AdWeek: Future of Shopping with Jason Test
Speaker 1: Hey, everyone. In today's episode of The Honey Buzzcast: eCommerce Industry Trends& Insights, PayPal's VP of digital and in- store marketing, Jason Test, chats with Adweek's VP of event partnerships, Matt Steinmetz, about best in class customer engagement strategies fueled by PayPal and Honey's extensive shopper testing and research, and how you can leverage these strategies to engage and retain more customers.
Matt Steinmetz: Joining me on stage now is Jason Test. He's vice president of digital and in- store commerce at PayPal. Jason, I want to thank you for being here. Where does our virtual event find you today?
Jason Test: Hey, Matt. Thanks so much for having me. I am in my home office here in southern California, in Orange County.
Matt Steinmetz: Very nice. Hope you're enjoying the weather and the summer. It's a great pleasure to have you with us. We have a ton of questions for you today. I want to dive in. I should note to the audience that Jason has agreed to take questions from you guys in just a bit, so make sure you submit them via chat at any point during our session today. So Jason, as I mentioned in the intro, Honey and PayPal have been looking closely at online shopping trends for some time now, and you obviously bring a ton of perspective to this conversation. So let's start with a two- parter. Number one, how has consumer behavior shifted due to the pandemic? And number two, what will consumers be looking for in a post- pandemic shopping experience or environment?
Jason Test: Yeah, sure. It's a great question. First of all, I mean, I think everyone would agree that we've seen just a massive historic shift to digital throughout the pandemic, right? I mean, people are forming new habits, everything is digital oriented. In fact, McKinsey did an estimate and said that over the pandemic period, we've seen the equivalent of a 10 year shift, a 10 year acceleration in digital engagement, which is just massive, and as I said, historic, I don't think we've we've ever seen anything like that. So with that, shopping behavior has changed dramatically. We're seeing that in surveys that we have, that nine out of 10 consumers say that they've changed the way they've shopped, which makes sense because it was out of necessity. And I think a couple of key things I would point out. Obviously digital first shopping journeys are very popular now, even if you're going to be shopping in store, right? I mean the emergence of curbside pickup, delivery is not just for pizza anymore, augmented reality experiences so that you can try on a pair of sunglasses without ever actually having to leave your house or try on cosmetics and see what those look like on your face. So augmented reality is really picking up. So I think that digital first is really changing shopping journeys, and shopping journeys have become very fragmented, which presents a pretty challenge for a lot of the marketers that I speak with. The second thing I would touch on is a focus on finding deals and discounts. That's always been a big thing for consumers, to be able to get a deal, find a discount, but it's even more amplified now. If you think about what happened with the pandemic there's people who lost their job, there's people who have less income, and even those who didn't lose their job or lose income have a heightened sense of awareness of the importance of saving money, the importance that nothing is given in this world. So there's just a different view towards saving money. In fact, four out of five consumers that we surveyed say that discovering a deal is even more important now than it was in the past. And we've got survey results that talk about how consumers actually feel buyer's remorse if they pay full price for something, or they feel anxiety if they pay full price for something. So there's really sort of a spotlight on being able to save money and find deals more so now than ever.
Matt Steinmetz: Yeah, there's an ongoing competition in my household between my wife and I to see who can find the next box of diapers cheaper. So piggybacking all of that then, how do you guys see consumer's expectations of brands changing as a result of the pandemic?
Jason Test: I think the bar has been raised in a few areas. Consumers expect brands to really up their game in a few ways. First I'll touch on convenience and value, right? So if you think about some of the technology enabled convenience things that consumers have come to expect, I mentioned curbside pickup, delivery, augmented reality, digital wallets as well have just taken off in popularity, like the PayPal digital wallet. So consumers have the ability to check out at 29 million different merchants using the PayPal payments button. And there's a huge convenience factor there, not having to enter all of their information or their credit card information. And so I think that convenience factor is really important. On the value side, as I mentioned before, today's shoppers are more savvy about saving money. In fact, 80% of shoppers search more frequently for promotions and online deals. I've talked with consumers personally who spend hours searching for coupon codes, and it's actually a very frustrating experience to go search for a code, find a whole bunch of codes, and then only to realize that none of them are actually active. And that's something that we're solving with our Honey solution suite, but that's another big thing that brands need to think about. I think authenticity and transparency, which was already really important, has just become more amplified. Consumers want to know not only what you stand for in the business that you're doing and the vertical that you play in, but what do you stand for socially? What is your company all about? So I think that's become really important. And then the last one I'll touch on is just health and safety, right? Because of COVID, there's a heightened sense of health and safety. And so consumers expect brands to really think about how are they taking care of their employees from a health and safety perspective, and what safeguards are they putting in place to make sure that when services or products are delivered to me, that my health and safety is preserved and protected and that that's being taken into account? For in- person brick and mortar locations, you're seeing a lot more touchless checkout experiences, QR code menus, right? If you go to restaurants now, it's all QR code- based menus, and that's all about health and safety. We rolled out actually last year a QR code- based touchless payment experience with PayPal and Venmo. And now, you can actually pay with PayPal and Venmo in over a million locations. Here in the US, places like CVS, there's a number of large retailers as well as small businesses that are rolling this out. And you don't have to tap or touch anything. You don't have to swipe. It's all QR code- based, which has the added benefit for the merchant of speeding up that checkout process and also creating a way for that merchant to engage even after the purchase with our audiences. So those are some of the things that I think brands need to think about that are really top of mind for consumers when they're making a brand choice.
