Retailers can't thrive without emerging payment tech partnerships
As partnerships between retail and digital transaction companies proliferate, it raises the question: What is the motivation behind them?
The recent announcement that Walmart and Target were joining forces with Google was particularly interesting in that it signified retailers’ willingness to increase dependence on shopping and payments technology and cozy up to their biggest competitors. While puzzling at first glance, this type of partnership may very well be the recipe for success in the ever-evolving retail industry.
Retail and technology company partnerships represent a complementary combination of physical stores and bleeding edge technology, perhaps the only way to maintain the consumers’ loyalty and attention in the age of digital payments.
Since no company, not even Walmart or Amazon, has mastered this recipe to date, technological innovation and partnerships have quickly become a necessary means for success. Since e-commerce and online payments' inception, the state of the retail industry has been fluid, always facing new challenges and battles.
The ascendance of e-commerce was gradual, and it wasn’t until 2009 that quarterly e-commerce sales exceeded 5% of total retail sales. By that point, traditional retailers had established themselves online and the future looked promising.
In fact, some aspects of online selling were superior to traditional retail. In 2009, the majority of online sales were occurring on desktop and laptop devices from traffic generated by search advertisements. Search ads were far more measurable than more traditional offline advertisements, like billboards and television promotions. Amazon was still gaining momentum at that time, but it wasn’t long before the landscape changed again for retailers. Fast forward to 2016 and Amazon managed to leverage their continuous innovation in mobile apps and fulfillment centers to earn a market share of over 50% in the US.
Traditional retailers have lagged behind, preoccupied with their own initiatives to catch up on mobile technology and build out their so-called omnichannel retailing capabilities.
Voice search is the perfect example of the gap that has opened up between Amazon and retailers. It’s a stretch to think that even Walmart could have matched Amazon’s fulfillment center footprint, but it’s impossible to think they could ever have launched a voice search device on their own.
According to research firm Activate, consumers are expected to adopt voice-search enabled devices from Amazon, Google, Microsoft and others, faster than they adopted smartphones. Some estimates say that e-commerce could account for a measurable 15% of total retail spending by 2020. Voice search will contribute to that growth and transform the way we shop, especially for products that are easily replenished, like dish detergent and food. Voice is now the current focus, with augmented and virtual reality not far behind.
Technological progress will continue, and even Walmart and Target aren’t big enough to go it alone — they need to partner with the Amazons, Googles and Facebooks of the world to ensure a prominent position on the next generation of platforms.
As consumers embrace new ways of interacting with information, such as the Voice and Augmented reality services provided by Amazon and Google, retailers need to partner up or risk getting left behind. The Walmart and Target partnerships with Google are a win-win: the retailers get distribution access through emerging technologies (in this case, Voice search) and Google gets deeper retail to round out its’ platform ecosystem.