Aim for sophisticated customers, and get rid of those credit card payment systems, reports advise.
Two recent reports highlight the need for companies to reassess their online shopping service strategies in terms of customer interaction and payment methods.
In its report, Serving the networked consumer Â- strategies for multichannel marketing and commerce, Deloitte Consulting warns retailers that they must adapt to the shopping habits of consumers. According to Deloitte, intense competition means online retailers must base their strategies on understanding individual customer requirements rather than taking a blanket approach.
The research suggests high-spending users will often use the phone, the Internet, catalogues and in-store visits to research a purchase before buying through an e-commerce site. Firms that target this kind of consumer are 88 percent more profitable, and those that do not tend to lose market share, according to the report.
In another report, research firm Ovum has told businesses to phase out the use of credit cards on their Web sites. In its report, Second generation e-payments: e-business beyond the credit card, Ovum says credit cards are not suitable for making small payments, and many potential buyers, such as young people, do not qualify for the cards. Also, filling in online payment forms and perceived security risks put users off e-commerce.
Ovum's suggested alternatives include electronic versions of cash and cheques. Microsoft last year added e-wallet tools to its Passport service that allow shoppers to buy items without having to fill in the same shipping and billing information each time they visit a site. Amazon offers a similar service with its one-click shopping system.
Visa's new electronic wallet service will let Visa card issuers speed up the authentication process. Instead of storing security software on the customer's PC, it is held on a server, so the customer can reach their electronic wallet from any access device. John Prideaux, executive vice president of Virtual Visa, said, "Visa is ensuring all members will have access to a solution providing authentication services to cardholders."
Visa's member banks are also aiming to encourage online shopping by migrating from magnetic stripe payment cards to chip-based cards.
Running authentication processes on the card itself means chip-based cards are more secure and powerful than stripe cards. The cards could be used with Internet access devices that have readers.
Robin Bloor, chief executive of analyst firm Bloor Research, said, "The chip prevents frauds that are perpetrated by copying the magnetic stripe. The card could possibly carry a biometric reading such as a fingerprint but the banks are nervous that the consumer would not like that."
