E-commerce Berlin Expo 2017 - Understanding Merchant Growth Paths in the Digital Age: The Payments Perspective
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The eCommerce disruption opportunity is here. With $2.3 trillion spent online annually, 1.6 billion people shopping online in 2016 and $1.0 trillion predicted in cross-border spending by 2020, the opportunities for merchant growth have never been so significant, varied and fast. ACI will present a framework for understanding merchant growth paths, and will discuss - using use cases and real-world examples - how merchants can select the most suitable growth strategies for their business.
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Semelhante a E-commerce Berlin Expo 2017 - Understanding Merchant Growth Paths in the Digital Age: The Payments Perspective
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E-commerce Berlin Expo 2017 - Understanding Merchant Growth Paths in the Digital Age: The Payments Perspective
- 1. MEETS THE CHALLENGE OF CHANGE Confidential 1 eCommerce EXPO 2017 UNDERSTANDING MERCHANT GROWTH PATHS IN THE DIGITAL AGE: THE PAYMENTS PERSPECTIVE
- 2. ConfidentialMEETS THE CHALLENGE OF CHANGE 2 Interactions Are Increasingly Digital Time spent online is double that five years ago
- 3. ConfidentialMEETS THE CHALLENGE OF CHANGE 3 Millennials: The Digital Natives Most millenials do not remember a world before the internet
- 4. ConfidentialMEETS THE CHALLENGE OF CHANGE 4 The Unprecedented Growth Of Mobile 8.6 billion mobile devices 1.2 devices per person 2016 nearly 80% of mobile users in developed markets use a smartphone 2020 nearly 70% of the world‘s population are expected to have a smartphone.
- 5. ConfidentialMEETS THE CHALLENGE OF CHANGE 5 Channels are Converging More and more brands are omni-channel
- 6. ConfidentialMEETS THE CHALLENGE OF CHANGE 6 Growth Lies in Digital Channels € 0 € 125 € 250 € 375 € 500 € 625 US UK GER FR ESP IT NL SE NO DK e/m-Commerce Turnover (in € bil.; selected markets; growth = 2012-2016E CAGR) Country 2014 2016 (F) 2018 (F) Over one billion digitally-active consumers spend nearly $2 trillion a year online.
- 7. ConfidentialMEETS THE CHALLENGE OF CHANGE 7 Market Context Societal and technological shifts signal new growth opportunities
- 8. ConfidentialMEETS THE CHALLENGE OF CHANGE 8 Societal and technological shifts signal new growth opportunities Market Context
- 9. ConfidentialMEETS THE CHALLENGE OF CHANGE 9 Market Context Societal and technological shifts signal new growth opportunities
- 10. MEETS THE CHALLENGE OF CHANGE Confidential 10 DEFINING MERCHANT GROWTH STRATEGIES eCommerce EXPO 2017 Understanding Merchant Growth Paths in the Digitial Age: The Payments Perspective
- 11. ConfidentialMEETS THE CHALLENGE OF CHANGE 11 Selecting a Suitable Growth Strategy There are many directions for merchants to grow 1. Going online for the first time 2. Optimizing domestic eCommerce business 3. Expanding cross-border 4. Investing in mobile 5. Delivering on omni-channel
- 12. ConfidentialMEETS THE CHALLENGE OF CHANGE 12 1. Going Online For The First Time Brick-and-mortar strategies thrived for decades are now under pressure eCommerce challenges: • Balancing simplicity with effectiveness • Order management and fulfilment • Warehousing and shipping • Remote customer service • Mitigating unknown risks and complexities • Managing new customer service needs Challenges on the payments side: • Online payment acceptance • Processing alternative payment methods • Dealing with PCI compliance • Enabling alternative payment methods for different regions • Online authentication and fraud prevention • Settlement of funds and reconciliation • Reporting
- 13. ConfidentialMEETS THE CHALLENGE OF CHANGE 13 2. Optimizing Domestic eCommerce Business eCommerce enables shoppers to cross borders conveniently eCommerce challenges: • High shopping cart abandonment • Improving customer checkout experience • Constant iteration and testing • The loss of 1-to-1 merchant-shopper transparency • Loyalty platform Challenges on payments side: • Getting the best out of payment service providers • One-click checkout and card vaults • Additional alternative payment methods • Balancing and fine-tuning fraud rules and analytics with conversion • Speed and uptime problems
