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“Not everybody feels comfortable using credit cards because of security concerns,” says Jeff Thorness, president of payments processor ACH Direct. “Payment methods like PayPal and BillMeLater are being adopted by major retailers, not just mom-and-pop retailers, because consumers are more comfortable with the security around them. The more payment options a retailer offers, the more they can boost conversions.”
Adding card-based or credit-oriented, non-card options only scratches the surface of what retailers can offer beyond credit cards. One option ACH Direct is working to develop is a so-called credit push, whereby consumers pay for purchases using the online bill payment applications through their banks. In essence, the processor connects the shopper to the bank’s bill payment application through the retailer’s checkout page.
Once connected to the bank, the shopper is presented an option to push funds through the bill payment application to the retailer. The funds are debited from the shopper’s checking or savings account and transferred to the retailer.
“The advantage is that this eliminates the risk of chargebacks, because the consumer initiates the transaction in a secure environment that requires they authenticate themselves in order to gain access,” says Thorness.
Another emerging payment option that is expected to become more widely available to consumers is PIN-based debit. Millions of consumers have PIN-based debit cards-ATM cards with personal identification numbers. Many actively use them to make purchases in the physical world, but do not have a credit card, preventing them from shopping online. Acceptance costs for PIN-based debit are about half those for credit cards.
The hurdle to widespread acceptance of PIN-based debit by e-retailers is creating a secure environment into which the cardholder can enter a PIN. “The industry is getting closer to creating a standardized secure environment for PIN debit and once that happens, consumers will get on board with it quickly for online shopping,” predicts Thorness.
Beyond enhancing the shopping cart, wish lists are another feature retailers can offer to enrich the shopping experience. The benefit is that a wish list provides a reason for shoppers to return to the retailer’s site. Often a shopper may run across an item she wants when making another purchase, but might not be able to afford at the time.
“A wish list gives the shopper a way to save the item so they can find it immediately when they return at a later date to make the purchase,” says Network Solutions’ Zimmerman. “It is also something they can share with family and friends to give ideas about what they want for their birthday, Christmas or other gift-giving occasion.”
The interaction that Web 2.0 creates can be extended to creating outfits. Apparel retailers can create virtual dressing rooms where shoppers assemble an outfit from a virtual rack of tops, pants and accessories and then e-mail the creation to friends and family for their opinion.
“It’s the same concept as coming out of a dressing room and asking a friend’s opinion of the outfit,” says MarketLive’s Burke. “Having the option to show the outfit to others builds on social networking communities that have become such a big part of the web.”
Home décor retailers can also take advantage of this functionality, enabling shoppers to decorate a virtual room, adds Burke.
Clearly, the advances in e-retailing as a result of Web 2.0 technology have no hard boundaries which means that retailers are free to push the limits of creating a richer shopping experience. What ties Web 2.0 together is not so much the capabilities of the technology, but the core principles surrounding its use to improve the ways e-retailers interact with customers.
“Web 2.0 is dramatically changing the quality of shopper interactions and those retailers that take advantage of this technology will have the edge because they are creating value, and those that don’t will lose traction and eventually disappear,” says Accretive’s Reeves. “It is a marketplace dynamic that retailers can’t ignore.”