Lord & Taylor innovates mobile payments with cross-channel bitcoin strategy
The two retailers are among the first to accept bitcoin, following Overstock.com and Tiger Direct. Consumers will have to download the Pounce app first and add their Coinbase bitcoin wallet account to purchase products using the digital currency.
“We’ve heard from multiple customers that they’re interested in paying with bitcoin and buying gift cards and products using bitcoin,” said Ryan Craver, senior vice president of corporate strategy at Hudson’s Bay Company and Lord & Taylor, New York.
“In this point in time not a lot of retailers take bitcoin, so for us it’s a major competitive advantage,” he said. “With that excited group of customers they only have a few options and now one of those is Lord & Taylor and Hudson’s Bay.
“I think the easier that we can make mobile shopping, the better and the higher the likelihood we’re going to create an enjoyable experience for our customers. The higher the likelihood you’re making it easier for the customer, the higher the likelihood they’re going to shop with you on their mobile device.”
By being one of the first to accept bitcoin, Lord & Taylor is showing its commitment to innovation and continuously improving the customer experience. Whether or not all consumers want to be able to pay with bitcoin is yet to be seen, for those that do, Lord & Taylor just became that much more attractive.
For now, consumers can only pay with bitcoin through the Pounce app, but Mr. Craver said that the retailer will evaluate the success of this functionality to see if it makes sense to add it to the Lord & Taylor and Hudson’s Bay apps and sites.
Lord & Taylor partnered with Pounce in January to let consumers purchase products they see in print instantly through the app. This is a continuation of that partnership to better connect online and offline channels.
Now consumers can tie their Pounce app to their Coinbase account to pay for products with bitcoin.
Coinbase partnered with Overstock.com in January to integrate bitcoin payments into the site, and on March 4, the companies announced that Overstock.com had surpassed $1 million in sales from bitcoin transactions.
Additionally, the average order size for a bitcoin customer — $226 — was 34 percent higher than customers paying in dollars— $168. Fifty-eight percent of bitcoin customers were new to Overstock.com.
Some other merchants have also been experimenting with bitcoin. For instance, Grouper’s Bitbar lets consumers pay for a drink at a bar using Bitcoin (see story).
“At the moment customers who already have bitcoins are looking for ways to spend bitcoins not only by trading them but for actual usage so there’s in fact a demand from the market for places to spend bitcoin and this is where it makes sense for a retailer to use this opportunity and tap into this market demand and allow customers to spend this kind of money with them,” said Avital Yachin, CEO of Pounce, Tel Aviv, Israel.
“I believe that for some retailers, it will take some time for them to jump on this, but as soon as they see real demand, I’m pretty sure more retailers would want to add this kind of payment method,” he said.
According to Mr. Yachin, since Lord & Taylor announced that it will accept bitcoin payments, other major retailers have approached Pounce to inquire about adding the payment themselves.
Driving mobile commerce
Besides for the fact that consumers are only able to pay with bitcoin via the Pounce app, the implications on mobile commerce for Lord & Taylor are huge.
One of the big pain points with shopping on a smartphone is having to type in payment information on a small screen. The ability to integrate a digital wallet of any kind can always make this process more palatable and push consumers to convert on mobile.
While bitcoin is still new, it has the potential to create an easier method of transaction for consumers on mobile as well as lower transaction costs for retailers (see story).
“If you tried running a transaction through coinbase using your digital wallet, it is incredibly simple and in my opinion a lot more secure than some of the other wallets I’ve seen like the PayPal wallet,” Lord & Taylor’s Mr. Craver said. “I’m a huge believer in it. I think it’s going through maturation and there’s a longer term play here.
“Our big focus is making sure that we’re creating enjoyable experiences for our customers, and we’ve heard loud and clear that bitcoin is a payment they want to try,” he said. “We think this is helping to define how everyone will shop mobile going forward.”
While bitcoin is the new and shiny technology today, it also carries quite a bit of risk with it, especially after the recent Mt. Gox debacle.
However Pounce’s Mr. Yachin does not believe that the Mt. Gox controversy should be considered a set back at all.
“For us there’s absolutely no concerns,” he said. “We partnered with Coinbase which is a U.S. company, it’s the largest bitcoin wallet company which has just crossed over a million wallet holders.
“The instability in the bitcoin world was largely related to a Japanese company called Mt. Gox which went out of business a few weeks back. Our understanding has nothing to do with other bitcoin companies. The bitcoin protocol was not exploited and we feel confident with those partners to move on.”
Nonetheless, retailers might still be wary of jumping to accept the currency when there is uncertainty and instability tied to it. Yet Lord & Taylor is confident that it has made the right decision.
“I think there’s inherent risk in any type of currency we take, whether we take it as a credit card or cash, there’s launch prevention techniques we have in place. In our mind we have to put the customer first,” Mr. Craver said. “The customer is asking to pay with bitcoin.
“We’ve seen success from places like Overstock.com,” he said. “Let’s take partners that have precautionary methods, and let’s give it a shot. We think it’s a calculated enough decision that we feel comfortable and safe moving forward.”
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York