The coronavirus crisis has caused even small traders to develop their virtual shop windows, and new buyers have been visiting them. Innovation in payment methods will help consolidate online sales after the pandemic across all sectors
Filling a virtual basket with just a few clicks, without needing to invest time in going to they physical store, has been a booming alternative in recent years. Around the world, the need to avoid crowds due to the coronavirus pandemic has given online shopping an extra boost.
In Spain, 23.3% of citizens who were already shopping online increased their virtual buying during the state of alarm, whilst 1.6% resorted to digital buying for the first time, according to the CIS barometer for May 2020. In Colombia, in April and early May the sector saw sustained growth of 12% per week on average, according to a report by the Colombian Chamber of Electronic Commerce. Where Mexico is concerned, increases in digital sales have been recorded since the beginning of April, with a year-on-year increase of 153.9% for the first 19 days of June, so says BBVA Research.
The pandemic has caused fluctuations in consumption in certain sectors, affecting digital sales as the data reveal. In Spain, the weight of online spending is now at 15%, compared to 18% in 2019, affected by the drop in accommodation and travel, according to a recent BBVA Research report. However, internet spending on household equipment, department stores and food has exceeded pre-COVID-19 figures by 40%.
One of the fintechs that has noticed this increase is Bizum, which is a product of collaboration between banks. As well as making it possible for individuals to transact money, it now allows businesses to offer the option of paying online just using a mobile number. “We are seeing [the service] growing rapidly, especially as a result of the state of alarm”, says Business Development Director at Bizum, Fernando Rodríguez.
The preference for buying basic products online during the pandemic has also been seen in Latin America. Food deliveries, fashion, daily consumer goods and household cleaning products are among the most purchased online, according to the Mexican Association of Online Sales, whilst in Colombia virtual retail has grown by 209%.
“Sectors that were not even close to e-commerce are beginning to see the need for virtual transactions, and that forces the creation of new alternatives”, notes Nicolás Rodríguez, Country Manager of Openpay in Colombia. This fintech, which went through the BBVA Open Talent competition and was then acquired by BBVA, offers businesses in Mexico and since fairly recently those in Colombia a payment gateway with a wide range of solutions.
“COVID-19 has made consumers have more interaction with the digital world and online shopping”, explains BBVA Mexico’s Director of E-commerce, Javier Ayala.
And what happens after returning to the new normal? 38% of consumers will continue to buy from the digital stores that they have used for the first time during the pandemic, according to a study by Kantar. Experts who were consulted on the matter, after taking part in a recent BBVA Open Talk about the future of e-commerce, believe that there will be some challenges to gaining their loyalty.
In Mexico, “alternative forms of payment are one of the main demands of businesses”, says Ayala. As the expert notes, only 36.9% of the Mexican population has a bank account, according to data from Minsait. Financial inclusion also has room for improvement in other countries in the region.
Nicolás Rodríguez indicates that, when it comes to offering payment methods, “it’s important to review the characteristics of the market and of consumers”, and not just try to offer standard solutions. Openpay allows you to receive and process debit and credit cards, phone and e-mail payments and even cashing tickets for companies that do not have a website. Another example is the fintech YellowPepper, which has run a pilot with BBVA Peru to develop a P2P payment platform that makes it possible to use your mobile to make inter-bank transactions.
In Spain, where the majority of the population does have a bank account, 9 million users use Bizum through their financial institution’s app, meaning that it is an attractive option for stores.
Focusing on logistics to ensure that orders are delivered is also key. A recent study by EAE Business School predicts that logistics chains will be inclined to relocate and get closer to final delivery points, and new alternatives to reduce contact with consumers due to the pandemic will be proposed.
There is also a need to strengthen customer service and to improve shop windows on social media and search engines, as well as to avoid online scams. That’s why platforms like Openpay are offering fraud prevention tools.
Businesses should keep in mind that physical purchases continue to dominate. “Customers are looking for half e-commerce and half face-to-face alternatives to avoid contact”, highlights Openpay Colombia’s country manager.
There is also room, where shops are concerned, to innovate on payment solutions and ensure distancing. One of the trends in this regard is making payments with QR codes. BBVA offers this solution in Mexico via its app thanks to the CoDi system, and in Spain Bizum will shortly be offering the option to pay using them.
The coronavirus crisis has meant that new businesses and shoppers have jumped on the virtual bandwagon, and new payment methods will help them stay on it.
For BBVA Mexico’s e-commerce director, restrictions on mobility and remote working will contribute to distance sales continuing to gain ground. Although restrictive measures are being relaxed, “many people have already successfully navigated the learning curve to know how to buy safely” by becoming familiar with delivery platforms and online supermarkets. For this reason, Ayala concludes that “e-commerce is going to be the new normal”.