As commerce evolved over the time (with an exponential increase in acceleration in the last couple of decades or less), the interaction between the customer and the business (merchant) has also shifted and morphed from the “traditional” physical, in store experience and interaction (single-channel) to the multi-channel communication introduced along with the mail orders, catalogs and telephone orders which further evolved once electronic commerce was born. From there it took a further step to evolve to cross-channel synergies whereby all merchant touchpoints will share some aspects (say, have a common inventory). Lastly there’s been a lot of literature about omni-channel whereby the channels of interaction are user-centric and not merchant or merchant-lines-of-business or merchant-functions centric. Thus in the context of omni-channel we could talk about omni-commerce or, in short, o-Commerce (as an analogy with e-Commerce and m-Commerce)
If we analyze the steps a person takes when making a purchase, we’ll identify at least 5 stages : Prospecting / pondering a purchase, Deciding, Ordering, Payment and Fulfillment. By some measures we could consider Payment as part of the Ordering step, but because the vast majority of the times it is either handled by external entities (e.g. payment processors) or it is heavily reliant on them (e.g. card issuing banks, card or bank schemes etc), we will treat it separately.Taking into account the fact that most of the interaction between consumers and merchants take place predominantly on three channels (or, better called, media - because they don’t have the same meaning as the term ‘channel’ exposed in the beginning), that is: offline, online and mobile. Thus we can formalize these concepts in the following matrix
Now, by using this somewhat formal representation, we could represent every user’s behavior as lines joining each stage based on the medium used by the user. For instance a complete in-store experience can be represented as this
While the all too pervasive person that buys on big e-tailers after doing all the “due diligence” in-store can be viewed as follows
It should be noted that we’re not representing here the path from a single merchant’s point of view, but from the user’s, just as in the “omni-channel manual”. Thus a merchant could see a particular user fall off the face of the earth after the decision phase, while another could see it popping up at the ordering phase.
If we ask ourselves why this channel hopping happens, we might come with several answers, two of which stand out :
Because pricing is a complex topic that takes into consideration everything from the merchant’s market positioning to relationship with the said user, we won’t be discussing it here, but let’s look a bit into more details on the second point..
A couple of the stages outlined before can’t be completed without some inputs from the user (if the merchant is lucky and the user already has an account they’ll need to login, otherwise it’s a bunch of forms - starting from “what’s your name?” and not ending with “where do you live?”) - ordering and payment.
As economists try to teach us, every rational action of a person is taken on the premise that costs are smaller than benefits (otherwise there’s no action). And, while the “cost function” has a big degree of subjectivity (same action will be weighted through everyone’s own experience), we can all agree that, for instance, entering your home address by typing one letter at a time on a tiny keyboard (and even worse, while driving - don’t do it!), or typing the 16 digits of the credit card on the same small keyboard (because who remembers those things?) - not to mention that we’ll have to have that card handy and be able to flip it on the other side to read the 3 digits there, is a tedious task, thus the perceived costs are big. As a result the user will either need a bigger incentive when using a particular medium or the merchant will need to employ techniques that ease that pain of ordering and paying.
To give to the user a true omni channel experience the merchant should know to address a user regardless of the medium of interaction. But, with few exceptions (like merchants that only have an mobile/internet presence), even today, there’s no easy way for the merchants to link the activity of a user on an electronic medium with the activity of the same user in a physical store. To address that most merchants ask their customers (and offer them incentives in the process) to carry a separate physical tag (or sometimes to install the merchant’s mobile app that can render a barcode) to present at checkout in the store.
Most of the issues outlined here could be potentially solved by using a Mobile Wallet. They are called “mobile”, just because they are apps that run on a user’s smartphone, but normally they have use not only on mobile channels/medium, but online and physical as well (from the “where can they be used?” point of view we could just as well call them omni-Wallets, enabling omni-Payments). This type of wallet has the potential to:
Some steps have already been taken into this direction (increasing adoption of mobile wallets) by quite a few vendors in the area, amongst which Apple’s and Google’s initiative (ApplePay and AndroidPay) stand out. They try to tackle all the aspects outlined before and they do so by taking a very user-centric approach (due to the fact that their integration is at the hardware - NFC - level there’s still a limitation in what’s being offered to each particular merchant). And although there are trials on enabling them for all channels (because, as of today, they lack some functionality when it comes to traditional e-Commerce), we’re still a few years out before having an experience that completely satisfies both merchants and users.
Payments are, by definition, a two sided market, therefore increasing adoption needs two different approaches - one for users and one for merchants. Providing payment services along with loyalty and maybe even personal finance services under the same umbrella might provide enough incentive for most of the users. On the other hand merchants have to put user’s interest at the center and build their omni-channel strategy (at least when talking about ordering and payment) around a single solution. We’re facing way too often with cumbersome processes around payment and ordering for various merchants with islands that make this space a fragmented one. And, because users tend to use a small part of the applications they install on their devices, fragmentation is not in anyone’s best interest.
Also, besides the improved experience in the relationship between user(s) and merchant(s) mobile wallets have the potential to become a new marketing channel, one that is bi-directional and very measurable one.
