Online shopping is on a tear, and marketplaces are reaping the rewards. Some sites are seeing more active buyers and higher gross merchandise sales (GMS) as consumers look to buy all sorts of items from merchants and creators. Etsy, for instance, recently noted that active buyers on the site grew by 17 percent to reach 37 million worldwide last quarter, while active sellers grew by 8 percent to two million. At the same time, GMS growth accelerated to 20.8 percent from 19.3 percent at the time.
Etsy is hardly alone: eCommerce is experiencing year-over-year growth of 14 percent, according to the Payments Powering Platforms Tracker, and merchants looking to capitalize on this rise must accept the preferred payment methods of their customers, which include everything from credit cards to PayPal to Venmo and everything outside and in between.
To help bring these options to shoppers, a growing group of payments players are fostering partnerships to accept new payment methods and improve their offerings. H&M, for instance, recently inked a deal with Klarna as Etsy partnered with Square. At the same time, Seat Geek is offering Apple Pay as Shopify added Venmo as a payment option.
Just under 150 billion — or 148.5 billion — online payments were completed in the U.S. in 2016, the most recent data available. And new payment methods are coming to eCommerce sites: Shopify, for instance, announced in October that it was adding Venmo as a checkout option for its Shopify Merchants that use PayPal checkout. The company noted in a blog post that it is always looking at popular checkout options that are resonating with buyers in order to reach more consumers and expand its business. In the post, Shopify wrote, “by accepting Venmo directly in your online store, users can complete their purchase in just a few clicks. Giving customers a familiar way to pay can lessen abandoned eCommerce carts and increase sales for your business.”
A little more than 74 billion — or 74.5 billion — online payment volume was completed in the Eurozone in 2016, the most recent data available. And European retailers are embracing digital payments: H&M, for instance, recently inked a partnership with Klarna through which they will further integrate H&M’s physical and digital stores. In a press release, the companies said that with the deal customers will get a more personalized shopping experience, whether that’s in a physical store or online. Klarna will power H&M’s Club payment program with the deal, give customers a streamlined post-purchase service as part of H&M’s mobile app, provide an omnichannel customer payment offering, and bring out other services that are yet to be announced.
The expected size of the digital payments industry by 2027 is $2.4 trillion. And some marketplaces are expanding their digital payment offerings: Etsy, for instance, partnered with Square to implement in-person payments for its sellers. Etsy CEO Josh Silverman said in an earnings conference call in May that the partnership allowed Etsy to replace a homegrown platform that “consumed time and attention from our engineering team.” The news came a few months before Square posted results this November that showed double-digit gains in gross payment volumes, notable growth in subscription and software-based revenues and continued traction amid a base of larger merchants.
Just under eight in 10 — or 77 percent — of mobile debit payments are made via Apple Pay. Seat Geek is among the platforms using Apple Pay: the ticket retailer includes the payment method amid its options for its Snapchat ticket buying experience. When it comes to purchasing a ticket, consumers normally have to complete many steps. Through SeatGeek’s Snap integration, however, consumers can pay in-app using a credit card, debit card, PayPal or Apple Pay while they are engaged with content. SeatGeek Director of Commerce Partnerships Lee Moulton said in a June interview with PYMNTS, “It’s those moments where you’re looking at these mediums and you’re like ‘wow I haven’t been to a game in a while,’” adding that the media triggers consumers to consider purchasing a ticket.
And 79 percent of U.S. adults make purchases online. When it comes to upcoming holiday season, eMarketer noted that eCommerce is expected to be responsible for 12.3 percent of sales. The company also reported that online retail sales may hit $123.73 billion as consumers buy gifts, which would be a 16.6 percent increase from last year. At the same time, eMarketer Forecasting Analyst Cindy Liu noted that more promotions and perks such fast shipping are to be expected amid competition between Amazon and other eCommerce retailers. The news comes as the National Retail Federation (NRF) found in a recent survey that consumers are expected to spend an average of a little more than $1,000 in the upcoming holiday season. The figure marks a 4.1 percent increase from 2017, when consumers said they would spend an average of just under $1,000 according to a press release from the NRF.
Going forward, the Boston Consulting Group (BCG) and Swift noted in a report that retail payments may compete on personalization. That comes to show that payments players that have the digital know-how can have an advantage over the less digitally-innovative competition as they head into the future.