We all know eCommerce is going to take-off faster than ever. In the last couple of weeks, my twitter timeline is filled with operators gushing about how the weekends seem like black Friday weekends, even for non-essential commodities. Change is already here.
How permanent is this change and how exactly will this playout for the consumers? I have not studied all the nuts and bolts in this puzzle but there are a couple of very powerful inferences I could make drawing parallels from other markets that went through such 'era-defining forcing functions'.
Contactless Payments Everywhere
Whenever I am in NYC, I always preferred to walk or take an Uber simply because the idea of punching the numbers on the ticketing machines or touching the screens made me feel so vulnerable. It didn't help that my visits always coincided with the flu season.
America has had the burden of legacy come in the way of payment innovations. Modern, digital-first payment systems like UPI have not found their way into the US yet. QR code-based payments, as a result, have not taken off either. Contact-less payments will finally become mainstream. Would you rather touch the pin pad or hold the iPad Pencil to sign a digital receipt or just scan and go?
When physical world payments go contact-less or more 'on the go' like 'QR code-based scanning', every physical surface becomes an eCommerce interface. Imagine a Dunkin donuts ad on the sidewalk with the QR code. It's the alternative to not having their app. You can scan right there and order a box of donuts that will be delivered to your home. Contact-less payments make eCommerce more accessible for the 'physical-native' segment.
So far, the 'physical-native' segment didn't have a compelling need to force payment innovations or adopt one. Now they will do it to save their lives.
'Payments' is a big blocker to the adoption of eCommerce. That's changing.
Convenience narrative to Safety narrative
eCommerce was cool. It was an embodiment of how human society has progressed to make life a lot simpler for almost every economic class. When India demonetized its currency notes a couple of years ago , with a few hours' notice, the older generation had two choices - stand in the queue for hours for currency notes at the ATM with no guarantee of getting the money or install mobile payment wallets. My mom did the latter and she never looked back. She books her train tickets with her wallet, buys things on Amazon and pills through another app. She lives in a village at the edge of civilization.
Covid-19 has made eCommerce a 'safer' choice to visiting a hotspot. Would you rather stand at the Walgreens queue for your pills or subscribe? The answer is already playing out. Walgreens recently announced a tie-up with Postmates to deliver medicines home.
Go online to live a little longer is a very compelling narrative. Nearly 35% of America's spending population is over 55 years of age. They are the slowest to adopt eCommerce and now they will.
Safety to convenience Flywheel
Some changes are set in motion because there is a forcing function. But once change unfolds there is no way to say there will be a pre-ordained endpoint and that it will or won't touch some parts of the physical transactions economy. If your mom has Postmates app installed and she is used to the UI of the app over time (or by now!), every category that Postmates starts to deliver will become an 'eCommerce-first' category for your mom.
Consumer behavior changes are hard but when they happen they start a fly-wheel effect. The new behavior will be introduced by one transaction for one category but will set the flywheel in motion for other categories. As soon as delivery apps understand the cohort of new users and their behaviors, the app will adapt to them and introduce them to the powers their iPhone magic wands possess. There will be no looking back. Everything convenient to order online will be ordered online!
Fear and flight to safety are great motivators. Fear of getting a transaction wrong and losing money slowed down payment innovations. Safety was never in the 'eCommerce equation' before. Two powerful motivators are propelling eCommerce forward now.
If there is one J-curve that won't be depressing to watch in the near future, it would be the eCommerce revenues.
- Ashwin Ramasamy
PipeCandy is a market intelligence platform that tracks the global eCommerce & 'direct to consumer' landscape.
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