Points as Payment for Online Retailers – Accessing Millions of $$ in Potential Revenue and New Customers
Financial headwinds resulting from the economic fallout of the pandemic-driven lockdowns have coalesced to effect a chilling impact on brick-and-mortar retail, tourism, lodging, and the sporting and gaming industries – to name a few sectors over the last year.
Many businesses have pivoted to find alternative ways of operating, or expanding profitable areas of service, to remain viable in this environment while taking advantage of new and expanding opportunities and channels. At the forefront of these changes is the acceleration of e-commerce.
Ecommerce sales show no sign of slowing, according to market research firm Digital Commerce 360:
- Retail e-commerce sales topped $861 billion in the U.S. last year
- Consumer spending online eclipsing 2019 figures by 44 percent.
With the explosion of online sales over the last year, we have seen retailers adapt their businesses to capitalize on changes in consumer demands. However, in an economy where consumers are not only looking for an opportunity to access a steady supply of products in the absence of in-person retail options, they are also looking for ways to maximize spending power. In this new, consumer-driven business environment, those retailers that can improve their technology and increase the number of payment options available to shoppers will gain a competitive advantage.
Indeed, consultants like McKinsey & Company believe that, in the aftermath of the pandemic, the “most successful retailers will be those that connect with consumers in new ways by leaning in on their digital, omnichannel, and in-store technology ambitions.”
Historically, credit, cash, and gift cards have been the primary forms of payment for most retailers – whether online or in-store Identifying new digital currencies and reducing reliance on the use of credit and cash not only increases revenue potential, it also expands the number of customers a retailer can engage with. One of the largest relatively untapped pools of funds available in the estimated $200 Billion in loyalty points accumulated and available for consumers to spend.
Like the tip of an iceberg, loyalty points are only beginning to be recognized as currency to be used beyond a closed system. Brands like PayPal, Amazon, and AMEX are all investing in points-as-payment technology. For brands and retailers, this offers a viable opportunity to deliver a superior customer experience, increase customer interaction, expand redemption options, and ultimately deliver against a demonstrated consumer need – all by increasing the payment application of loyalty points.
Regardless of the rationale or impetus that has moved loyalty program owners to look at points as a resource and customers to view them the same way as any other form of currency, it is a rapidly growing trend – and with our partners, we are happily leading the way.
Engage People Inc.