- 14. ConfidentialMEETS THE CHALLENGE OF CHANGE 14 3. Expanding Internationally Domestic merchants pursuing a cross-border eCommerce strategy Different models have different eCommerce challenges • Adapting business processes to local payment methods • Website localization • Operational adaptation to meat customer expectations • Maintaining high conversion rates when card issuers tend to decline more cross-border transactions Challenges on payments side: • Accepting local payment methods • Local regulations and tax issues • Checkout localization • Pricing in local currencies • Locally preferred alternative payments • Connections to local card acquirers • Fraud tailored to local conditions
- 15. ConfidentialMEETS THE CHALLENGE OF CHANGE 15 4. Investing in Mobile Mobile commerce has grown three to four times faster than PC-based eCommerce
- 16. ConfidentialMEETS THE CHALLENGE OF CHANGE 16 Mobile Outgrows Traditional eCommerce Mobile commerce has grown three to four times faster than PC-based eCommerce 0% 15% 30% 45% 60% AUS AUT BRA CAN CHI DEN FRA GER ISR ITA MEX NLD NOR POL RUS SPA SWE SWZ TUR UAE UK USA m-Commerce has grown three to four times faster than PC-based eCommerce over the past several years (% estimated CAGR 2013–2016 of total e/m-commerce; selected markets) Online commerce Mobile commerce Mobile has grown from 5% of all digital commerce to more than 30% in the US and UK. In other global markets such as China, mobile already accounts for more than 50% of purchases.
- 17. ConfidentialMEETS THE CHALLENGE OF CHANGE 17 4. Investing in Mobile Thriving in omni-channel mCommerce challenges: • Smaller screen require rethinking of hover- over design elements, pop-up windows, fixed- sized iFrames • Shorter attention spans • App design and development • Mobile marketing and design strategy • Mobile checkout completion rates are 40% lower on mobile than on desktop Challenges on payments side: • Mobile requires frictionless payments • One-click checkout • Mobile authentication (biometrics) • Enabling in-app commerce and payments Offering new mobile payment methods • Mobile fraud prevention strategy
- 18. ConfidentialMEETS THE CHALLENGE OF CHANGE 18 Key Takeaways Along All Growth Paths Growth paths show that needs evolve Service Providers, you need not only focus on your merchants’ needs of today, but also on the ones they are likely to face tomorrow Merchants, carefully assess your needs and focus on those facilitating your growth path 1. Optimize payments to improve customer experience 2. Channels create different payment requirements 3. Balance speed to market with control and complexity 4. Build a robust but flexible foundation (with omni- channel in mind) 5. Centralize payments infrastructure, processing and vendors where possible 6. There is no single panacea for payment acceptance, so be practical
- 19. ConfidentialMEETS THE CHALLENGE OF CHANGE 19 Enabling Merchant Growth Strategies ACI’s UP eCommerce Payments solution We provide simple, one time integration; with an exceptional developer portal merchants can be up and running rapidly, and can immediately go live. We are truly global; we offer the widest range of payment methods for international expansion and local relevance. Our extensive global network is continuously growing. Through world-class integrated fraud detection, prevention and transaction monitoring, merchants can achieve the highest acceptance levels and lowest chargeback rates in the industry. SIMPLE GLOBAL SECURE
- 20. MEETS THE CHALLENGE OF CHANGE Confidential 20 WHITEPAPER FAST-TRACK MERCHANT GROWTH PATHS IN GLOBAL eCOMMERCE DOWNLOAD HERE http://unbouncepages.com/aci-white-paper-merchant-growth/ © Copyright ACI Worldwide, Inc. 2016 ACI, ACI Payment Systems, the ACI logo, ACI Universal Payments, UP, the UP logo, ReD, PAY.ON and all ACI product names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the United States, other countries or both. Other parties’ trademarks referenced are the property of their respective owners.
