The Coronavirus pandemic might be remembered for the public health and economic havoc it caused, but along with it, the virus has been a harbinger of many ways in which life and business will be conducted now onwards.
One of these is the major transition to online retailing in a big way. ‘Some transactions that felt like they’d be offline for many years to come, quickly moved online,’ according to payments giant Stripe.
The company, set up by the two brothers, Patrick and John Collison from Limerick, is now worth $100bn (£72bn), making it the most valuable private company in Silicon Valley.
A new study by UK Domain, a free resource to build online presence, showed that retailers were, by far, the biggest winners in the Pandemic year.
A quarter of the top 100 websites for the year were e-commerce firms. Amazon, in itself, is a complete success story.
Stripe, which is a payment gateway for e-commerce websites and mobile applications, has noted the shift, and benefitted from it.
Stripe, now headquartered in San Francisco, has million of clients, which use its application programming interfaces (APIs) to transact payments.
“We saw a lot of businesses (hundreds of thousands across Europe) – big and small – start using Stripe to keep trading through lockdowns. In some cases, it just accelerated a shift that was happening anyway,” Paul Crayston, head of communications, UK and Ireland at Stripe, told Ulster Business.
“Independent high street retailers for example were already flocking to platforms like Shopify (with payments powered by Stripe) to increase their addressable market – those kinds of trends were dramatically accelerated out of necessity.
“…a lot of high street restaurant chains used Stripe to enable diners to pay via their mobile to help staff to keep to social distancing rules.”
For a lot of online businesses, it was not just survival, but time for growth. Businesses are taking heed of the need to invest more in online activity.
Global advertising spending fell around 4 per cent to $569bn last year, according to media agency Magna. Digital platforms have fared better than traditional media, climbing 8 per cent, while offline ad sales went down by 21 percent.
But the ecommerce market is what is gaining traction at nearly $5tn, which is already several times larger than the entire advertising business. eMarketers estimate that worldwide, ecommerce sales rose by 28 per cent last year and now make up 18 per cent of the total retail market. Google and Facebook are bound to move to these digital services as earlier they did with advertising budgets.
Facebook chief Mark Zuckerberg said in January 2020 that the three areas he was “most focused on for the next chapter of our company were private messaging, virtual reality, and commerce and payments.”
Facebook has already added shopping tabs to Instagram and its other apps, and begun testing a WhatsApp payments system in Brazil and India. It has again revived its plans for its digital currency Libra, which is not called Diem.
Twitter is testing the concept of charging for bonus content for users. TikTok is pushing into e-commerce through partnerships with Shopify. The parallel selling concept of influencers making money through recommendations was started in China and has picked up globally. Twitch, Patreon, YouTube and Facebook, have all ventured into it.
But how do these payment channels operate. Most are using the Stripe API, with similar payment gateways riding on the popularity and starting their own to service commerce sites. Shopify, Instagram, Cameo and Substack are among Stripes’ customers.
Collisons’ “mission statement” was to “increase the GDP of the internet”, Patrick Collison says it is not about killing the competition, but making payments easier and faster, and stimulating new economic activity.