Anyone who has ordered groceries online knows the frustration of not receiving the ingredients they need for a dinner recipe – or, even worse, getting inadequate substitutions that must be returned (or left in the pantry for eternity).
Ben Laluc, vice president of digital commerce solutions at Cybersource, said this demonstrates the need for merchants to better sync their in-store inventory with their online presence rather than relying on warehouse data to populate the digital marketplace. In an interview with Karen Webster, Laluc said consumers also want to be able to check online to see whether an item will be available at a brick-and-mortar location before making a trip.
“It used to be ‘it better be worth my while’ [to go to a store],” he said. “Now, it’s ‘it better be extremely efficient.’ Otherwise, it’s just frustrating.”
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According to the U.S. Edition of the Global Digital Shopping Index, a collaboration between PYMNTS and Cybersource released last year, consumers’ digital shopping channel use has increased by 60% since March 2020. The share of online-native shoppers has grown by 17% since the pandemic began, while the share of consumers who prefer paying for and receiving products in-store has fallen by 10%.
Transferring Digital to Physical
Gone are the days when eCommerce could be totally siloed from the store or an omnichannel strategy could be led by brick and mortar, Laluc said; retailers now need to put on a “digital-first hat, even for things that need to happen in the store.”
One example is finding things while in the store: Do customers look up locations on their phone, or is it an assisted experience from an employee who can order something if it’s out of stock?
A lot of merchants are still experimenting with how best to create a digital experience in the physical environment, which Laluc noted is tricky and very dependent on a merchant’s environment. “There’s not a one-size-fits-all answer for how to make that experience seamless.”
A big gap in the U.S., though, is the acceptance of contactless cards. Visa has seen tap-to-pay grow to 70% of all face-to-face transactions globally excluding the United States, with more than 70 countries having over 50% contactless penetration. In the U.S., penetration is just over 15%, more than double a year ago, with 400 million cards, quadruple that of two years ago. At the peak of the pandemic, the Shopping Index found that consumers increased the share of purchases made via digital devices by 60% since March 2020.
“I think it’s starting to get pretty penalizing for merchants,” Laluc said. “[Contactless] was a ‘nice to have’ four years ago. At this point, I think it’s more like ‘you need to close those gaps.’”
A key to creating a digital-first experience is making sure commerce software is compatible and integrated between online and store locations. “That’s where we see the delta between the merchants that can implement it today,” Laluc added. “They can create those integrations. They’re forward-leaning enough.”
Updating Infrastructure
Currently, Laluc said, enterprise merchants mainly fall into two camps when it comes to their omnichannel integrations. There are those who have a solid infrastructure in place and are just working to refine experiences “at the edge,” such as ensuring BOPIS order accuracy, adding payment options like buy now, pay later (BNPL) and adding contactless payment options in-store.
Then there are those that implemented “spot solutions” during the pandemic, and still need to identify more permanent technology.
“It’s really setting themselves up with the right kind of solutions that are going to be sustainable in the future and work fully within their system,” Laluc said. “Not the hodgepodge of spot options they had to integrate during COVID in a rush to perform their day-to-day business [functions].”
Many in the latter group of merchants, he said, have a list of 35 to 40 items across the company that need to be updated, but they can probably only address eight or nine of them this year. The main items getting attention now, Laluc told Webster, are things that impact top-line revenue; pre-COVID, priorities included a larger share of bottom line-focused items, such as using automation and eliminating waste by connecting inventory systems.
Small Business Priorities
For small businesses, though, it’s less about making the omnichannel experience holistic across the business’ various channels, markets and regions – and more about focusing on the integrations that helped them most during COVID. SMBs that lacked the right digital solutions when the pandemic began faced a particularly daunting task trying to implement them after the fact. Not only did they need to balance health and safety for employees and consumers, but they also had to assess their business model overnight to survive. Laluc said the pandemic caused a big shift in the rationale behind small and medium-sized businesses (SMBs) providing a more digital experience to consumers.
“Pre-COVID, it was to grow, and during COVID, it was to survive,” he said. “Now, it’s kind of both.”
See more: Digital Features Drive Global SMBs’ Digital Shift
Small businesses may even have an advantage over larger merchants in some cases, because they’re able to utilize well-developed eCommerce platforms like Shopify, which is “very comprehensive for SMB needs compared to what a large enterprise needs to do for their complex infrastructure, which requires integrating multiple systems in order to deliver.”
According to PYMNTS research conducted in collaboration with Cybersource, 35% of SMB merchants in the U.S. consider acceptance of contactless cards to be a top priority over the next three years, as do 34% of large merchants. But whereas 38% and 43% of large merchants are prioritizing mobile order-ahead and BOPIS or curbside pickup, respectively, only 31% of SMBs say mobile ordering is a top priority, and 34% prioritize BOPIS and curbside pickup.
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