By Patti Murphy
ProScribes Inc.
I'm a big fan of online shopping. I have been ever since moving to a rural area. (The store closest to my home is a six-mile drive.) But e-commerce can't replace in-store shopping; there are too many downsides. That means payment companies need to become proficient at supporting all manner of payments across multiple channels.
One downside of e-commerce is lack of immediacy. Often, by the time an online order gets delivered, the excitement of the purchase has diminished. Amazon Inc. has said it's working to overcome this. The plan: use drones (unmanned aircraft) to deliver orders in 30 minutes or less. News of the service, called Amazon Prime Air, has been met with a good deal of skepticism and derision, and for good reasons. It's not practical. It's not even legal for private citizens to fly drones in U.S. airspace. That's why Amazon said it will take "some number of years as we advance the technology and wait for the necessary FAA rules and regulations."
Another downside of online shopping is technology. Consumers who shop online want transactions that are seamless and easy, and the technologies underlying e-commerce are not always up to the task. I discovered this first hand on Black Friday when I went online to purchase an oven. According to the National Retail Federation, I was one of 59 million Americans who shopped online over the Thanksgiving weekend. Digital metrics company comScore Inc. said U.S. businesses rang up $1.198 billion in consumer online (desktop) sales just on Black Friday – a 15 percent jump over Black Friday online sales in 2012.
My penchant for online shopping was put to the ultimate test, however. Although it didn't take long to find a new oven, the purchase process went on for almost an hour before I was told my order could not be completed and that I should try again in a couple of hours. It seems the major national retailer with the best deal on ovens had a systems outage. So instead of ordering a new oven from the comfort of my home, I had to get into my car, drive 20 miles and fight frenzied crowds at a brick-and-mortar locale on Black Friday.
I may have been a bit too optimistic expecting to be able to make a large-dollar purchase online with the same ease that I order books and computer equipment. According to NRF data, the average online shopper spent just over $177 online Thanksgiving weekend.
But here's something else the NRF's data revealed: consumers continue to rely on traditional advertising media when shopping for deals. Among Thanksgiving weekend shoppers polled, 49.2 percent sought deals by perusing advertising circulars; only one-third went online to find deals. Nearly 37 percent kept track of email deals sent by retailers, and 16.4 percent reviewed the store's Facebook pages; just 12.2 percent walked store aisles looking for bargains, NRF said.
Today shopping is, for most, a multichannel experience, and the Internet is just one of those channels. "Multichannel shopping is all about freedom and being able to shop wherever and whenever you want," the consultancy PwC wrote in the white paper How U.S. online shoppers are reshaping the retail experience. Among U.S. consumers surveyed in 2012 by PricewaterhouseCoopers LLP (PwC), 65 percent said they shop across two channels, 25 percent use four and 21 percent use five channels to shop.
PwC also found most U.S. consumers go online to research products before shopping – between 73 percent and 80 percent, depending on the products. The higher the price, generally, the more likely consumers are to research online. "[O]nline research doesn't just lead to online purchases, it's also critical in leading to purchases through other channels and in driving traffic to physical brick-and-mortar outlets," the consultancy wrote.
This creates challenges not just for retailers, but also for payment companies. As a recent survey by First Annapolis Consulting revealed, a significant share of multichannel merchants (27 percent) use three or more software solutions to facilitate payments across multiple channels. The survey results indicate payment processors are missing the mark "mostly due to the fragmented manner in which payments technology has tended to evolve in the past," First Annapolis stated. 
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at patti@greensheet.com.
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