Notas do Editor
- Capture 0, 2sec
- I’ll now begin with the current market developments. People of all age groups are increasingly shopping digitally at home, work, or on the road rather than visiting a physical shop. Before a purchase, consumers turn to online review sites to research products. Afterwards they use public forums such as Twitter or Facebook to praise or disparage them. And consumers have an increasingly complex set of online payment tools at their disposal for purchases. (02:26)
- These macro changes are being driven in part by substantial demographic shifts. Millennials (18-35 year olds in 2016) are now the largest segment of the U.S. population, make up 24% of the European Union’s population, and are a substantial part of the workforce in both regions. Most millennials do not remember a world before the internet and these “digital natives” are very comfortable with online services and eCommerce. (03:00)
- The unprecedented and simultaneous spread of mobile devices and enhancements to their capabilities is another meaningful catalyst. There are now 8.6 billion mobile devices worldwide, which is 1.2 devices per person. And they are increasingly powerful. 2016’s iPhone is more powerful than 2006’s iMac, has similar screen resolution, and a much faster internet connection. Nearly 80% of mobile users in developed markets use a smartphone and analysts expect 70% of the world’s population to have a smartphone by 2020. (03:40)
- Merchants of all sizes are increasingly multi-channel; even the vast majority of European online merchants also sell through a physical shop. In most cases these are not online merchants that have expanded offline but rather small local businesses who occasionally utilize online marketplaces such as eBay or Sellers at Tesco. Many brands seek to combine their online and in-store channels to create a cohesive omni-channel experience. Such actions transform the traditional retail store into a place where consumers engage with and learn about products and interact with the wider brand. (04:23)
- A key implication of these macro changes is a shift towards digital commerce: the buying and selling of goods and services via a personal computer or mobile device. While digital channels have grown rapidly since first appearing in the mid-1990s, digital’s scale now provides the tailwind for overall retail growth: over one billion digitally-active consumers spend nearly $2 trillion a year online. (04:54)
- Payments have long been overlooked by merchants. Traditionally not considered as core to their business as merchandising, marketing or sales, payments have often been considered a foregone conclusion: once shoppers reach the payment step their mind is already made up and the purchase as good as complete. That paradigm changed with the arrival of eCommerce. (00:23)
- Online shopping is extremely convenient, yet so is abandoning a full shopping cart before or during payment. After all, another store is only a click away. (00:11))
- Payments, and the role they play converting shoppers into buyers, became more integral to merchants’ bottom lines and growth trajectories. Savvy merchants know that payments are integral to a great shopping experience and understand that if their product or service is similar to what the competition offers, then the payment can be the differentiator. (00:23)
- In this presentation I describe five potential paths for merchants’ growth today, illustrate the challenges of merchants and solutions for success(01:50)
- Now that the stage is set, let‘s look at the 5 Merchant growth paths before tackling them one-by-one. Going online for the first time Optimizing domestic eCommerce business Expanding cross-border Investing in mobile Delivering on omni-channel (05:42)
- Merchant Growth Strategy 1: Going online for the first time The strategy that will be most familiar – it has been reshaping commerce for the last 20 years. Now, in the UK, most large retailers – including department stores, grocery chains, and major brands – have already been selling online for years, and it’s much the same in markets such as the USA and Japan. But there are major global markets including Russia, Italy, and Brazil, where many of the dominant brick-and-mortar businesses are only now taking their first steps into eCommerce. Driven, in many cases, by the pressure of changing customer expectations and declining same-store sales. But those evolving consumer expectations that we’ve already talked about mean that success in the online world – even for a well-established offline brand – is never guaranteed. Merchants face broader eCommerce challenges; designing and hosting a web shop, order management and fulfilment, warehousing and shipping, and remote customer service. On the payment side, they need to adapt to the challenges of online payment acceptance; processing card-not-present payments – and dealing with PCI compliance, enabling non-card payment methods, online authentication, fraud, settlement of funds and reconciliation, amongst other issues. Merchants need a vendor who can simplify all of this, without restricting their further growth as they gain traction, and perhaps look at cross-border growth or additional channels. (06:08)