Matt Steinmetz: That's great. I'm curious what your analysis, and even anecdotally, conversations you have with merchants, what you see as the differences in how gen Z and millennials will be shopping post- pandemic?
Jason Test: Well, I think gen Z and millennials are top of mind for almost every marketer that I talk to. Obviously everyone is looking to attract and engage younger audiences, and gen Z and millennials, really important. Millennials are already a very large segment in terms of their purchasing power, but the estimates say that they're actually going to increase their spending by about 10% over the next five years, and gen Z is going to increase their spending by about 70%. So you bet it's important to try to gear your business around how do I engage these younger audiences? And what we're seeing in terms of differences in how they buy, obviously they lean heavily into digital and mobile first shopping journeys. So clearly they're leading the way there. Looking to feel a connection with the brand, so again, understanding what the brand is all about, what the brand stands for, and then leaning into new technologies and new ways to buy. And I'll give you a few examples. Venmo, as an example, has grown in popularity among millennials and gen Z, not just to do peer to peer payments, but also be able to pay at a retail or website or in store using Venmo. And what we find is that younger audiences really love the Venmo social feed and the social aspect of what they're purchasing and not being shy about sharing that information in their social feed. And you'd be surprised at how many of our millennials and gen Zs really look at that social feed. And so our brand partners actually, when purchases are made at their websites or in their stores, they get that branding opportunity in that Venmo's social feed. So I think that's one technology that we see this younger demographic really leaning into. Buy now, pay later solutions which you're starting to see pop up everywhere, right? The idea of being able to buy something today and pay over time in installments without having to pay interest, that's very appealing to this younger audience who tend to be very credit averse. They don't want to take on debt and pay interest. What we're seeing is that millennials and gen Z consumers are 28% more likely to shop at a merchant again if they offer a buy now, pay later option. And in our data with our PayPal buy now, pay later data that we're seeing, we're seeing tremendous repeat usage. So when a consumer uses PayPal buy now, pay later solution Pay in 4, we're seeing that about 50% of those consumers repeat again within a three month time period. Either at that same website or on a different website, they're using it over and over again. So they're seeing huge value in that. I mentioned augmented reality. I think that's so exciting. And certainly millennials and gen Z are very forward- thinking in terms of those shopping experiences. And then finally, finding deals. I think millennials, gen Z, very savvy about using technology to find deals. I mentioned that example of searching for coupon codes and having a bad experience. There's a lot of newer technologies like our Honey technology, where consumers who are Honey users have a much easier way and more convenient way to receive those deals and to track prices and to be able to drop list items so that if the price drops that we will notify them in at a future date when the price has dropped on an item. So we're seeing that younger demographic really lean into technology when it comes to their shopping journeys.
Matt Steinmetz: For sure. You touched on this a little bit earlier, but can you talk a little bit more about the role of incentives and rewards in the mind's of today's customers?
Jason Test: Yeah, I think they play a huge role, and it's really all about accelerating that decision- making process for consumers. Consumers have so many choices at their fingertips, especially in a digital environment. The ability to go search and compare and look at customer reviews and deals and rewards and discounts really play a role in accelerating that decision- making process. I mentioned the buyer's remorse thing. We just completed a survey, and one of the crazy statistics out of that was 61% of survey respondents said that they had experienced buyer's remorse within a few hours of making a full price purchase, and 38% said that they experienced anxiety after making a full price purchase. So it's a really a big deal. It's beyond just having a reason to convert a sale right now. It's really about a broader relationship that you have with the consumer and showing them that you care and that you are leaning in with deals and discounts and rewards. And the great thing is that we're seeing that survey respondents said that 67% of them actually said that they feel less guilty about making a purchase if they found a deal or a discount or coupon. And then with just our solutions, with Honey offers, when a merchant has Honey offers on their website, shoppers who engage with Honey offers, what we're seeing in our data, are 43% more likely to revisit that site again and 16% less likely to engage in competitive comparison shopping. So clearly deals and discounts and rewards really help accelerate that decision- making process and really help reduce that anxiety and buyer's remorse that consumers are feeling now more than ever after the pandemic.
