From Crisis to Normalization: Building Resilience in a Digital World
Riskified and Axerve organized a panel discussion with experts from the Italian eCommerce community, including Mastercard, Bain & Company, Mohd, Infobip, and Triboo. Here are some of the insights they shared on building resilience in the face of uncertainty.
First country in Europe to get hit by the pandemic, Italy is now on the path to normalization. At the peak of the crisis, online sales were a lifeline for the locked-down retail sector with a 90% YoY increase. What are the business lessons we can learn from the eurozone’s third-largest economy and how is the Italian eCommerce ecosystem bracing for future challenges?
A Pre-Crisis Overview
According to Bain & Company, eCommerce was trending positively in Europe, with a steady compound annual growth rate at 12% between 2014 and 2019. The upward tendency was even more pronounced in Italy, despite a modest eCommerce penetration of around 7%. New types of consumers, younger and more digitally inclined, were driving the transformation of what used to be a conservative market.
And then enters COVID-19, de facto locking down most of the brick-and-mortar side of the economy and catalyzing digital trends. While in-store card payments were down 50% in Italy and all affected countries, online spending soared by a staggering 160%, with 53% of consumers using digital payments for the first time.
“Consumers are increasingly comfortable shopping online and trying new digital payment methods. Data indicates that 40 to 45% of cardholders who did not use their card in 2019 used their card during COVID to shop online.”Mariagiovanna Di Feo, Principal, Bain & Company
Readiness is All
The seeds of digital transformation were already sowed. Merchants were increasingly embracing omnichannel approaches, while PSPs, issuers, and regulators were focusing their efforts on securing remote payments and promoting digital inclusion. The entire ecosystem was introducing innovative tools, processes, and payment solutions, which greatly facilitated the pivot once the crisis hit.
“As a PSP, we went from being a payment service provider to being a business enabler. With shops closed, businesses had to find alternative ways to keep the daily cash flow and maintain their relationship with their buyers. For instance, our Pay by Link solution, where closing a sale is as simple as sending an email, was activated in 500 stores across Italy in a matter of weeks.”Alessio Damonti, Head of Sales and Business Development, Axerve
From shopping to paying to receiving the goods, commerce had to involve minimal physical interactions. With more than 80% of in-store card payments being fully contactless during May, Mastercard saw its merchants and cardholders make good use of its NFC-enabled Italian portfolio.
Having the physical infrastructure in place, and bolstering the digital channel, were both key to a fast and smooth pivot. Shoppers took the eCommerce leap of faith, and the eCommerce market was ready for them.
At the Heart of the Chaos
Erratic sales spikes, interrupted supply chains, uncertainties around governmental regulations: navigating the turmoil was no easy feat, even for digital leaders. If automated tools went a long way to help streamline highly disrupted processes, businesses still had to shift their priorities, understand where to focus their resources, and maintain solid lines of communication with key stakeholders along the fulfillment chain.
“How to proceed, what to focus on? We worked in a very uncertain environment. What we did was to communicate. To communicate extensively with our colleagues, suppliers, partners, and especially with our end customers. Our clients are located all over the world, so the best approach was to establish proactive communication, keep them informed about delays and any other change in real time.”Ivan Cianci, Head of eCommerce Operations, Triboo
On the fraud front, existing challenges were also emphasized. Between corona buying patterns resembling fraud patterns, cohorts of first-time online shoppers with no digital footprint, and the massive increase in sales volume in certain sectors, traditional fraud prevention was often counterproductive—failing to stop fraud, and falsely declining shoppers who exhibited changing shopping patterns.
“Vetting good orders became more difficult. And on the other hand, we saw fraud attempts peak between March and April, rising up to 60% when compared to January and February.”Meirav Peled, Director of Partnerships, Riskified
Ecommerce is now a key growth engine of the European economy. Merchants need to leverage the right tools and technologies to ensure every good order gets through while being protected against sophisticated fraud schemes.
Bain & Company estimates that the COVID-19 crisis has fast-forwarded European eCommerce two years up the penetration curve. From a widely cash-based market, Italy has rapidly opened up to digital payments: today, 80% of transactions are made with a card. These are uncertain times, but it can be assumed that some, if not most of the shopping habits consumers adopted are here to stay. For merchants, it is an opportunity to be seized.
“This is an opportunity to build better scenarios. From a business perspective, we discovered that we were stronger than we thought. Now that people are much more familiar with digital environments, it can serve as an accelerator and help solve complex challenges.”Alberto Strani, Senior Manager, Infobip
Our panel of experts explored what are probably the pillars of resilience: learn, iterate, adapt, and repeat. Their experience has taught them that the new normal translates into the ability to function optimally through uncertainty. And in order to achieve that, they unanimously highlighted the importance of continuously rethinking processes.