- Merchant Growth Strategy 2: Optimizing domestically and diversifying channels and distribution Realizing the full potential of eCommerce means constant iteration and testing. And high-growth merchants may find that the outsourced solutions that supported their initial foray into eCommerce, soon become unsuitable. It’s a seemingly never-ending journey for online merchants, given that the customer experience can always be better, conversion can always be higher, fraud can always be lower, and everyone yearns for a simpler operating model. Complexities are magnified when merchants expand into non-direct distribution channels and business models in which enablers, intermediaries, and aggregators (e.g., marketplaces) alter the operational requirements. Payments are the gateway to increased revenue when optimizing eCommerce business; one-click checkout and card vaults, additional APMs, and fine-tuned fraud detection rules boost conversion rates. It’s all about reducing friction. This topic – boosting conversion rates – is a whole topic in itself and it’s one that I don’t have time to go into in depth, but if you’d like a copy of our recently published Conversion Study Insight Paper – please drop by the ACI booth and we’ll gladly share this with you. Merchants following this growth strategy may find that turnkey solutions that served them well initially, may prove restrictive, and they’ll start to look at enterprise-class solutions that deliver a more flexible and nuanced product set. (06:40)
- 13. Merchant Growth Strategy 3: Cross-border expansion International expansion provides great promise, especially for large merchants who are experiencing diminishing returns in their domestic market, or tech companies seeking to scale rapidly. There is great promise in cross-border expansion as other than China, U.S., and U.K., no single global eCommerce market represents more than 10% of the total market. There are different models for international expansion, depending how a merchant wants to handle issues such as marketing, website localization, and payment methods. Merchants going cross-border will often graduate from full-service partners, and in-source operations over time. Cross-border expansion is easier in digital commerce than it is for physical stores, but still requires marketing and operational adaptation to provide an experience that meets consumer expectations. Go-to-market strategies, website localization – and that means more than just languages – and considerations of how to do business in each country or region. Regulation and tax also crosses over into payments. This has really been a key driver of PAY.ON’s business over the past few years (can allude to case studies such as Planet Payment, Peach Payments)
- 15. Merchant Growth Strategy 4: Investing in Mobile Here’s where we begin to get into the realm of omni-channel, because integrating mobile with traditional desktop stores, or enabling mobile payments in-store, is already a step down the omni-channel road.
- Mobile is a priority because mobile technologies and platforms are driving commerce growth more than any other influence. Growth in mobile commerce is outpacing desktop eCommerce three-fold in recent years. In the US and the UK, mobile has grown from 5% of all digital commerce to more than 30%. In other global markets such as China, mobile already accounts for more than 50% of purchases.
- Principles gleaned from traditional eCommerce are extendable to mobile commerce, but merchants must adapt the customer experience and operating model in order to thrive. Mobile-first design principles are essential. Consumer behaviors on mobile devices differ substantially to desktop – shorter attention spans, for example. Conversion rates are often stubbornly low, but this also presents an opportunity. Mobile requires frictionless payments, mobile authentication (biometrics), and of course a robust mobile fraud prevention strategy. Mobile is also a key battleground for multi-channel merchants looking to boost the importance of their stores via omni-channel experiences. A mobile web shop does not mean that a merchant is omni-channel, but without a strong investment in mobile, a merchant is unlikely to succeed when they extend their mobile strategy and pursue an omni-channel strategy.
