Online shopping at a crossroads

As the overall growth of online shopping is slowing down, continuous development is critical for success. With technological development assuming an increasing role in online shopping, balancing efficiency with service has become essential. Automation can make things run smoother, but more is not necessarily more.

TEXT: TIMO MANSIKKA-AHO

Artificial Intelligence and other technological advancements have found their way into practically every online shop, and the temptation to become blinded by all new opportunities is understandable. With AI taking care of tasks in even the simplest of tools such as Microsoft Office, why not put it to use at full force, sit back and watch the revenue pile up?

While the plan sounds obvious, the reality will most likely look a lot different.

“Technological development is one of the trends that is most significantly changing the nature of online shopping”, Markus Laurio, CEO at Paytrail agrees. “However, research shows that also the appreciation of personal attention is becoming more important.”

Laurio refers to Paytrail’s new “The trends of online shopping 2024” report, which clearly demonstrates this dilemma. Technology keeps creating solutions that can make operations more efficient. However, there is a tipping point also in online shopping where customers turn against automation and begin demanding individual service. The secret to success is to understand where that tipping point is, and then set up operations accordingly.

“In big stores, where volume is the core of profitability, the role of technology can be bigger as it contributes to faster turnaround time and even lower prices. The more specialty store we are talking about – such as a sporting goods store for a particular sport – the more customers expect and appreciate personal service, even to the point of live discussion with an expert.”

The key in finding the balance between technology and service is in understanding the nature of the online store. The more expensive products, and the more limited volumes, the more should the scales lean towards individual approach and service.

Tougher times call for new ideas for growth

Another significant trend in Paytrail’s report is the overall economic development, which calls for new ideas from online stores. As both inflation and interest rates rise, customers must make choices between various categories – a new television and a holiday trip are these days often competing against each other. While the overall amount of online shopping is still increasing, certain business areas are facing substantial challenges.

“Consumer goods business, which obviously peaked at the time of Covid-19, is still declining”, Markus Laurio explains. “On the other hand, the services sector is rising quite sharply. For example, travel, hotels and even barbers are doing very well at the moment.”

The development puts an increasing pressure on those online stores who have counted on continuous growth with old set of tools. However, there is no point in simply waiting for the interest rates go down and purchasing power to rise, as the future remains impossible to predict.

The stores that can develop operations and make the required investments, will emerge as winners. To help merchants deal with temporary shortages in their working capital, Paytrail has launched a simple funding solution.

“When consumers delay purchase decisions, inventory turnover times become longer”, Markus Laurio says. “With our solution, merchants can finance their working capital conveniently.”

In Paytrail’s solution, the merchant’s previous revenue stream works as collateral. Based on that, the merchant can make an application at Paytrail’s own online management system. This is an easy way to arrange for example campaigns: the goods can be purchased with Paytrail’s funding, and after the campaign, when the goods have been sold, the merchant can pay off the loan flexibly.

As consumers use money with greater consideration, the success of any online store starts with getting the fundamentals straight. Making the most of technological opportunities without sacrificing distinctive customer experience is critical, as is managing finances in a way that keeps the store operating even through occasional bumps in the road. As Markus Laurio concludes, you can’t underestimate the importance of personal service, especially when the market starts recovering.

“Maintaining your own identity and tone of voice is essential. That is something you can’t delegate to technology.” |

Read more at paytrail.com