FinTech Payments

Merchants And The Big Retail Reset

June 26, 2020 at 09:00AM

eCommerce has grown about as much in the past few months as it has in the past 10 years. Iain McNicoll, VP of Americas/SMB for payments platform Payoneer, recently told PYMNTS that eCommerce’s market share has risen to 27 percent from just 16 percent when the pandemic began. By contrast, it took a decade for it to hit 16 percent from less than 6 percent 10 years ago.

McNicoll said the quick gains aren’t surprising, as physical retail stores essentially closed down worldwide for months. If a consumer wanted to buy something, doing it digitally was pretty much the only game in town.


Payoneer believes that while there will be some regression back to physical commerce as stores reopen, things will never go back to the way they were. Consumers are shopping online more, going to ATMs and using cash less, and showing an increased preference for contactless payments – and McNicoll thinks much of this shift will be permanent.

“With this [change], we’ll see more competition in the online arena, with larger brands coming in and competing directly,” he said. “This will all eventually benefit the buyer, because we’ll start to see online stores become more dynamic and take a more refined approach to the customer.”

McNicoll added that as the rules of the road have changed, consumers’ expectations of digital commerce have expanded. He said companies will have to incorporate many of the lessons of the past few months into their next iteration of online offerings.

The Rebuilding Project

The past several weeks have been a learning experience for merchants – both physical and digital – on the fundamental importance of diversifying operations across channels, McNicoll noted. For instance, physical merchants have had to pivot hard and fast to digital channels and distribution methods, while also renovating their brick-and-mortar stores to help consumers feel safe.

But McNicoll added that changes are also coming for digital-first merchants. For instance, many of Payoneer’s merchant partners are talking about diversifying their supply chains so they are less dependent on China – or, in some cases, are completely rethinking their product lines. For example, McNicoll said a luggage company that Payoneer works with is using the current slow period to diversify its product line to become less vulnerable to future market swings in the travel sector.

“They’re looking at expanding into games, because they want [to be] diversified, and to be set up to handle the [possible] second [COVID-19] wave or any other epidemic in the future,” he noted.

Making such a big pivot sounds simple, but it’s often costly and complex, McNicoll said: The question isn’t how hungry consumers are for change, but how ready merchants are to pivot.

Overcoming the Cash-Crunch Blues

One issue is how to finance a pivot, a challenge the luggage company faced. “Access to capital has been tough for everyone in this environment,” McNicoll said. “Traditional options have often been frozen or moved to severely restricted offers.”

Ultimately, the luggage company secured a working capital loan from Payoneer to help finance its pivot. McNicoll said his company is better positioned than a traditional lender at approving such offers, because the firm takes a wider view of a retailer’s finances. But he noted that such approvals aren’t easy to make, even if Payoneer has a bit more data than average.

“In the time of COVID-19, you have to adjust your model, because we’ve never seen this before,” McNicoll said. “We have nothing to benchmark it against. So, it requires a bit of a manual override of the underwriting models that we’re used to. Times like these require an agile approach, because there is no roadmap for the environment.”

Still, he remains hopeful that a year from now, the world will have returned much closer to normal. McNicoll believes that while new businesses will rise, marketplaces will consolidate, and some well-known companies will have to shift to a more digitally focused business model. “Overall, I’m confident in the future,” he said. “I think we’ll see a lot more online [commerce] as we build a greater comfort level in dealing with people in different locations.”

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