- Optimize payments and fraud setup – never stop testing and iterating Balance speed to market with control and complexity Build a foundation that is robust but flexible Centralize payments infrastructure, processing, and vendors where possible Practicality rules! Let’s recap then on some of the best practices for omni-channel growth… Optimize payments to improve customer experience Optimizing payments is necessary, but adds complexity. A first step in optimizing payments is often to take a close look at fraud rules, accepted payment methods, and the checkout customer experience. Actively managing these elements and regularly testing small refinements can drive meaningful improvements: responsive payment pages can drive a 15-20% increase in mobile checkout conversion, one-third of customers declined due to a false positive fraud flag will abandon their purchase, and one-half of regular online shoppers will abandon their purchase if their preferred payment method is not accepted. 2. Channels create different payment requirements In-store, online, and mobile channels each have unique requirements. Multi-channel merchants must manage the requirements of every channel in which they operate. Online, consumers have heightened concerns about security but still expect convenience. This translates into practical requirements like secure payment forms, the ability to store payment information for faster checkout in the future, acceptance of locally-preferred non-card payment methods. While mobile is really a form of eCommerce, it presents a unique challenge due to its form factor, as discussed earlier, so the best practice is to design for simplicity to optimize conversion, even when this means a different payment mix than implemented in the ‘traditional’ online checkout. 3. Balance speed to market with control and complexity The pattern of trading off control in exchange for simplicity and therefore speed is evident in e-commerce payments. Merchants pursuing growth through international expansion may focus on accepting only international cards and using a cross-border acquirer at a higher cost. There are clear benefits to this straightforward approach, such as avoiding the process of picking new vendors, not having to manage additional vendors, and obviating the process of reconciling multiple settlement sources, all of which allows a merchant to move faster. But, these benefits must be balanced versus the downsides of higher costs, lower performance (e.g., auth rates), or limiting the addressable market to consumers willing to use card. 4. Build a foundation that is robust but flexible (with omni-channel in mind) Merchants should build their commerce and payments systems on top of a solid, scalable foundation. Engaging local vendors for each market and directly integrating them with the core retail system will inevitably result in a complex web of hard-to-maintain integrations; a global payment gateway can provide a common interface layer between one or more retailing systems and multiple payment vendors. Merchants engaged in digital commerce should also ensure their operational practices are scalable so they are ready when “hyper growth” hits. Have a vendor network or a technical platform built for agility because new means of payment, new means of authentication, and new channels for commerce are not decelerating, but rather accelerating. The quality and adaptability of technology does matter therefore, in your payments infrastructure. With an ever increasing focus on omni-channel commerce, merchants have come to realize how challenging integration of payments infrastructures across channels can be. Payment terminals speak different languages than hosted pay pages and the data fed into both oftentimes is not ending up at the same processor or acquirer. Because retrofitting payments infrastructure is such a challenge, it is important to identify and to prioritize payments providers which are naturally omni-channel capable. 5. Centralize payments infrastructure, processing, and vendors where possible In response to the complexity of local acquiring, multi-national merchants have worked to rationalize their payment relationships. One way to do this is on the front-end, through standardizing applications or payment services providers such as ACI, who provide a single technical gateway into hundreds of potential end-points. Another approach is to reduce the number of acquiring vendors to scale buying power and to simplify back office operations. This trend has been further encouraged in recent years by market harmonization in Europe and to a lesser extent by card networks exploring more global licensing programs. Acquiring, however, remains globally fragmented. Among the tens of thousands of merchant acquirers and registered ISOs worldwide, there are fewer than 100 with a meaningful regional or global footprint and the requisite capabilities to provide effective central acquiring. The good news is that e-commerce acquiring is significantly more global and more centralized than at the POS. The largest and most sophisticated digital merchants should carefully consider those elements of payments infrastructure which they wish to control in-house. Pay pages, gateways/payments switching, card vaults, encryption and tokenization, fraud detection, data analytics and other aspects of the value-chain can be managed via in-house, oftentimes licensed, applications (or similar cloud-based services). The value of such control should be carefully considered versus the complexity and resourcing requirements. 6. There is no single panacea for payment acceptance, so be practical Global brands might make retail appear as a seamless global business that transcends borders, channels, cultures and languages. However, if it appears this way, this is often the result of hard work putting together a large number of different vendors. In payments, the reality as of today is that there is no one provider that can offer the full value-chain of payment acceptance, across payment types, across channels, globally. Payment services are still often channel specific and delivering on an omni-channel payments are not turnkey infrastructure. E-Commerce requires many alternative payment types and these payment types often require separate PSPs and direct relationships with the underlying payment scheme. Different geographies still often require different providers. For those merchants who have special needs, such as in-app or recurring transactions, the need for multiple vendors is even more apparent. So while an objective to simplify payments vendors and infrastructure is a common and rationale objective, but for those merchants operating globally and across channels, this still typically means working with fewer (but not one) payments vendors. This is one reason why technical connectivity providers such as ACI have established strong value-creation models – “If I can’t have a single provider, at least I can leverage a technical partner to make these multiple integrations easy”.