Payment collection plays an often underestimated role for growth and profitability in e-retail. Payment is an essential component of the shopping experience, and for ambitious e-retailers, it has never been more important to get their payment strategy right.
Digital payment tools have created a world of new opportunities for retailers, which in turn have provided consumers with unprecedented choice and convenience. But they have also introduced some new challenges which merchants must address in order to be successful — here are the top four.
Challenge #1: Globalization
The Internet has enabled a global networked economy like no other technology before it. Modern e-retailers now compete at a regional if not global scale, and leading players typically generate more than half of their revenue outside their home country.
While globalization and new technologies are creating extraordinary new opportunities for growth, taking your business outside your borders can also be a complex and resource-intensive undertaking.
For many expanding e-retailers, adapting to local payment infrastructures and customer payment preferences in the markets they are entering is proving particularly challenging. While offering local payment methods enables you to address geographical markets and customer segments that would otherwise be out of reach, it does add significant complexity.
The solution: Look for a globally networked payments partner that offers easy access to all the local payment methods you need, preferably with a single integration for all geographical markets.
Challenge #2: User experience
The customer journey does not end when a shopper reaches the payment page. While payment used to be no more than an inevitable transactional point, it now represents an opportunity to engage with customers and enhance the total shopping experience.
Customer convenience is a moving target, however. Technological innovations continuously drive new consumer expectations. At the same time, you must balance your customers' desire for a frictionless experience with your own need for payment security and fraud protection.
The solution: Make sure that your payment service provider can offer the right tools and technologies to support rapid and cost-effective deployment of new payment technologies that improve the customer experience, while avoiding unnecessary risks and costs. New technologies should be easily integrated into your existing infrastructure.
Challenge #3: Customer engagement and loyalty
Digital technologies have changed retail forever. While they create rich opportunities to reach new customers and retain existing ones, these technologies also introduce new challenges in terms of customer engagement and loyalty.
Perhaps most significantly, the path to purchase is less linear than ever before. For example, buyers may ask for peer recommendations on social media, check out suggestions on their mobile phone, and try on a product in a physical store, before they finally place the order via your e-store.
Blending online, in-store and mobile channels into a single, frictionless shopping experience has become one of the most critical challenges for retailers whose systems are often channel-specific and siloed.
The solution: Team up with a payment partner with the necessary expertise to support a ubiquitous customer journey. A convergent payment infrastructure, directly supported by tokenization technology, will enable you to accept payments via a single platform with integrated and consistent payment experiences across channels.
Challenge #4: Profitability
Last, but not least, profitability remains a perpetual challenge in e-retail. While all trends point toward the eventual dominance of online commerce, lower pricing power and the need to invest in digital transformation — coupled with new competitors with different operating and cost models — create a perfect storm for retailers.
Add the constant threat of fraud, costly chargebacks and disputes, and complex reporting and reconciliation processes: there is no shortage of pressures on your profit margins.
The solution: While even the perfect payment setup cannot solve all your profitability challenges, optimizing payments will take you a big step forward. Besides enabling payment alternatives with lower transaction costs, make sure your payment service provider also offers an effective fraud protection system, streamlined chargeback and dispute handling processes for all payment methods, and automated reconciliation services.
Payment is a crucial step in the buying journey, and as such it is an opportunity to engage and delight your customers, provide a better user experience, and differentiate yourself from your competition. Delivering such an experience is no mean feat, however, and the difficulty is compounded by the need to adapt to different markets and payment preferences … cost-effectively.
When you evaluate a payment service provider, make sure to assess whether your potential partner offers local experience in your target markets, stays at the forefront of payment technology innovations, provides robust omnichannel solutions, and has the necessary experience to guide you in protecting your profit margins.
To learn more about best payment practices for growing e-retail businesses, download our white paper "How payments can make or break your online expansion".