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March Madness: Payments And Commerce Style

Is your bracket ready?

Beginning today, the annual March Madness college basketball tournament officially kicks off. While the best 64 teams in amateur basketball will go head-to-head on the court, millions of Americans will be anxiously checking their brackets to see just how good they are at prognostication.

There are a variety of methods that go into selecting those choices. Some undertake a complex, moneyball-esque statistical analysis of every team, every match-up and every venue in the hopes that they can use math to crack the winning code. Others make their choices based on team loyalty (Go Hoos!). And yet others let their feelings guide them — at least one member of PYMNTS’ staff filled out their bracket based entirely on how much they liked the team logos.

Incidentally, none of these methods are any better or worse than the others if the goal is to pick a perfect bracket that correctly predicts the course of the entire tournament. It’s nearly impossible to pick a perfect bracket, so no one will get it totally right. That’s not so much our opinion as it is the conclusion of statisticians who’ve calculated the odds of picking a perfect bracket at 1 in 9,223,372,036,854,775,808.

For those whose eyes glazed over on digit 15 or 16 in the above figure, that rounds out to about 1 in 9.2 quintillion. Or, at least, that’s the pessimist’s view — a more optimistic estimate puts the odds somewhere around 1 in 128 billion, which is a much more manageable statistical impossibility. The average American is far more likely to win an Academy Award, be elected President or find several four-leaf clovers over the course of their lifetime.

But the fact that perfection is nearly mathematically impossible will not stop millions from trying — and then obsessively watching college game after college game to see if they’ve somehow managed to defy the odds in the biggest possible way.

Because in March, the madness isn’t really on the court at all — it’s in the minds of those who’re watching the games.

And that madness is, well, kind of everywhere, even if you aren’t a sports fan. It’s just that the sports fans get to make brackets to map it for the next few weeks.

Not liking basketball is no reason not to get in on the fun, and so, we made you our own little payments and commerce mini-bracket, a “Final Four” for anyone who would rather follow the price of bitcoin than the progress of Duke through the tournament.

 

1. Productivity vs. The NCAA Tournament 

Intense focus has to come from somewhere: Brackets don’t write themselves, and games don’t watch themselves.

Over the next couple of weeks, that focus will be so intense, in fact, that it will cost the America’s employers a collective $4 billion in lost productivity over the course of the first week of the tournament alone, according to estimates by Challenger, Gray & Christmas.

That will come care of the estimated 50.5 million workers (about 20 percent of the U.S. workforce) that will be participating in office pools this year — a 5 percent increase from last year and a 9 percent jump from four years ago.

After that first $4 billion hit, employers, according to forecasts, will lose another $1.3 billion for every hour of the workday spent building/checking brackets and watching games.

According to Challenger, Gray & Christmas, resistance from employers is probably futile. The games are live-streaming everywhere — as well as being broadcast — and flipping them off will, well, make employees sad.

“Efforts to suppress the ‘madness’ would most likely result in long-term damage to employee morale, loyalty and engagement that would far outweigh any short-term benefit to productivity,” the firm said.

Winner: The NCAA tournament. Sometimes you have to give the people what they want — even if you are their boss and what they want is to watch basketball at work.

 

2. Toys R Us vs. The Retail Death Spiral 

When Toys R Us first announced its bankruptcy a little under six months ago, it was with an almost upbeat tone: The move would allow the firm to refashion both its capital and operating structures and hit a reset on the business. It even managed to garner a $3.1 billion loan at the time to keep stores open.

Then the holiday season came, but consumers did not, and as 2018 arrived, Toys R Us announced plans to shutter an additional 200 stores.

As of the first week of March, the liquidation rumors were flying, though the store was continuing to put out orders to vendors and employees were told things were still operating as normal. Then a vendor payment was missed, Toys R Us stopped taking calls from the media and, as of yesterday morning, it was all but final: Liquidations were a foregone conclusion.

By the close of business, the court filing was in, and Toys R Us was officially done.

