CyberSource: Helping Merchants Prepare For eCommerce ‘Mini Peaks’

In retail, peak seasons can be as reliable as clockwork, dependable as — and even dictated by — spring, summer, fall and winter.

Back to school is the longest peak season, stretching through July and August, generating tens of billions of dollars (as estimated by eMarketer) for kindergarten through 12th grade and college-focused retailers.

The traditional holiday shopping season, which lasts from Black Friday onward, still accounts for roughly a quarter of annual sales for retailers in general, and for certain verticals, such as jewelers, a much bigger chunk of the annual top line.

Redefining Peak Season

Amid the continued shift to eCommerce, peak season is getting redefined to the point that platforms and even countries are “manufacturing” their own huge events spanning borders and currencies. Witness Alibaba’s Singles Day late last year, which notched $38 billion in sales.

And retailers have been turning to flash sales to drive transactions — 40 percent of them had such sales during the 2018 holiday shopping season.

In an interview with Karen Webster, Michele Herron, senior vice president of strategy, marketing and small business at Visa’s CyberSource, said the proliferation of shopping holidays worldwide means merchants must take into account the new normal of “mini peak” seasons.

The conversation came as eCommerce is growing five times faster than in-store sales, at a compound annual growth rate of 9.5 percent versus 1.4 percent, respectively, and now is worth hundreds of billions of dollars.

There’s no doubt that Cyber Monday, Black Friday and other shopping days and seasons have and will continue to have their place within retail.

But retailers, said Herron, must be meticulous in mapping out their desired customer experiences and how to protect those experiences from friction and loss of sales caused by fraudsters.

The SCA Component

The balancing act between security and streamlined consumer experiences is especially urgent in a world where Strong Customer Authentication (SCA) is taking root through 2020. SCA requires payment service providers authenticate customers’ identities through at least two of the following three elements for applicable transactions: something customers’ know (a PIN, for example), possess (a device, perhaps) or something they are (established through biometrics).

The European Banking Authority (EBA) provided extra time for the industry in the European Economic Area to implement SCA. This creates an opportunity for businesses to adopt relevant technology to benefit from additional security and deliver good customer experiences.

Looking at Points of Failure

There’s also room for retailers to consider other aspects of their eCommerce operations as they get ready for the “new normal” of mini peaks.

At a high level, managing an eCommerce presence day to day requires the balancing act of what Herron termed “opening the aperture” of bringing sales into the digital pipeline while still protecting the business from fraudsters.

And in moving toward an optimal level of preparedness, she pointed to the need for merchants to test what a “40x” sales volume might look like at every touch point across the customer and payments lifecycle in a hypothetical peak event.

Whether conducted across traditional or “manufactured” peak seasons, the burgeoning volume of eCommerce demands that retailers think through possible points of failure, and while many CyberSource corporate clients do indeed plan well in advance of peak events, there are plenty of firms that do not plan as optimally.

Those companies may be making the mistake of not adequately taking stock of issues that can impact conversion, said Herron, such as whether websites are loading swiftly; if shopping carts, order management systems and payment gateways can scale to meet capacity demands; and if retailers have the right network of acquiring connections mapped to achieve global reach and maximize acceptance.

Unified Commerce Efforts

The goal for the CyberSource platform, she said, is to help these firms — through a combination of machine learning (ML) and artificial intelligence (AI), along with human oversight — rethink their readiness to tackle peak events that are unified commerce in scope. She noted that buy online, pickup in store (BOPIS) has been gaining traction, and installment financing is, increasingly, a desirable offering for many retailers.

A movement into new markets globally means merchants have to consider accepting new payment types — and offering those options can be as easy as connecting to payment management platforms such as CyberSource, which use application programming interfaces (APIs) to connect clients across 190 countries and territories through the acquirers and processors of their choice.

“There’s a primacy in thinking about the customer that’s really changing the dynamic of where we see transactions occurring,” she told Webster.

“The concept that we’ve nurtured for a long time — that there’s business throughout the year, but then you must get ready for this massive peak holiday season — that’s diminishing,” she added. “And I think this is changing the conversation about retail patterns and how they impact merchants and sellers, and how they have to prepare for spikes.”