D-to-C Brands on the Move: How Payment Acceptance Innovations Will Drive Growth and Mobility
With 40 percent of U.S. internet users predicting direct-to-consumer (D-to-C) brands will account for at least 40 percent of their purchases over the next five years, D-to-C brands have everything to gain in 2020 and beyond.
D-to-C companies have disrupted traditional retail and found innovative ways to connect with mobile, digitally savvy shoppers. Much of what customers love about D-to-C companies — like the uniquely personalized journeys these brands are famous for — extends to their ideal payment experiences, too.
The Changing Shape of Commerce
Payments are the pillar of any unified commerce success story. That was true when brick-and-mortar stores expanded into e-commerce. It’s true again now that born-digital retailers are making the move to offer updated versions of in-person shopping experiences.
Shining examples abound, including online eyeglass purveyor Warby Parker, which used innovative pop-ups to feel out the best locations for brick-and-mortar stores. And recently, Birchbox partnered with Walgreens to create BYOB (Build Your Own Birchbox) stations where shoppers can browse and try pocket-sized beauty essentials.
Since D-to-C brands are native to digital, they’re adept at bringing the benefits of online and mobile commerce into traditional retail settings. Innovations that venture beyond the point-of-sale (POS) terminal, like electronic shelf labels and contactless pay, could add the “wow” factor to D-to-C brands’ brick-and-mortar spaces. Some online payment services have even made a move toward offering POS solutions that enable mobile wallet use in brick-and-mortar stores, removing the frictions of the typical checkout experience.
D-to-C, Across Borders
For many D-to-C brands, expansion doesn’t just mean adding more sales channels. It includes crossing borders to serve customers’ demand for products from around the world. In the U.S., over half of shoppers reported making an online purchase from another country. Reasons ranged from lower prices to the desire for designer or specialty items.
While cross-border sales present a tremendous opportunity, they come with new payment considerations. These include the need to enable transactions in customers’ preferred currencies and payment methods, while offering price assurance and low foreign-exchange (FX) rates. To stay profitable, D-to-C companies must meet customers’ requirements at maximum cost efficiency, while keeping fraud low and conversion rates high.
Affordable global transactions become more doable by the day. In fact, a recent report from McKinsey & Company predicted that international payments as small as $1 will soon be as profitable as domestic payments. Fintechs are already approaching that target, due to strategies that enable more cost-effective and secure transactions.
Beyond jumping channels and mobilizing across borders, the most successful D-to-C brands excel at connecting with price-sensitive consumers. One way to do that is by integrating payment acceptance and customer loyalty solutions, driving shopper engagement and spend.
Referral programs remain one of the most popular approaches to loyalty, with an estimated one in three D-to-C brands using this customer acquisition strategy. For instance, Away, which specializes in affordable luggage, has a refer-a-friend program that deposits earnings directly into users’ accounts.
Other ways to pay range from virtual rebates to physical cards, which are both compatible with mobile wallets and usable in brick-and-mortar stores — further blurring the lines between virtual and in-person shopping experiences.
The future of D-to-C is all about breaking barriers — unifying retail channels, making borders obsolete, and integrating customer rewards into the payment experience. Customers love D-to-C brands because they present a refreshing mix of the new and traditional, while continuing to innovate and expand. A robust and agile payment strategy will empower these companies to keep on shaking up the evolving retail space.
Kevin Brown is the vice president of strategic partnerships and marketing at Wirecard, a company that employs innovative financial technologies to build complete digital ecosystems and end-to-end solutions throughout the payments value chain.