By Patti Murphy
The end-of-year holiday season is well underway, and is promising to add a much-needed boost to retail sales. The National Retail Federation predicts holiday sales rung up in November and December will total between $755.3 billion and $766.7 billion, or between 3.6 percent and 5.2 percent over the same period last year. If the NRF's prediction holds true, the year-over-year increase in spending would be in line with those registered the previous six years.
"Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirit of family and friends after such a challenging year," said Matthew Shay, NRF president and CEO. Jack Kleinhenz, NRF chief economist, added, "Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago."
But the big story here is that most of the percentage increase will be driven by online and other non-face-to-face channels. The NRF expects online holiday sales to total somewhere between $202.5 billion and $218.4 billion. In 2019, consumers spent $168.7 billion online during the last two months of the year. That works out to a year-over-year increase of 20 to 30 percent for online sales.
Much of that increase is being driven by the COVID-19 pandemic. In April and May, when most pandemic-related shutdowns were taking hold, consumers spent $153 billion online. The online resource eMarketer predicts overall sales at brick-and-mortar businesses will fall by 14 percent this year compared to last year, and ecommerce sales will grow 18 percent over 2019 totals.
According to business listing site Yelp, 60 percent of small businesses that were forced to close due to the pandemic have done so for good. But among those that survived and pivoted to online sales, prospects are improving. Adobe Analytics, for example, reports that small businesses on average saw online sales increase by 110 percent in November.
Clearly, the pandemic has highlighted the importance businesses should be placing on diversifying sales channels—on meeting customers where they feel most comfortable shopping. It should be a wake-up call for ISOs and merchant level salespeople (MLSs) as well. For the better part 20 years, industry insiders have emphasized the consultative approach to merchant services. It shouldn't just be about selling terminals and shaving basis points off transaction processing costs.
If current shopping trends continue, merchants will be less interested in terminals and more inclined toward solutions that support ecommerce sales. And they will need a business consultant to help them successfully transition to this new sales environment.
Most small business owners are not skilled in building ecommerce sites that are as compelling as their brick-and-mortar stores. This presents an opportunity for ISOs and MLSs to bring additional value to those businesses.
"If you're not going back to each and every merchant [in your portfolio] and saying 'I can get you online,' then you're losing an opportunity to remain a person of value to those merchants," Keith Sampson, national sales director at North American Bancard, said during a recent episode of the Merchant Sales Podcast.
At the start of the pandemic, Sampson recalled, NAB entered into partnership with the SaaS-based ecommerce platform BigCommerce to simplify and streamline the ecommerce journey. "We're partnering with them in the same way as we do other resource partners, like providers of POS systems," Sampson told me in a later interview. "By bringing BigCommerce into our fold, working together to simplify the process, we're positioning our sales partners to provide a valuable product offering."
The two companies collaborate on sales, implementations and training of agents and merchants. "They [BigCommerce] can actually help sell the account," he said. For example, an MLS can send a client a link for a 15-day free trial with BigCommerce. BigCommerce then will block ads for competing payment services providers from reaching the client and keep the MLS apprised of how the trial is going.
Eventually, Sampson said, NAB plans to integrate directly with the BigCommerce platform, eliminating the need for third-party gateways.
Patti Murphy is senior editor at The Green Sheet and co-host of the Merchant Sales Podcast. Follow her on Twitter @GS_PayMaven.
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