Retail Customer Experience: Paypal’s NYC Pop-Up Store Could be a Smart Strategy
Through a special arrangement, presented here for discussion is a summary of a current article from Retail Customer Experience, a daily news portal devoted to helping retailers differentiate the shopping experience.
PayPal recently confirmed reports that it will open a pop-up store at 174 Hudson Street in New York City’s Tribeca neighborhood. The store is intended to showcase PayPal’s new in-store payment products so merchants can see them in a more realistic setting.
In a post on its corporate blog, PayPal’s senior director of emerging opportunities Carey Kolaja explained that consumers have changed the way they shop and that retailers must change too.
"But while so much of current thinking is focused just on the future of ‘checkout,’ here at PayPal we’re creating a better shopping experience, from start to finish, no matter what’s being bought, where it’s being sold, or how it’s being paid for," Ms. Kolaja said.
The pop-up store builds on the "sneak peaks" PayPal gave of its mobile and offline strategies last month, Ms. Kolaja explained. The outlet will be about expanding on that vision and showing merchants and select members of the media PayPal’s "complete set of solutions" that include a mobile digital wallet and point of sale solution.
For retail consultant Mike Wittenstein, the pop-up location is a good idea, one that will give PayPal a chance to explain how they actually plan to connect their online expertise to the offline retail world.
Since PayPal hasn’t been viewed as an offline payment option, introducing it to merchants in a setting where they can get a feel for the new products, and see how to make it easy to introduce the products to their customers, is a big opportunity for PayPal.
"Bringing [PayPal] out in the open is important if it shows they can be added seamlessly, smoothly and quickly," Mr. Wittenstein said. He added that merchants will eventually have to be able to describe a product they’ve only just started using to consumers, who also don’t know PayPal in a retail setting.
Mr. Wittenstein explained that a pop-up location for PayPal will help to reduce merchants’ fear of a new payment method, improve usability and let merchants see where the benefit is for them. He added that the success of PayPal in the offline world could have bigger implications for payments in general.
"PayPal is the first electronic payment method that can be adopted," Mr. Wittenstein said, explaining that as opposed to credit or debit cards, which are provided to consumers through issuers, the decision to participate in PayPal is up to consumers to opt-in.
"Keeping up with technology is hard, not just for retailers, but also for the range of customers that they serve," wrote Ms. Kolaja. "So, without mandating any technology upgrades or favoring one solution over another, we’re making the connection between merchants and consumers more convenient, more personal and more relevant."
Discussion Questions
Discussion Questions: What will encourage more retailers to experiment with alternative payment methods such as PayPal’s? Do you think PayPal will be successful in transforming brick & mortar payment methods?
Ah the irony! One of the poster children of online commerce is using brick and mortar to show its offerings. Great idea, strategically placed in one of the United States’ (and the world’s) hubs. Brick and mortar is alive and well folks, although its purpose and transformation into a showroom may be changing.
What? An online icon needs brick & mortar help to sell its idea? Get out! Showcasing the technology in a real world environment is great, but using one location to get the word out seems odd. Method of payment is one area where brick and mortar must keep up with their online competition. Giving the customer every available option to pay just makes sense.
I use PayPal extensively both for purchasing and for charging customers on my websites. Despite their hinky reputation for customer service, PayPal is improving. Their main appeal to purchasers is the dispute control available to them. Disputes can be faceless and at-a-distance, handled strictly through and by PayPal. This empowers timid consumers to “speak” their minds regarding product quality, etc. It also enables frivolous and even fraudulent refund claims that require extensive time for retailer responses. Credit and debit card services offer dispute resolution services, but nothing as aggressive as PayPal.
For B&M retailers, customer dissatisfaction creates “moments of truth” during which store personnel can face their customers and respond to their complaints in a positive manner that creates good will. The PayPal dispute process effectively defeats that opportunity to create loyalty, instead creating a chasm between retailer and customer. To a retailer during a PayPal dispute, PayPal actually becomes the customer — eliminating the opportunity for face-to-face resolution and relationship building. While I enable my online customers in 98 countries to use PayPal for payment, I would never use it for B&M transactions.
I don’t really understand what they are trying to do here. What are they actually going to sell in this store? And are they expecting only retailers and merchants to shop the store? Couldn’t a field sales team do a better job by actually showing the PayPal systems in the retailer’s own environment? Maybe (probably) I’m daft but I just don’t get this.
Although news broke about this a little while back, this is especially interesting in light of yesterday’s BrainTrust discussion about Google Wallet.
My comments about the opportunities for marketing surrounding mobile payments in yesterday’s discussion are equally applicable here. Will PayPal become the tender of choice in bricks-and-mortar retail? Will Google Wallet? Will some yet-to-be-conceived technology lead the way? I don’t think anyone can know for sure.
What is certain is that the winner(s) in the world of payments will be those that best integrate relevant marketing and communication into the whole payment process (provided, of course, that the experience is seamless for the consumer and the retailer). That’s where the real opportunity lies.
Yay! This is great news for merchants and shoppers. It paves the way for all manner of payment and currency options. Today, there are websites like points.com, which acts like a currency exchange for digital scrip, like American Express Reward points, Facebook Credits, and miles (among others). Points.com allows shoppers to consolidate value into a single PayPal account, which can be used to buy almost anything. Now that PayPal is pushing more aggressively into the bricks-and-mortar space, shoppers will be able to make purchases using earned value from many sources.
For some retailers, managing all the payment options is challenging as technology, terms and affiliations evolve. For the online shoppers, PayPal represents the easiest way to do business, so using it in selected retail locations would be natural. New security for both sides of transaction.
Interesting choice to use a pop-up location to introduce. With more brand marketers and retailers using pop-ups for introductions, seasonal and more, PayPal would be a natural partner — set up and go. The future will see more “short term” retail opps in malls with space available, enhanced by easy to use digital technology — interactive kiosks, displays, etc — PayPal is an easy fit, here, too.
The more choice and control you give consumers over their shopping experience, the more likely you will have broad adoption across the marketplace. PayPal offers options that are evidently in demand for many shoppers, so this physical presence should only help to keep them top-of-mind.
Mobile payment solutions represent some great opportunities and also many challenges for retailers — especially in terms of data and customer engagement “disintermediation.” I would suggest retailers think through their strategy very carefully.
It’s great that PayPal has seen this opportunity, though it’s a little too early to speculate as to who may win. Like other commentators I’m also confused as to the thinking behind this pop-up store. It may be worth a visit — if I’m allowed….
One fundamental challenge retailers have with traditional payment methods is the transaction fees. With transaction fees ranging from 1.6% – 2.5%, retailers can almost double their net margin if they can eliminate transaction fees. So retailers are open to any new payment methods that reduce the transaction fees.
I don’t believe PayPal has it in their DNA to transform bricks and mortar payment methods. PayPal introduced PayPal mobile (to enable payment on mobile) as early as 2005 and yet never made significant headway. New comers like Square have picked a niche in bricks and mortar and developed a superior business with great user experience. Similarly there will be many other innovators who will pick other pockets of brick and mortar payment opportunities, before PayPal gets it right. This is based on my experience of working with PayPal mobile on various ways to reduce the friction in adoption of mobile payment.