Since the beginning of commerce, the goal of any business has been to sell more stuff. Simply stated, the ones who sell more stuff win. To reach this goal, companies have tried all sorts of ways to make this happen: sales, coupons, targeting, segmenting, BOGO, and the list goes on. Modern times are no different as companies are using consumer information to gain the upper hand. Nowhere is this more apparent than in the e-commerce space.
This is not new news. E-commerce companies have been leveraging buyer data since the time it became a viable commerce channel. Now, however, there are a new set of players looking to maximize consumer buyer behavior—payment companies.
I read, with interest, a recent post on Forbes’ website that discussed the increased activity of certain payment providers in this battle for information. In the article, Why Payment Companies Are The Key Players In The Great E-Commerce War, the author talks about how payment companies like Klarna, Venmo and Afterpay are all helping merchants collect information to help them market and sell to consumers. As the article points out:
These companies are sitting on massive treasure troves of data and with that comes a lot of potential value. For example, the data they have collected about consumers’ spending preferences and habits can be very valuable in itself. But that data can also be used for demand forecasting that can give them a competitive advantage in the eyes of their customers, the merchants.
The competitive advantages they talk about include Klarna allowing consumers to buy from sites that do not currently partner with Klarna or using the social aspects of Venmo to see where friends shop. In the case of Afterpay, the article gave this example:
Afterpay has a different approach. They recently launched an omnichannel product that allows consumers to choose their “buy now, pay later” service as an option in any of the partner retail stores without additional interest or fees. With this feature Afterpay can now also gather insights about consumers’ real world spending habits and tie it to what they already know about consumers’ digital behaviour. The company also launched personalised recommendations for consumers based on merchants that are on Afterpay’s platform – another step towards becoming a one-stop destination for shopping.
At the end of the day, this all comes down to monetizing personal data. In other words, collecting a shopper’s information on who they are, where they shop, and what they buy to find ways to “incent” consumers to buy more stuff. This is not the first time we’ve heard this song. Many have tried this before and many will likely try it in the future.
The success or failure of these endeavors will ultimately come down to two things: Will they be able to provide merchants with the sales lift they are looking for, and will consumers be willing to give up personal information for cheaper products or to know what their BFF is buying?
The overarching issue to ponder is the matter of the proper use of consumer information. Companies like Google and Facebook have been called to task (and to Congress) over how they use data and how they monetize data. Is it just a matter of time before these companies are called to task also?
Author: Peter Reville
Source: https://www.paymentsjournal.com/payment-companies-get-into-the-consumer-data-business/
