On The Agenda: Five Things Retailers Can Do To Drive Conversions This Holiday Season
The holiday shopping season isn’t just going to be very different than any that have come before it. In some ways, it already is. For many consumers, the holiday-shopping rush kicked off in October with Amazon Prime Day and has continued as “Black Friday” sales started popping up before Halloween decorations had even come down. But top industry experts told Karen Webster during PYMNTS’ latest “On The Agenda” panel that the hurdles for retailers are only beginning.
Citcon CEO Chuck Huang, Extend CEO Woody Levin, PAAY CEO Yitz Mendlowitz, Paytronix Systems CEO Andrew Robbins and Greg Lisiewski, PayPal’s vice president of global pay later products, talked with Karen Webster recently about what challenges retailers will face in this unusual holiday season.
Here’s what they see – and what merchants can do to rise to the occasion:
Get Purchases Delivered On Time
Extend‘s Levin said challenges are only going to get more interesting from here, with U.S. consumers reorienting their holiday shopping to digital channels at health experts’ suggestion. That’s going to put an incredible strain on the supply chain when it comes to shipping all those packages to all those front doors in time for the holidays. He said the shipping infrastructure nearly buckled earlier this year, and retailers are now being highly conservative when it comes to managing deliveries.
“We were talking to a merchant yesterday and they said their order-cutoff time for holiday delivery is Dec. 5 this year, which is [normally] unheard of,” Levin said.
Or at least it was unheard of before 2020, PayPal‘s Lisiewski said. He said that due to increased digitization, the trend over the past five years had been to push the cutoff date for Christmas deliveries deeper and deeper into December, with some retailers going all the way up to Dec. 22 or Dec. 23.
But this year, cutoff dates as early as the week after Thanksgiving foreshadow a season where every merchant is going to rethink and adjust their seasonal strategy. And Lisiewski said it’s also a time when the FinTechs large and small that serve them need to be extremely wired in to enable those adjustments.
“The big focus for us at PayPal with our tens of millions of merchants is: ‘How do we make it easy for them to bring solutions that meet their customer needs when they have so many other things to worry about — logistics, inventory, payroll? ‘Do I need in-store staff or do I need warehouse staff? Do I need to move up the cut-off date for holiday delivery?’ It is a really fascinating time, and I think payment choice is helping ease [the challenges] — even if ever so slightly.”
Boost Consumer Choice And Control
But like merchants, consumers are also having a stressful holiday season. For example, many families are unable to travel to loved ones’ homes and are instead cooking Thanksgiving meals for just their immediate households.
Panelists agreed that such stresses only layer on top of the other challenges that everyone has faced all year — will their jobs remain stable, can they manage work from home, are their kids being educated safely and effectively? Combined, all those worries create what can feel like a holiday season that’s fraught with lots of very real worries.
The panel agreed that retailers can’t fix those problems. But by keeping a careful eye toward what the consumer actually wants, sellers can avoid adding to the stress — and escape garnering customers’ ire.
Panelists said that what consumers want are two things that 2020 has otherwise robbed many of them of so far — choice and control. The panel said opportunities for merchants to offer those things are laced throughout the entire digital-commerce journey.
For example, Citcon‘s Huang said that when it comes to payments, it’s all about adding options for customers — particularly around contactless payments. He said that means working with things like in-app payments and leveraging QR codes.
Using Payments To Engage Consumers
But Huang added that it also means thinking more broadly about the payment experience — beyond merely enabling a transaction itself and instead using it as a tool to further engage with a consumer.
He said merchants should engage with customers “through online channels, through [the] order-online process and through the pickup. But also, they want to be able to leverage the mobile wallet even post-purchase and beyond.”
For example, Huang said that if consumers buy a meal and pay with Venmo, “they can then publicly share that meal on their feed and spread the word to their friends: ‘This is a good meal. This is a good item. Maybe [you] should try it out.'”
Lisiewski added that opportunities to add control and choice via payments are increasingly pushing the expansion of buy now, pay later (BNPL) as consumers increasingly look to control cash flow without necessarily taking using traditional credit. He said that’s something consumers across demographics are signaling they want as an option, and in a wider variety of use cases than they ever have.
“Historically, financing has been most leveraged in what I’ll call medium to large price points — a $500 TV or a $2,700 Peloton, for example,” Lisiewski said. “What has happened over the last 12 or 18 months is moving that flexibility and control down [a] price point to small to medium-sized purchases. You see a lot more pickup in apparel or in beauty, where items certainly can get expensive. A $100 skincare product — breaking it into four payments of $25 suddenly is really appealing. And that’s where there’s been, a really, really big shift.”
Extend’s Levin is seeing a similar phenomenon at his company, which offers extended warranties. He said merely offering them to consumers boosts conversions by a significant margin — even in cases where the customer doesn’t end up signing on for an extended warranty at all.
Levin said the mere option of an extended warranty offers something of a security blanket behind the purchase, which appeals to consumers no matter how big or small the item is.
He said that if it’s a big-ticket item, there’s something strong to be said for not having to worry about needing to replace it if something goes wrong. And if it’s a small purchase, an extended warranty’s cost is usually so low that the few dollars it adds are a negligible price for customers to pay to feel protected.
Doing It Better In The New Year
The ongoing series of troubles that has defined 2020 will be over someday — and given all the favorable news about vaccines in recent weeks, it could be over someday relatively soon.
Paytronix‘s Robbins said there’s every reason to suspect that 2021 will very much be the “Year of the Party.” After all, pent-up demand for big celebrations like weddings, graduations, sweet sixteens, retirement parties and the like will have been building for a year.
“We’re heading for the ‘Year of the Party,'” he said. “We just have to build the bridge to get there and figure out how we survive the winter to get to the parties yet to come.”
PAAY‘s Mendlowitz said that will be a challenge, particularly in industries hit hardest by the pandemic. But it’s one that he believes merchants of all stripes can ultimately meet by learning how to keep interactions personal even when they’re conducted digitally.
“Ultimately, what is going to work is adding the human element in the now-more-digital world,” he said. “That’s something I think people crave, and as a merchant, you have to make sure you don’t lose sight of that if you want to both convert and then maintain that relationship over the long term.”
PayPal’s Lisiewski added that every retailer, merchant and commerce player’s new year’s resolution should be to make 2021 all about being flexible. Because what 2020 proved is that it’s often impossible to know what’s coming down the road until it arrives at the front door.
Lisiewski said the players who survive and thrive are always the ones best able to assess and immediately pivot to a new situation as it’s still taking shape.
“The pandemic has really highlighted that those who can adapt most quickly are in the best position to survive,” he said. “That means it is necessary to stay on the trends [and] leverage the technology platforms that have made it easier than ever to do that. And you’ll never go wrong by focusing on the consumer and offering flexibility, safety and control.”