Matt Steinmetz: So talk a little bit more about how Honey and PayPal are working directly with your partners to reach consumers along that shopping journey.
Jason Test: Sure. Yeah. We have across our Honey, PayPal and Venmo platforms, we have some fantastic ways for our retailer and brand partners to engage our audiences. And you may not be aware that our audience has grown rapidly. If you look at the PayPal user base, the Venmo user base, the Honey user base, we have almost 400 million active users now across these platforms, and that's growing rapidly. We added 70 million last year alone and we're on track to add another 40 to 50 million this year. And so what we've been developing in our innovation is ways for our retailer partners to engage our audiences to drive our users to their experiences. So it's really all about driving new customers for our retailer partners. It's about driving conversion. So we have solutions for driving conversion, and it's also about driving loyalty and repeat usage. And I'll just give you some examples. So on the PayPal platform, for example, that app, the PayPal app, is being transformed as we speak. We're going to be rolling out a lot of new features, a lot of new functionality that it's going to drive daily engagement in those apps. And for those of you who have the PayPal app, you know that we added cryptocurrency. So you can buy, sell and hold cryptocurrencies in your PayPal app and your Venmo app, and you can actually use it as a funding instrument now. When you go and check out at a retailer, you can actually pay with crypto. So that's an example of one of the features. We're adding some budgeting tools, things to manage your daily financial life. But more importantly, we're adding a shopping hub, and this is a place where our users can go to discover brands, to discover deals and discounts and cashback rewards, and to use very helpful shopping tools and tips. So that's something that's going on with PayPal. We have some other solutions that are really all about cart abandonment and bringing shoppers back, anonymous shoppers that you may not know as a retailer, bringing them back to convert and make that purchase. And of course, I mentioned our buy now, pay later solution, which has proven really to drive new customers, as well as conversion. On the Venmo side, we talked about the social feed and the aspect of getting your brand exposed and amplified in that Venmo's social feed. We also have cashback rewards within Venmo as well that a lot of our brand partners engage in. And then on the Honey side, it's really a full suite of tools, really full funnel if you think about the purchase funnel. We've got native shopping experiences with the Honey app and the website joinHoney. com, where a lot of consumers go to discover brands, to discover deals, to discover rewards and start their shopping journey there. So that's a great way for our partners to get new traffic and new customers. And then we also have tools that are utilized by consumers to help aid them in their shopping journey. I've had a lot of consumers talk about Honey. Once you've signed up for Honey and you've installed the browser extension, it's like a virtual shopping assistant that goes with you everywhere as you shop, and showing up and giving you tips and pointers, helping point out where there's savings opportunities. So all of those tools really are meant to drive new customers to our merchant partners, in addition to the consumer value, but on the retailer merchant side, it's about driving new customers, it's about driving conversion and it's about driving loyalty.
Matt Steinmetz: We do have a couple of great questions for our audience I want to make sure we save time to get to. Keep them coming, folks. But before we get to them and your takeaways, I'll sneak a couple of additional questions in here with you, Jason. So again, you guys have incredible perspective. I'm curious, what has surprised you most about how shoppers have behaved over the past 15, 16 months, and what could we take away from that as we look forward?
Jason Test: Yeah, that's a good question. I mean, I think what's surprised me most probably is just this aspect of deal seeking and how much that has become more prominent. And it's not just for deal seekers. It's most shoppers really are interested in getting a deal, saving money. And so that behavior change that I'm seeing, and obviously that's happened over time, but based on more digital technology that's evolved, I think it's become easier for consumers to really look for deals and look for incentives. But that part of it, I think just the degree to which that has become important is what's probably surprised me the most. And I think it's something that'll carry on well after the pandemic, and again, it's because technology has enabled it and it's because that's what consumers are looking to do, is really save money when they make a purchase.
Matt Steinmetz: Right. Yeah, and folks who are getting more accustomed to the deal seeking culture, right? So let's talk a little bit more about buy now, pay later and how that factors into driving conversions and long- term customer loyalty.
Jason Test: Yeah, sure. I mean, I think when you think about what's happening with buy now, pay later, and I mentioned this earlier, like the ability to buy something today, pay for it later over time without interest is very appealing for consumers. And we're seeing tremendous usage across our network when we launched our buy now, pay later solution. It's just caught on like wildfire. And the data and analytics show a significant uplift in conversion when you have a buy now, pay later option on your website, especially if you're featuring it kind of more upstream on product pages and things like that. When consumers are a little bit earlier in their shopping experience, but they see there's an option to do a buy now, pay later, that's really been very popular. And we see especially with gen Zers and millennials, 37% in our surveys have said that buy now, pay later is an appealing option simply because it gives them more control of their finances, and 39% said it makes budgeting easier. So those are some of the reasons why I think it's taking off, but even more so than the consumer benefits, I think the merchant benefits are very clear and they're very quantifiable.
