E-Commerce In The Age Of Covid-19 Part One: Advances In Merchant Software

October 13, 2020

By Tricia Kemp, Oak HC/FT

This article is the first article of a three-part series on e-commerce addressing the merchant experience, improving consumer experience, and the next generation of technology

Covid-19's impact on American retailers has been massive — not just in terms of lost income or jobs, but also the accelerated rise in e-commerce volume. Online retail, which had previously taken more than a decade to reach 16%, leapfrogged to 27% in the 2 months following the onset of Covid. Experts forecast this growth will only continue, magnifying the opportunity for e-commerce but also the challenges ahead.

For merchants, the rapid shift from in-store to online has made an e-commerce platform a business necessity. Retailers that had previously sat on the sidelines are now forced to reckon with a new reality. Meanwhile, those that already had strong web platforms are quickly working to improve them. Regardless of their prior embrace of the stage of e-commerce, all retailers now recognize that a dynamic online presence is critical to survival. They also recognize that shifting toward online comes with new complications.

That’s where software companies have an important role to play. This year has seen a surge of new software offerings aimed at modernizing, expanding and fixing shortcomings in merchants' online platforms. Even though e-commerce technology remains a work in progress, the pace of progress has been brisk.

Take fraud for example, which becomes more complex and more prevalent as shoppers are no longer physically present at checkout. Credit card fraud is easier to execute online than in a store, making it a serious pain point for retail. And a costly one, at that. Merchants are responsible for fraud prevention and have to deal with the ultimate compromise of taking on more risk or tightening controls with the consequence of turning away paying customers. Fraud eats away about five percent of retail revenue in lost sales and prevention measures.

Fortunately, the latest generation of anti-fraud technology has been a boon for merchants. Since February, a handful of companies have introduced anti-fraud software that can passively authenticate users. For example, Prove, an Oak HC/FT company, automatically matches users’ telephone numbers with their identity and other attributes to determine a level of virtual trust. It is swift and seamless. Customers don't have to jump through hoops to prove who they are, and merchants can efficiently and accurately approve transactions without losing business. These programs could represent a major advance in fraud detection, one that is both merchant-friendly and customer-friendly.

Customer hijacking is another big problem. Merchants want to control the consumer experience to suit their brand, which is easy offline but increasingly difficult online. Say that a customer has loaded up their cart and is ready to pay, when a cluster of false check out pages and pop-ups appear telling them where to buy the same items for less. The pop-ups aren't from the retailer; they come from malware that competitors inject in customers' browsers to steal their business. This would be the equivalent to if a Nike employee walks around an Adidas store selling discounted Nike shoes to Adidas customers, a laughable scenario offline but increasingly occurring online.

About 70% of online customers abandon their carts before check-out, and retailers see malware as a chief culprit. Namogoo, another Oak HC/FT company, and others like Brandlock have introduced tools to block intrusions on the customer's end and enable the merchant to protect the shopping experience.

Beyond these solutions to common woes, more sweeping advances are in the offing.

As merchants move online toward omnichannel strategies, managing all parts of their business are becoming increasingly complex. The emergence of multi-task software platforms, which go by the umbrella term Centralized Systems of Record, augur a future when conducting business, both online and in-store, will be something of a breeze.

Toast is a leading innovator in this area. A software provider to restaurants, Toast this year broadened its capabilities to encompass not just bookings and payments, but also menu management, online ordering and off-site deliveries, a feature that has kept many restaurants afloat during the pandemic, easing their shift from a physical to online presence. Slice and Squire, which cater to pizza chains and hair salons, respectively, have similarly added new functions to their technology platforms.

A new wave of all-purpose merchant software is beginning to swell – one where platforms will be able to track customers' preferences and enable retailers to adjust pricing dynamically and manage their inventories and supply chains more efficiently. Customer financing options and other financial services tailored for specific verticals and merchant-to-customer relationships will be part of the mix.

While a great many merchants are benefiting from the next generation of software, some are currently being left behind, namely providers of in-person services or contract-based services. Finding ways to automate and streamline the trade in products that don not fit in a box (or on the cloud) remains an elusive goal. Needless to say, it is high on the short list of hurdles to cross.

Notwithstanding the heavy toll the Covid-19 crisis has taken on American business, and on retailing, in particular, the current environment has spawned a wealth of technological innovation that will strengthen the retail sector in the years ahead – for customers and merchants alike.

This article originally appeared in Forbes.