For Retailers, Payments Trump Omnichannel

Retail seems to have a faster moving cycle of jargony imperatives than many other industries: idioms du jour went from ‘online’ to ‘multichannel’ to ‘omnichannel’ in a few short years, closely followed by ‘mobile’ and ‘social.’ While it all seems to be heading in the same direction — namely that customers are doing more and more shopping through venues other than brick-and-mortar stores — I believe that the focus on these distinctions is taking us off the real end-game. Where it’s at for retailers, is making payments that point of convergence, then reconfiguring from that point back. Here’s why.



It’s been drummed into retailers that in order to survive and prosper in today’s uber-connected marketplace, they have to start by building an integrated organizational structure that’s capable of working with and through multiple channels. While this may be true, the reality is that few retailers, Amazon being one of the very rare exceptions, are capable of matching the front end, payments, to the middle, marketing and advertising, and then to the back end, supply chain and data.



And the corollary is that most retailers focus on profit margins, while what Amazon is doing is looking at the return on their invested capital. They built a whole new model that didn’t require retrofitting a digital strategy into an existing reality, the way established brick and mortar retailers like Bloomingdales and Macy’s have had to do as they developed their online capabilities.



And what has made the difference for Amazon, what has made it so vastly appealing, successful and yes, such a revenue generator, profitability notwithstanding, has been the simplicity and elegance of its one-click payment system. Payments is the most important piece of the puzzle for retailers, particularly in regard to their online sales. It’s the conclusion of the shopping journey. If you’re not able to complete that payment in a fabulous way — in other words, if it’s not the easiest, most seamless experience for the customers — how likely are they to return? I think not all that likely, if there are easier and more appealing choices.



You’ve all experienced the difference between checking out of a clunky ecommerce site, versus finishing a transaction at Amazon. An elegant, simple, safe payment system is the crown jewel — it goes all the way back to the beginning of the supply chain, and all the way forward to the product being delivered to the customer, present, past and future in one click. And that’s where most retailers haven’t been focused.



Retailers need a system that is collaborative for all involved in the payments process — merchant, user and bank (or transaction facilitator). Users of NFC payment systems like ApplePay should be able to walk up to the cashier with their phone and have all the information magically appear and log without effort — as it is now, they still have to swipe a loyalty card first. We need something designed to accomplish both in-store payment and mobile or online payment seamlessly.



What would this look like? MCX is more merchant-focused, so that might provide a clue. But it’s not what I’d call a graceful solution— which would be more like a payments system where everything is interwoven and integrated into everything else: data, merchandising, marketing, paying and customer experience. Retailers need to be able to meet their customers at any one of these points at any time from the perspective of that function, but without losing sight of all the other functions.



To make this happen, everything does have to come together across all channels. All the pieces need to be in place: marketing and advertising, which circles back around to the need for collecting the data; sharing and using that data in a responsible way that’s acceptable to consumers; having a loyalty system that ensures it’s consumer driven; logistics and supply chain integration; understanding and managing the costs; and finally, payments— one-click, one-to-one, one and done — as easy, safe, simple and elegant as possible.



So on a practical level, if you’re marketing, you need to bring payments into your field of vision, and integrate this critical capability into what you’re doing along with supply chain, cost and risk management, data collection and analysis. The same applies to any of those other functions: each one needs to be integrated, backward and forward, sideways, with all the other functions — but most importantly, with payments. When all this is happening, what will be different is that you will finally truly and deeply achieve that much sought-after holy grail: understanding your customer at the most nuanced level.



Amy ter Haar is an independent consultant who works with financial services institutions and retailers to address the integration of mobile and social commerce with consumer-permissioned use of big data.