The online world has grown up.
Gone are the days of consumers not trusting technology or being hesitant to buy products and services through the Internet. Indeed, Amazon, iTunes, smartphones, and the globalization of markets and consumers have all combined to create an environment where online buyers are more than willing to virtually traverse to new places and make purchases. Most don’t even give it a second thought.
The merchant account and payment worlds have wildly differing pricing structures with many options for services — which may or may not include fees.
Case in point, first quarter sales for Amazon in 2015 were up 15 percent to $22.72 billion compared to the first quarter in 2014. While that is certainly great news for arguably the most popular online retailer around, what impacts are we seeing within the adult space? How are consumers changing things with the different methods and tools they are using to make online purchases or subscribe to content? What other external factors should be considered when managing or setting up a paysite?
Change is the Constant
Anyone that has been around in the e-commerce arena for the last few years has seen a pretty massive amount of change. Desktops gave way to laptops. Laptops gave way to smartphones. And now tablets, streaming media devices and smart TVs have been thrown into the mix.
Social media is increasingly becoming a channel for brands to communicate with their customers, or even provide support assistance. And in the adult space specifically, the proliferation of tube sites a few years back was something nearly all content providers had to address, and are still addressing. The takeaway here is that merchants and online retailers need to be nimble enough to adapt to what works, and to incorporate changes the market presents, when it makes sense to do so. All the while offering what their consumers want, and how they want it.
Throw in the various regulation and compliance standards in the adult market, and it can certainly seem like things are being stacked against conducting online sales for high-risk content. Yet the consumers are there and the market remains strong. Knowing this, navigating the changing environment can become the key to running a successful online business. And this is where a good e-commerce partner can really help.
For instance, the e-commerce partner can stay on top of any new developments within the regulatory landscape. Be it guidelines from card associations or governmental agencies. And things are changing all the time. We have seen how EMV (Europay MasterCard Visa) in Europe has had an unintended effect of counterfeit cards being used more in the card-not-present space.
How this will impact the U.S. market when EMV is scheduled for full-scale adoption in October remains to be seen. The new facial recognition test program MasterCard rolled out recently is likely a countermeasure against what was/is happening in Europe with EMV cards. However, what if a recognition program of some sort did become standard? How would adult consumers react to it? How would merchants incorporate it? What costs could a potential increase in fraudulent or counterfeit card transactions produce within high risk markets? Yes, these are hypothetical questions at this time. But they are all things a good e-commerce provider and business partner should be considering on behalf of merchants.
Differentiation Via Partnerships
Something that is becoming more and more common these days is for merchants to engage in partnerships with other merchants to gain traffic and/or drive new revenue streams. While the adult market remains strong, it is also somewhat conversely challenging at times for merchants to gain new consumers.
The affiliate model is still in play, to be sure. It is just not what it once was. Yes, there are methods out there for buying traffic. And those methods are certainly an option some are successfully using for their business. However, that approach includes a cost that could possibly be mitigated by working with e-commerce partners that offer new opportunities for merchants to engage more with one another.
This method is becoming more prominent within our markets as it enables one merchant to send its traffic to another, and also provides an inherent possibility for merchants to expand their product offerings through complementary cross-sales.
We are seeing this quite a bit with digital goods/subscription services merchants that want to also offer tangible products through their websites, and vice versa. They work together, form a partnership, and soon are selling each other’s products on their sites, while capturing a percentage of those sales for their own business. Not only are they happy with additional traffic and sales, their consumers are happy as they are able to buy multiple types of goods without ever venturing to another website. It’s the supermarket approach to sales. And we know that’s been working for years in brick-and-mortar retail.
Comparing Apples to Apples
It’s fairly safe to say many consumers make purchase decisions based on price. But you might be surprised how many businesses take that same approach, without considering what the services (or lack of services) can cost them in other aspects of the business. When you select an e-commerce partner, you need to not only understand all it can do to help you, but what fees your business may be incurring for using the features of the provider.
Analyze what the services or features (and fees) are saving or costing you in staffing, operations, chargebacks and customer reputation. The merchant account and payment worlds have wildly differing pricing structures with many options for services — which may or may not include fees.
Doing without a particular service may save you a small percentage or fee on the transaction, but end up costing you in other fees — or worse yet — in lost sales. For instance, we’ve seen how data breaches have cost some very prominent mainstream companies dearly in terms of lost revenues and lost consumer confidence. And online fraud protection measures for high-risk transactions can be quite intensive.
Rather than attempt to take on all these different aspects of selling online, it can perhaps be a benefit to work with an e-commerce partner that addresses some or all of them for you. Just like buying a new car, it is a good idea to take the time to fully determine what features of any e-commerce service you will want to use for your business, and do a comparison based in reality and not on a single number.
To paraphrase the old saying, let’s compare apples to apples. Otherwise, what you save in a small percentage may be lost in the cost of your time to handle the problems. It is always worth the time to do the research, compare, and ask questions.
Gary Jackson, managing vice president of sales and Internet markets for CCBill, brings 18 years of experience in the online media and commerce markets to the adult industry, having built from scratch four successful sales organizations for a number of software and ISP start-ups. Since joining CCBill in 2006, he has been a champion for expanding business opportunities for the industry, as indicated by CCBill’s diversification into dating and tangible markets, as well as expanding the CCBill billing automation platform to adapt to changing consumer buying habits.
