Omnichannel commerce has been a work in progress stretching across decades.
Adding digital capabilities to on-premise, brick-and-mortar activities has proven to be a hit-or-miss process.
In the past, retailers used technology in a “bolt on” fashion. Websites didn’t connect fully to the brick-and-mortar settings to update inventory and promotions with speed. No one was all that comfortable using fingerprint scanners at the point of checkout — and checkout itself remained tethered to the terminals and cashiers anyway.
But now, the consumer follows a non-linear path as they browse and buy, and ultimately get what they want, picking up their orders or having them delivered to the doorstep. Nowadays, shoppers weave between physical and online channels, often within the same shopping journey.
Retailers must understand the journey and be ready to close the sale at any point, and anywhere, or else they risk “point of failure” if there’s friction in the mix.
ACI Worldwide Senior Vice President and Head of Merchant Payments Basant Singh, Zenni Optical Chief Technology Officer David Ting and Walmart Vice President of Omni Services and Capabilities, U.S., Julia Unger told Karen Webster that offering consumers their preferred methods of payment is a critical component in incentivizing consumers to close the transaction. But, increasingly, it’s what happens after the transaction that can make or break an individual’s loyalty to the brand.
There’s a thorny problem in the mix, according to Singh.
“There’s the common challenge that we hear from the merchant, and it’s that there are many payment methods,” he said. “…Consumers from various demographics use different payment methods. They have a different preferences. The merchants ask, ‘How could we possibly offer everything and integrate everything?’”
No matter the merchant, said ACI’s Singh, a few things are universal in determining the development and ultimate success of omnichannel commerce.
“The most important theme we see is optionality,” he said. “That means that you as a consumer want to pay, by their own choice, at the place of their own choice.”
For the merchants, that means offering a broad range of options to their end user, but without cluttering the experience at checkout. Cost is a factor, and Singh noted that each payment method integration, if done piecemeal by the retailer, would cost tens, even hundreds of thousands of dollars, spaced out across multiple providers.
“You’re not going to find a provider who provides every option,” said Singh.
The optimal strategy is one where a merchant defines their payment strategy with the help of a payments orchestration platform (such as on offer by ACI) accessed through a single application programming interface (API) that can “orchestrate” between channels, payment types and various combinations thereof.
Ting emphasized that merchants need to learn the behaviors of their consumers and simplify the user interface so that the “purchase experience,” — and not just the payments — are as efficient and intuitive as possible. The end result is that linking with a range of providers and acquirers winds up boosting conversion rates.
It’s the overall experience, the trio of executives told Webster, that merchants must fine-tune in the age of always-on, blurred-lines commerce.
In discussing what omnichannel means in the current environment, Unger, who leads the omnichannel services and capabilities team at the retail behemoth noted that for Walmart, “we don’t think there’s an ‘order’ of store and then digital, or digital and then store [journeys]. We want to make sure we are present where the customer is and where their preferences are.”
She offered up a range of examples of how customers’ preferences can vary depending on where they are, what they’re buying and when. The intersection of data, the mobile device and physical/online channels, said Unger, can offer a level of personalization that capitalizes on those preferences. A customer might opt to buy tires online with Walmart but schedule an installation in-store (their car is in the parking lot, after all). Or, in another example, a consumer standing in the brick-and-mortar aisles might not be able to find the right size or color of sneakers.
“We are introducing QR codes where the consumer can ‘QR code’ an item, and that leads them to a larger assortment of the desired items — and they can purchase online, and have it shipped directly to their homes,” Unger said.
Ting noted that omnichannel’s evolution has helped spur a transformation in buying eyewear, which used to be confined to in-person visits with optometrists and now straddles several face-to-face and digital touchpoints. In a previous PYMNTS interview, Ting said only 14% of consumers buy their eyewear online, which leaves a greenfield opportunity for digital channels to help streamline and speed the process from conducting “virtual eye exams,” to getting prescriptions to providers, to paying for it all — forging an optical industry that’s more fully online than could have been imagined just a few years ago.
Consumers are continuously assessing the various options they have on hand, and they “play the field” in an opportunistic way as they consider the best ways to shop amid inflation. That means that merchants must weigh how they can satisfy the different payment needs for different customer segments, Unger said.
“When we think about payments, we’re trying to create consistency in what’s available across different channels,” she said.
Walmart’s own customer base, and their needs, are diverse, to put it mildly. Many Walmart shoppers still use cash, others have thin credit profiles, and with the money services business in place, Walmart has become a “banking solution” for many providers. Buy now, pay later (BNPL) and paying with points are more recent introductions that are gaining traction. In the wake of the 2022 purchase of Even Responsible Finance and One Finance, Walmart is also considering initiatives that can help users build credit over time, establishing checking and savings accounts beyond simply cashing checks.
“Depending on the customer need and where they are in their life cycle, we’re able to serve them the right product at the right time,” she said.
Customers’ needs, in this inflationary environment, are focused on making purchases more affordable. With the interest rate hikes continuing from the Fed and the cost of variable rate debt rising, paychecks are shrinking. Credit cards are getting declined as consumers carry more debt than many of them ever have before.
Many U.S. consumers, as PYMNTS has found, live paycheck to paycheck, and Unger, Ting and Singh contended that merchants must be proactive in pushing various payment options “further up” in the shopping journey — rather than waiting for the end — so that consumers know that BNPL and other methods can help them seal the deal.
More retailers, said Singh, are “showcasing” payment options and pricing alongside item descriptions at the point of browsing so that customers have transparency at hand.
Panelists told Webster that the post-purchase experience has, and will have, an impact on how consumers view their merchants, and whether they’ll stick with those retailers. When it comes to handling exchanges, returns and refunds, the after-transaction process represents a “moment of truth” for Walmart and others, said Unger. If not handled well, as Singh said, as many as a third of customers won’t buy again from a merchant if they find returns or exchanges difficult.
Amazon is the benchmark here.
“It’s a ‘liquid’ expectation because everybody follows Amazon, and so every merchant is trying to improve their processes, how returns are handled, how cards are refunded and when,” Singh said.
Walmart, for its part, has rolled out options including “curbside returns,” and, in addition, when in-home delivery is in the offing, employees can accept returns in that setting too.
Zenni, said Ting, which has long had a store credit offering, now offers a “one free remake” option for consumers who might be less-than-ideally satisfied with their glasses. The company is also experimenting with a “cash back” function (with enhanced fraud detection to make sure no one is gaming the system) to keep customers engaged.
Zoom tutorials, he added, can walk customers through the process of adjusting the frames to their liking once the glasses are in hand, which cuts down on returns. Zenni is also a bit unusual here because when items are returned, they aren’t resold or junked; the eyeglasses are donated to people in need around the globe.
“All of this is ‘included’ with a payment but really are, holistically, part of the customer journey,” Ting said.
And time goes on, as the physical and digital retail channels blend, Unger told Webster, the critical path for retailers is to make sure that commerce is “a one-stop destination. It cannot be disjointed; it cannot feel impersonal. And it needs to be a connected experience where it feels personalized, and it’s important that one event leads to the next.”
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