Practical Advice for Retailers to Bolster Omnichannel Strategies


In today’s digital age—when convenience, ease, and personalization are highly valued—consumers expect a variety of payment options, whether it’s buy-now, pay-later installment plans, cryptocurrency, or contactless payments. And they want those options not just in e-commerce but also within physical stores.

As a result, many companies are adopting an omnichannel payments strategy that gives consumers the option of paying the way they want.

In a recent PaymentsJournal podcast, Nitin Prabhu, Vice President of Merchant Experiences & Payment Solutions at PayPal, and Daniel Keyes, Senior Research Analyst of Merchant Services at Javelin Strategy & Research, discussed how retailers can bring their omnichannel strategy to life in order to reduce friction in the customer journey.


Practical Advice for Retailers to Bolster Omnichannel Strategies

PaymentsJournal Practical Advice for Retailers to Bolster Omnichannel Strategies

Adjusting Retail to an E-Commerce-First Market

Although an omnichannel experience isn’t something new—retailers have long looked at being able to reach consumers on their own terms, regardless of the device they use—an omnichannel payments experience is a whole new territory for most.

“There are a lot of basic things retailers can do to improve this, such as reducing friction during the checkout process, as well as offering the right payment options,” Prabhu said.

Keyes noted that shopping at retail stores can be more taxing than online shopping, presenting more friction than is necessary. “Any process that can remove friction, and is very consistent and familiar, is ideal,” he said. “That way the customer is just getting what they want, without having to give payment much thought.”

Post-Pandemic Adaptation

Before the pandemic, small and medium-sized retailers worked with multiple vendors on dealing with fraud risks and catalog management. But they found that interoperability of vendor software was an issue and managing the vendor relationships was challenging. Today, many merchants are switching to a single vendor that can meet all their payments-related needs in an end-to-end experience.

For example, PayPal has developed a vertically integrated platform that includes services typically outside of its purview, including a service to return products. “PayPal recently acquired a company called Happy Returns,” Prabhu said. “They’ve done a fantastic job at creating a seamless returns process for merchants, especially in the small and mid-market segment who may not have the logistics or footprint across the U.S. to return products.”

Integrated platforms can also reduce headaches for consumers and even drive demand. A seamless returns process can drive business development.  

“It is shown that for most customers, if they’re able to return a product after trying it, the propensity to go and try that product or service is much higher,” Prabhu said.

Merchants need to find a custom solution to IT for their businesses, but this doesn’t mean they need to go after multiple vendors and maintain all those relationships. Increasingly, merchants are seeking a company that provides all of their payment functions in one place.  

Once merchants commit to a single payments ecosystem, they want it to handle everything. For example, in the hospitality sector, “a restaurant might expect the processor to have a shift management software, the ability to handle tips, but also delivery and other things,” Keyes said. “Providers are doing their best to meet that meet that challenge to maximize their relationships and maximize the revenue in the process.”

Earning Customer Trust

According to PayPal, having payment options that customers trust can increase sales. Its data indicates that 44% of consumers are more likely to trust merchants if they see their preferred payment option at checkout.

In fact, many consumers won’t make a purchase at all if their preferred method is not present. “Roughly 59% of PayPal consumers have actually told us that during checkout, if they don’t see PayPal as a payment option, they have decided not to purchase something,” Prabhu said. “People are very worried that if the purchase goes wrong, will their financial institution or payment provider have their back? How easy is it to get refund policies to fight chargebacks or disputes? Preference of payment options definitely drives trust with merchants.”

Reducing Friction Is Crucial to Driving Sales

When consumers have to make complex payments, they often drop off. Thus, reducing friction becomes the first barrier to clear in driving sales.

“In a survey, we found that one in four customers drops off from a purchasing funnel if the process is too complex or there are too many steps,” Prabhu said. “That translates to approximately $236 billion in lost sales.”

Retailers should start by focusing on the basics. For example, smartphones aren’t the easiest devices to type on, so it’s important to have minimal forms. Providing one-click payment options is also helpful, as is storing customer information for future checkouts. And merchants still need to let customers check out as guests if they prefer.

Finally, retailers should avoid redirecting to different URLs within the payment process. Should consumers lose signal service, they would have to go back to the beginning of a long checkout flow. And that inconvenience is enough to drive them away.

What to Expect in 2023

One big change over the past few years has been the acceleration of e-commerce, particularly among older generations. There are no signs this will slow down in 2023.

What’s more, expect to see a greater diversity of payment options. “Credit and debit have historically dominated the payments in general,” Keyes said. “But other options—whether it’s a buy-now, pay-later solution or other types of digital wallets such as Venmo or Cash App—will gain increasing traction in 2023.”

The biggest change, however, will be the convergence of online and in-store shopping. “Customers don’t think about online or in-store separately,” Prabhu said. “They say, ‘Let me purchase this product online. I don’t want to wait for two-day shipping, so maybe I go to the nearest store and quickly pick it up, and try it on. And if I end up not liking it, I can return it in store or by mail.’ All these channels are merging. That is what is most exciting to me.”


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