Winner: The Retail Death Spiral. Toys R Us had an interesting idea on how to reboot their stores as innovative play centers for kids, but they didn’t have the juice to overcome their billions in debt or their diminished profile among consumers. Just in time for the Ides of March, the 50-year-old brand announced it was shutting or selling all of its stores in the U.S., affecting 33,000 jobs nationwide. There are rumors that a consortium of toy brands may buy out and operate at least some of the retailer’s assets, but for right now, another historic brand bites the dust.

 

3. Boomers vs. Millennials vs. Scammers 

Which segment of the population is most vulnerable to scammers? It’s not your grandmother — despite the entrenched notion that scams mostly dupe older, less technologically adept, consumers.

Grandma does get taken in by scammers, but, statistically, she does so less often than her millennial grandchildren do. According to the Federal Trade Commission (FTC), 40 percent of those aged 20-29 who reported fraud indicated they lost money, while only 18 percent of those aged 70 and over reported losing funds to fraud.

The numbers do get somewhat worse for older customers a bit further down the line. The study also reported those aged 80 and over lost more than double the amounts that millennial victims lost — $1,092 compared to $400 for those aged 20 to 29.

Imposter scams, which involve someone impersonating a family member or someone in authority, had a particularly good year: collecting $328 million in consumer losses.

Winner: Scammers. As it turns out, scammers don’t care if you’re young our old; if you have money to take, they’re happy to take it — more often if you’re young, more of it if you’re old. The big takeaway? According to the FTC, consumers are losing more money to fraud than they were last year, which means someone needs to get the ball out of team scammer’s court.

 

4. Amazon vs. Grocery 

Everyone buys groceries, but according to data gathered by PYMNTS, Vantiv and Worldpay, no one really loves the experience.  In fact, by the numbers and on a scale of 0 to 100, consumers are ranking their current grocery experience at about a 30.

An F by any definition.

But consumers, though dissatisfied, remain hopeful and continue to hunt for that better experience. More than half of all consumers we studied — 55 percent — said they use both online and offline channels to buy their groceries, while only 41 percent were brick-and-mortar loyalists. As Karen Webster noted in her commentary this week, those consumers are increasingly falling into Amazon’s hands, with the Dash Button, Prime Pantry deliveries and, most recently, at Whole Foods.

Grocers around the ecosystem have responded. Prices are down, and omnicommerce initiatives are up.  Order online and pickup in-store — a rarity a two years ago — is now de rigueur for Kroger and Walmart these days (the two brands that control roughly half of American grocery retail). Grocery delivery is becoming ever more common and has been kicked into high gear since Amazon announced that free grocery delivery from Whole Foods is about to become a Prime membership benefit for many people.  The future of food under the influence of the Amazon Effect isn’t going to be about the food itself, or even the price. The future of food is convenience and letting customers get what they want, when they want, without having t0 make a lot of decisions about how they want to do it.

Winner: Consumers. We aren’t going to hazard a guess about the overall winner of the grocery wars — or even how many winners there might be at the end when all the dust settles. Amazon is Amazon, and as amazing as it is at what it does, it won’t quite dominate grocery they way it did the rest of retail. Grocers saw what happened when everyone ignored Amazon, and they clearly won’t be repeating that mistake. But consumers — the people currently ranking their experience at a 30 — are buying better food for less money and are being given more choice about how they do it. That’s a good enough to win for this bracket.

So, what can we learn from Payments and Commerce March Madness?

The times are changing, meaning winners are often hard to pick ahead of time. Upsets happen — like Toys R Us. Bad guys sometimes win — like scammers (and Duke). But, everyone once in a while, you also get a Cinderalla story, like consumers in the grocery aisle.

Most critically, we learned that you can’t stop March Madness: Your employess will stream the game no matter what you do. It’s better to just pick a team and roll with it for the next two weeks instead.

Go Hoos!

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 Mobile Order-Ahead Report, PYMNTS talks with Dan Wheeler, Wahlburgers’ SVP, on how the QSR balances security and seamlessness to secure its recently launched WahlClub loyalty program.

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