works across channels,” Patty Walters, Vantiv senior vice president for merchant product and security, noted in the report.
Merchants also face the daunting task of integrating their customer-facing technologies with back-end systems that support such fundamentals of e-commerce as reporting, order processing, fulfillment, and delivery, Vantiv notes in the report. “It’s very hard to coordinate all the aspects of all the channels,” one consumer-goods retail executive told the researchers. “It doesn’t sound hard, but ordering online for in-store pick up can be a real nightmare unless you know your inventory exactly, up to the minute. But many stores only balance inventory daily… so they don’t know what they’ve sold during the day. What if a customer drives all the way to the store just to find that the item he purchased is sold out? That doesn’t work.”
As such, succeeding with eCommerce in the age of the omniconsumer involves working on a lot of fronts, and it seems that merchants are often having difficulty doing that, Vantiv said. Indeed, succeeding with eCommerce in the age of the omniconsumer involves working on a lot of fronts. Moreover, merchants generally are not taking advantage of the wealth of customer/purchasing data created in the online business, which could help them to address changing trends quickly, according to the report.
With the multifaceted nature of eCommerce, merchants can draw on a wide array of partners that can provide help with payments and gateways, billing engines and analytics, the report notes. But merchants will need to find ways to bring these varied partners and their varying technologies together in a cohesive fashion. Moreover, merchants will need to be flexible and ready to take advantage of new technologies and approaches as they emerge—and then keep plugging those developments into their strategic plans, the report notes.
They also will need to keep an eye on ever-rising customer expectations. “With eCommerce, you have the opportunity to really engineer the customer experience,” says Vantiv’s Weingart. “As merchants are finding, that can be a lot of work, but it can be key to building loyalty and profitability as e-commerce continues to grow.”