Jim Magats is the SVP of Omni Payments at PayPal. He writes on the payments industry and advice for merchants on their growth journey.
By now, we’re all aware of the shift from physical to digital commerce that’s happened as a result of the Covid-19 pandemic. This trend was progressing pre-Covid-19, but the pandemic put the transition to digital commerce on the fast track. A recent UBS report predicted that e-commerce will increase to 25% of U.S. retail sales, a jump from 15% in 2019. Another symptom of the pandemic? The shuttering of small businesses. A McKinsey report estimates that before accounting for intervention, 1.4 million to 2.1 million small businesses could close permanently as a result of the first four months of the pandemic.
This data gives us an indication of what may come, but the truth is there is no crystal ball that will tell us when this will end and what the long-term impact will be on consumer spending habits. The best way for small-business merchants to prepare for the post-pandemic world is to revamp their infrastructure to one that allows for flexibility. Here are three ways to prepare your business for whatever comes next.
Revisit your omnichannel experience.
Omnichannel is not a new concept, but it’s a practice few small businesses have mastered. And while some small businesses have achieved an omnichannel strategy by bringing the physical experience online, the next phase of this approach involves taking the latest digital innovations in-store, bringing the experience full circle.
For example, bringing digital wallets to an in-store environment. When used in a physical environment, digital wallets provide consumers with the same experience they are used to when shopping online. This includes debit and credit cards, stored balances or even innovative methods, like pay with rewards. Unlike a physical wallet, digital wallets also have the potential to provide consumers with shopping offers and validate if they are getting the best price for an item — all in real time. These enhancements create a positive shopping experience that can keep the customer coming back.
But one of the most timely and relevant benefits of digital tools in a physical environment is the ability to offer a touch-free experience, something that’s been a crucial concern for both employees and customers. Several touch-free technologies come to mind immediately, like Apple Pay, Google Pay and tap-and-pay credit cards.
Another technology that has come in and out of consumers’ lives in the past decade that is here to stay is QR codes. The adoption of QR codes by many countries in Asia has proven their validity. They not only enable contactless and safe transactions, but they can create customer loyalty and drive repeat business.
For example, the experience of being served an ad online that recommends clothing options for you based on past purchases will soon become a reality in-store. A consumer will be able to walk into a retail store where the stylist will know that they’ve bought two of the same T-shirts and, as a result, can make a suggestion for pants to pair with those.
For small businesses to stay relevant, they need to revisit how they are blending the online and physical worlds.
Help your customers save money and manage their spending.
This may sound counterintuitive to a business, but you can’t ignore that cost savings are top of mind for consumers right now. We know an overwhelming number of consumers are strapped for cash, and that won’t end in the next year. The Congressional Budget Office recently released its 10-year forecast, which predicts the unemployment rate won’t recover for the next decade. Think about how you can help your customers manage their finances to prepare for this with responsible credit options, the opportunity to pay in whatever method is easiest for them, shopping deals and more.
The simplest tools for a small business to integrate into their existing infrastructure are responsible credit options or buy now, pay later tools. A study by The Ascent, a personal finance brand of Motley Fool, found that over a third of U.S. consumers have used buy now, pay later services, and 38% use buy now, pay later services because they want to avoid buying something that’s not in their budget.
Offering responsible credit will not only help customers manage their finances, but can ultimately help you create customer loyalty and stickiness — keeping your customers coming back for more.
Lean on your network.
Lean on partners you already work with, such as email marketing services, supply chain logistics, payment partners, etc. Rearranging your business to meet changing customer behaviors might seem daunting, but you don’t have to do it alone.
You also don’t need to find all new vendors in a rush. Start by asking your existing partners and vendors how they can help address new challenges. You may be surprised to learn they have an out-of-the-box solution that can help. Alternatively, they might be willing to create something custom based on demand from other customers.
This is the time when consultants and partners are so valuable. They have the benefit of working with multiple different businesses and can share knowledge and insight on what they are seeing across their customer portfolio.
What do all these strategies have in common? Flexibility. Because while we can make some very well researched predictions about what the future holds, only time will tell. So now is the time for merchants to reevaluate their processes and adjust course to future-proof their business.
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