How Shifting Consumer Values Are Changing Online Payments

LONDON, United Kingdom — Co-hosted by BoF and Affirm’s Chief Commercial Officer Silvija Martincevic, an exclusive 45-minute Digital Live Event on How Shifting Consumer Values are Changing Online Payments took place last week (available to watch here), identifying some of the most transformative forces in the retail market today and substantiated by insights drawn from Affirm’s network of more than 5.3m customers and 4,000+ retailers.

Hit by the second major global crisis in their lifetime, Millennial and Gen-Z consumer cohorts are exhibiting increasingly cautious purchasing behaviour, shares Martincevic. However, the COVID-19 pandemic has become “a massive online accelerator.”

Affirm’s Chief Commercial Officer Silvija Martincevic | Source: Courtesy

Beginning with the impact of the pandemic, which represents the biggest change to consumers’ lifestyles in modern history due to the global curtailment of freedom of movement; then considering the unfolding tragic events and inspiring protests in the United States following the killing of George Floyd, Martincevic shared how consumers were reacting to these unprecedented times.

“Consumers have been shifting towards missions-focused companies. The events transpiring right now will further that as well. Consumers want to work with brands that stand for something good. We also believe the shift online will stay. Look to China, who are operating three months ahead. The online shift has stayed, even after the economy reopens there.”

The discourse went on to include how contactless payment options are becoming fundamental to doing business; the growing impact of off-the-shelf technology — creating new opportunities for agile small and medium-sized businesses; and the opportunity for retailers to optimise their omnichannel capabilities to provide consumers with convenient and safety-conscious “buy online, pick up in store,” and “buy online, return in store” strategies.

Below, we select five key insights from the conversation, which can be watched in full here.

Insight 1: Lessons from China

“We have done lots of research understanding China recovery. When Covid-19 came to the US, we saw massive decline in travel in travel/entertainment — up to a 95 percent decrease. The same thing had happened in China. We are seeing very similar trends, so can anticipate that the consumer trends will be the same. Luxury saw a 23 percent increase in first month, then a drop in the following two months. Mobile commerce really thrived in China —mobile phone usage was up 30 mins a day on average during Covid and remains the same. Across the rest of the world, we anticipate seeing similar trends. Online and mobile shift is here to stay. There is no turning back.

Insight 2: Advantage in Agility for SMEs

There are moments in time where the world changes forever. Companies that are agile, using technology to democratise their business and to respond to tectonic shifts in consumer demands will win. Our data shows two ways that retailers are responding. Split between massive businesses, who find it hard to change their behaviour, and SMEs that are much nimbler.

Our mid-market business demands have doubled, while our enterprise clients have taken a more cautious approach. Some of the smaller retailers and businesses are understanding that providing financial flexibility is key – they are insightful about what consumers need. They’re ahead of the curve during this time.

Insight 3: The Cautious Consumer

We studied the [2008 financial crisis] as a lesson. Many Millennials growing up in that period saw their parents lose their jobs and houses — the way that has impacted their consumer behaviour is extraordinary: 70 percent of millennials do not have a credit card – they do not trust the financial intuitions that let their parents down, including the business models of credit cards that benefit from debt.

So, we conducted a survey with graduating Gen Z students. Usually the number one consideration after graduating was travel, but this time it was financial safety — savings are on their mind. Alternate payment solutions are becoming the norm — two thirds of Americans have already tried them, and the last three months show continued increase. Nearly 55% of our customers are Millennials and Gen Zs already.

Insight 4: Businesses will drive societal change

As consumers demand more transparency and demand goodwill missions from the world, businesses will be the ones delivering. That makes me unbelievably excited. Coming out of this will change our societies for the better. One that's more transparent, responsible, accountable — one where customers are going to drive change.

We’re living during extraordinary times. There is a vacuum that governments have created, and its business that will drive societal change. At the end of the day, how we vote is with our wallets. Businessowners will look back and say, “How did we behave during that time”? “How did we support our consumers?”

Insight 5: Optimised omni-channel strategies

Ecommerce will become M-commerce —the new storefronts will be in your hand. You see that tie on Instagram, and you need to purchase today. You will want to start that journey online as a consumer, then go and collect in-store. While this is important for convenience and conversion, it’s important for safety. Returning to [physical] store is not instantaneous – there are safety considerations.

Technology that connects online with the in-store experience is critical, and contactless mobile payments will become fundamental. Localisation technology comes in to play. Staying locally, spending locally – we think this will last for a while. Enabling localisation tech such as push notifications, driving traffic to pick up kerbside and figuring out how to connect social media presence to local activity will be critical for a long period of time.

This is a sponsored feature paid for by Affirm as part of a BoF partnership. To learn more about Affirm, please click here.