The ‘Why’ And The ‘Wow’ Of Pay With Venmo

If one wanted a quick, three-word explanation for why social commerce or social media-based contextual commerce is actually much, much harder to do than it sounds, 2016 has managed to offer one: Twitter buy buttons.

Although it was released with a lot of hype last year – by 10 months in, the writing was on the wall at the social media platform, and the ability to click to buy on Twitter was being phased out. Twitter users were not all that upset, because Twitter users never really used the embedded commerce feature to begin with.

It’s easy to pick on Twitter, but pushing for commerce extensions only to quickly learn that making commerce happen is not so easy is an issue most social media platforms have hit at one time or other. It seems like they should be good places for commerce — users are already there and in many cases they are literally talking about products or even uploading images of them.

But, in real world experiment after real world experiment, consumers don’t necessarily feel compelled to buy while they are there, because on some level it’s just the wrong context. If they feel like catching up with their friends or the latest memes being shared, they’ll head to Facebook or Instagram. If they want to broadcast feelings in the moment, they’ll head to Twitter. If they want to shop, they’ll head to Amazon.

But what if the shopping bit and the sociability bit were designed from Day 1 to go together and be mutually supporting?

That, it seems, is the question to be answered with the newest Venmo features coming out of beta.

As was reported first on Tuesday (July 28), the PayPal unit is branching out beyond P2P payments, and taking the ability to make transactions and share bills across several apps belonging to 10 partnering retailers.

Among the marquee names in the queue: Boxed, Delivery.com, Poshmark, Gametime and others.

“When I think about our most active users – they are checking Venmo daily. We have high engagement on this product and as you see through the numbers the transaction growth continues to hockey stick,” Joanna Lambert, Vice President of Consumer Product and Consumer Financial Services at PayPal, noted in an interview with Karen Webster.

“A natural extension is for those Venmo customers to be able to make that payment to the merchant at the start of their journey. Bringing the purchase piece in before the split and share actually has been really natural.”

Lambert isn’t kidding about that “hockey stick-ing” growth – Venmo did $4 billion in transactions in the latest quarter, far above the $1.6 billion reported last year at the same time, which itself was more than double the prior year.

“That growth has really been in direct relation to the rapid engagement across the consumers within the Venmo space,” Lambert said.

Behind that organic growth, said Lambert, lies a customer that she says can be defined as sticky no matter how you might define sticky.

Average users transact with Venmo three to four times per week, with the extension a natural one as users bring friends and family on board to make payments, of course leading to high transaction volumes.

And those high transaction volumes told Venmo two things. One about their user base, and one about their potential customer base.

“Our customer discussion indicated that they wanted this. And our merchant partners are looking at Venmo with high engagement and transaction volume and seeing it is a huge opportunity to be part of the whole Venmo conversation.”

Because the Venmo conversation, noted Lambert, is unique; they are conversations rooted in some aspect of commerce. That is the unique special sauce to the Venmo experience, the running social feed that lets users share what they bought, where they ate and how they are living. The partners Venmo chose for this extension in fact spoke to those uses — eating, drinking, shopping and major life milestones like moving.

“We’ve chosen merchant partners our Venmo users want to talk about. Users are also given a chance to share their life moments with their friends and family. These updates and functionalities also help amplify our greatest asset which is our engagement as a social feed,” Lambert told Webster.

Not to mention, an onramp to serving the most coveted and fickle customer base of all: millennials.

Lambert emphasized the benefit of the social feed to users – they can see natural and native referrals from Venmo users to friends and family about the goods and service they provided. That, she says, gives merchants a chance to be part of a conversation with the most relevant customers in a completely organic way.”

And that organicness is the point, Lambert notes, and how a platform like Venmo is able to leverage its large, loyal and critically massive customer base to contemplate the addition of more value-added services. Pay with Venmo, she says, removes the awkwardness of sharing expenses and moves the process into a social context. She believes that commerce is just a natural part of that by bringing relationships into an environment where consumers aren’t just transacting, but where they are engaged already.

“What we are doing is opening the whole opportunity up to the entire Venmo user base, which now has the critical mass that lets us extend to relevant merchant partners.”

There’s another dimension to Venmo, too, that, Lambert told Webster, adds to the mix: Fun is Venmo’s main opportunity when it comes to payments and commerce. Venmo, for example, believes the majority of its users will continue to use the service for the mainline P2P services they use it for today. The opportunity for the maturing former startup is to change how consumers mentally approach merchant interactions.

And if that seems like a tall order, it is. But then again, three years ago, “Venmo Me” was uttered by a small group of millennials who saw a cool and easy way to pay and be paid. Today, there’s a nation full of their baby boomer parents who know exactly what that means because they “Venmo” their kids money.