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Omni-Commerce: What It is and Why It’s Crucial for Business

Mobile technology is finding its way into consumer shopping behavior, with much recent research providing insight into how quickly it’s happening.
In an annual study conducted by Vantiv and the Mercator Advisory Group, researchers found that only a small number of consumers are using mobile payments. In fact, just 2% said they have tapped or waved a smartphone to make a payment. But consumers are finding other ways of putting mobile technology to work—and as they do so, they are blurring the lines between online and brick-and-mortar channels.
For example, 15% of consumers said that they have seen an item in a store, received a coupon on their phone and then purchased at that store—a fairly new practice that seems to be gaining traction. Conversely, 28% said that they regularly use ‘showrooming’ techniques—using a mobile device in a store to search online for the cheapest price, and then buying the item online or in another store. And the use of mobile devices to make online purchases is now quite common; according to Mercator’s estimates, as much as $23 billion worth of payments a year are made via this mCommerce approach.
This does not mean that the mobile channel is replacing traditional channels, rather, it’s being added to them. Certainly, many consumers are embracing showrooming, but many others still clip coupons and bring them into the store. In the Vantiv-Mercator study, nearly half of those surveyed said that they typically conduct research online before making an in-store purchase but a significant amount still do both their researching and purchasing in a physical store.
In essence, then, merchants have a growing range of shopping, purchase and payment channels that they need to understand and support in order reach consumers who have different preferences and different levels of sophistication. Thus, they need to employ an ‘omnicommerce’ approach that takes advantage of each individual channel, while providing a seamless, consistent customer experience across all channels.

What Consumers Expect
The research sheds light into customer expectations that merchants should factor into their omnicommerce strategies:

- Security
Consumers expect security in all channels, however, today they feel slightly less secure with most payments methods compared to last year. Moreover, they are least comfortable with the security of emerging methods, such as mobile payments. Security measures are often misunderstood by consumers. That means that the industry has an opportunity to educate consumers about new payment methods that offer greater security through the use of encryption, tokenization and multifactor authentication, and that cloud-based mobile payments mean that they won’t have to keep sensitive payment information on their phones at all. The industry can also work to align its policies with consumer perspectives: In the study, 7 out of 10 said that they expect the ‘zero liability’ that applies to physical credit cards to apply to mobile channels as well.

- Mobile wallets
Perhaps due to the lack of availability, the number of consumers interested in using a mobile wallet at a retail point-of-sale declined to 10% this year, down from 20% last year. This suggests that the industry needs to clarify the wallet value proposition and deliver wallet features such as loyalty programs and budgeting functions that complement payment capabilities. The research found that consumers have relatively low interest in simply using mobile payments in place of their traditional cards. Instead, they are looking for platforms that provide financial and shopping tools with payments as part of a comprehensive program.

- Rewards
Incentives can have a real influence on purchasing behavior, even in new channels. About 4 out of 10 respondents in the Vantiv research said they would switch from their current preferred payment type to another type if it meant getting a discount or reward. Interestingly, even though security is a key concern among consumers, only 24% said they would switch if they experienced a security breach with their payment method. That’s about half the number that would do so for an incentive. In addition, it may not take too large of an incentive to drive change: The research also found that a cash-back reward of just 1% would get people to switch.

- Mobile payments
Although mobile payments usage is still relatively low today, consumers expect to be using these payments as a regular part of their shopping in the near future. Two-thirds think that mobile payments will be in common use within five years, and 39% believe that they themselves will be using such payment methods in that time frame. Both of those figures represent an increase over last year’s responses.

Developing Strategies for Omnicommerce
Merchants need to adapt to the omnicommerce environment. They might consider, for example, using in-store tablets to counter showrooming activity. Associates can use the devices to help customers locate items quickly, provide individualized recommendations and, if a desired item is not in the store, quickly find it at the merchant’s site online. With this approach, the associate keeps the customer from having to look at their own device to shop around and ultimately captures the purchase for the merchant.
On a more strategic level, merchants serving customers in numerous channels will be able to gather a great deal of information about consumer purchasing behavior to drive targeted marketing efforts. But they will need to be careful about how they use this data. About three-fourths of consumers worry about getting too many inappropriate or irrelevant offers or messages via email or text. More than two-thirds worry about being inundated with too many offers as they shop, even if they’ve asked for those offers. And nearly three-quarters worry about mobile payments requiring them to share too much personal data with vendors.
Clearly, merchants need to find ways to develop deeper customer insights without being too intrusive in the collection and usage of data. Other, non-merchant players, such as the big technology companies, are also interested in this data, and some are offering or planning to offer, their own mobile wallets to get it. Merchants need to find ways to avoid being dis-intermediated and separated from their customers by non-bank wallet providers, because maintaining control of this data asset will be key to owning the customer relationship.
Most importantly, omnicommerce means that merchants will have an expanded range of opportunities to shape interactions and messages. They can be in constant contact with consumers and interact through the whole shopping lifecycle from the point of consumer online research to in-store mobile device usage, to the point-of-purchase and afterwards when the consumer posts something on Twitter or Facebook about what he’s bought. Thinking holistically about these interactions, retailers can find new ways to weave their brands into the lifestyle of the consumer.
The key to success in all of these efforts will be the delivery of a good, consistent and seamless experience across channels. A superior customer experience has always been important to retailers, but in the age of omnicommerce, it’s more critical than ever.

(Source: http://www.transactionworld.net/articles/2013/october/marketing.html)

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