The Retailer Summer Edition_2020

The future of Ecommerce requires understanding the new consumer

ALPESH PATEL HEAD OF STRATEGY Axerve Spa

AN INCREASE IN ONLINE SALES AND A DECREASE IN SALES IN-STORE AS A CONSEQUENCE OF THE LOCKDOWN: THIS IS HOWWE COULD SUMMARISE THE IMPACT OF THE PANDEMIC ON PURCHASES IN EUROPE, BUT WE KNOW THERE IS MUCH MORE TO IT AND THAT A MORE CAREFUL ANALYSIS OF THE DATA CAN PROVIDE EVERYONE WITH A BROADER PERSPECTIVE OF WHAT HAS OCCURRED. To understand what has changed in recent months, let’s take a look at some useful data as food for thought for online retail which must transform in order to keep up. The analysis of public data attributable to DESI (Digital Economy and Society Index), an index that monitors the overall digital performance of Europe and the progress of digital competitiveness in European Union countries, offers a snapshot of a situation of overall growth in digital accessibility alongside a growth in digital consumption. In terms of digital accessibility, in 2019, NGA (Next Generation Access) coverage increased to 86%, +3% compared to the previous year, and 17 EU countries are already at an advanced stage of developing 5G connections1. The tools for easier and faster network access are not lacking, nor is the consumption of digital services - increasingly satisfying needs which were purely analogue in the past. Even before the pandemic, 85% of European citizens regularly accessed the internet - with peaks of 95% for Denmark - and of these, 66% use internet banking services and 71% buy online. A general framework highlights a growing approach towards digital, in some contexts meeting typically analogue needs. A good example of this is the increase in those using digital services in the field of fitness. Estimates indicate users will have increased to 158 million in Europe2 by the end of 2020; Virgin Active Europe has declared a 150% increase in the use of its content since the beginning of the year. How to detect digital consumer needs The DESI snapshot of data before the pandemic and lockdown period that marked much of Europe in the first two quarters of 2020, shows the conditions exist to successfully approach more and more consumers online.. What aspects should we focus on in order to capture the potential online market globally? A first solution is to integrate collection platforms that combine the advantages of digital with the opportunities offered by in-store customer management. Accompanying the classic strengths of offline – for example payment cards and more traditional instruments – typical online payment instruments, for example digital wallets, can contribute to the loyalty and acquisition of new customers. New-generation platforms exist that let merchants request a payment by sending an email or showing a QR-code, offering customers the chance to pay from their devices, at any time and in any place.

Offering alternative payments In the European context, as well as internationally, the use of alternative payments beyond the more traditional options such as credit cards is increasingly common.. According to a report published by Bernstein Research, Apple Pay generates 5% of global card transactions, which will increase to 10% by 2025. The other digital wallets are also hard at work: just think that by the end of 2020 Google Pay and Samsung Pay are expected to have about 100 million users each, compared to the 227 million users of Apple Pay3. The possible alternative payments include more than just digital wallets. There are different types depending on the location of users, the type of payment needs (B2C or BTB), age or a combination of these elements. For example, MyBank and iDEAL are perfect for B2B payments, since the underlying tool is bank transfers. WeChat Pay, Alipay and Unionpay – two digital wallets and a credit card circuit – are the most widely used tools in China. With its platforms, KLARNA Payments responds to different needs, from B2B payment to payment in instalments, and is essential for those working with Northern European markets, especially in the fashion industry. Multi-acquiring Platform Even more so today, focusing only on the European market in certain contexts and for certain product sectors – think of fashion, for example – can be a limitation. A successful strategic aspect involves identifying a payment gateway that can offer a multi- acquiring platform, as it brings multiple advantages and could be a differentiating element for revenue generation and cost reduction. The opportunity to connect to multiple buyers can contribute to an increase in authorisations and conversion rates, improving the shopping experience. Local acquirers have better knowledge of buyers with cards issued by issuers from the same country, resulting in higher authorisation rates and conversion rates in general.

“Developing markets are driving growth in non- cash payments, expecting a compound annual growth rate of 23.5% between 2017 and 2022.” World Payments Report 2019 | Capgemini

18 | summer 2020 | the retailer