Matt Steinmetz: So before we take a couple of audience questions, let's have a look at this session's three key takeaways. I know, Jason, you worked on these. Our team can show them now. Take us through these and then we'll do some questions.
Jason Test: Yeah, sure. I mean, first of all, it's now a digital first world, right? We talked about this massive digital shift and consumers are really leaning into digital first experiences, even when they're going to go to a physical store or a restaurant. Never before have I engaged in a behavior where I've got a local Mexican restaurant that I love called Lupe's and it's very busy and it's always crazy when you go there. So the first thing I do if I'm going to go there, sometimes I'll literally pull my car over on the road, open up the app and place my order so that when I show up, it's going to be ready and I can just pick it up, or even if I'm going to eat there, it'll be ready and I could eat there. So I just think this digital first behavior, even in physical experiences, is here to stay. And I think that's a key takeaway. The role of incentives and rewards we've talked at length about, just don't underestimate I think how important that is and how it really helps build trust with shoppers in helping reduce anxiety. I don't know that a lot of people think about rewards and discounts and deals in that light, but it really does have a psychological effect. And then the last thing is just I'm really excited to partner with brands and retailers with a lot of the new solutions that we're bringing to market that have great consumer value, but also have great value for our brand and retailer partners. We've got a full suite of solutions across our consumer platforms that help drive new customers, that help drive loyalty, that help drive conversion, and ultimately, sales lift. And we have a lot of analytics and a lot of data, a lot of shopper data obviously, and that's something that we can unlock on behalf of our partners. So those are some of the takeaways that I hope folks can take away from this discussion.
Matt Steinmetz: Really intrigued by some of the new features and services, Jason. Any sort of a timeline for the rollout?
Jason Test: Yeah. I mean, some of them have already been launched. And then later this year and early into next year, you're going to see some additional things launch. We're not doing a let's hold everything and then have a big reveal. We're unlocking features and unlocking solutions as we go, but buy now, pay later, Honey, a lot of the things I talked about with Venmo, they're already there. The PayPal shopping hub is going to be launching along with a full revamp of our PayPal app experience later this year, but I don't want to tip my hand on any dates and set expectations there.
Matt Steinmetz: Fair enough. Fair enough. All right. Great question here from Brian Buechner, who asks," What do you feel are the biggest barriers to entry for consumers who are hesitant to adopt digital wallets or change behavior to use touchless payments, QR code menus, et cetera? Is it lack of education? Resistance to change? What are you guys seeing as the one or two biggest hurdles to additional adoption there?"
Jason Test: I think it's a lack of education. And I think you nailed it, right? Lack of education, resistance to change as far as what's stopping people. Now, what happened during the pandemic is it was a forcing function, right? People literally had to figure this stuff out. And so they didn't have the luxury of just wanting to resist change because you couldn't go do physical brick and mortar purchases. You had to figure out online experiences. So I think what that's done is it's opened people's minds, it's created new habits, but it's also taught people that they don't need to be resistant to change. They can self- educate when things are a little bit harder to figure out. And I think it's sparked a little bit of curiosity when it comes to digital technologies. And so, yeah, I think that's what's been the reason that's kind of stopped us. When it comes to QR codes, they've been extremely popular in other areas of the world, which is why, and we've seen this before, we had a surge of QR code interest a couple of years ago and it kind of died down, but globally, QR codes are huge, and this time around, I think they're really starting to catch hold. And I'm sure you all see QR codes everywhere, and restaurant menus is one that's very common. And I think using a QR code to pay in store is going to start to really take off as well, certainly based on how rapidly we're building out our network and the fact that there's benefits for both the consumer and the retailer.
Matt Steinmetz: All right, let me sneak one more in here from Jacques inaudible. I think this question came in early, Jason, when you were talking about Honey. " How do you select your products when a Honey for good or good deal for good products? How do you guys work with merchants to highlight products and to make them more visible to consumers?"
Jason Test: Yeah, I mean, there's a couple of components to that, and it really depends on which experience we're talking about, but I'll just talk more generally speaking. A lot of it is driven by consumer data. So what do we see in our... Because we have a lot of consumer data that we're able to see what consumers are interested in. We're able to look at trends, we're able to predict what consumers are interested in, especially different cohorts of consumers. And so what we choose to feature, what we choose to showcase largely is driven by what we're seeing in the consumer data and what we think is going to be most important to consumers based on what's going on in the world, what time of year it is. Maybe it's seasonality or a particular holiday. So those are some of the decision points that go into that. And then obviously merchant partners that are really collaborating with us and wanting to lean into that Honey, we have probably over 10,000 merchants that we work very closely with and probably three or four times that where the Honey browser extension is engaged, but we really work pretty closely with a lot of merchants to feature their items that are newer items that consumers may not know about, or where there's a special discount or reward that's maybe more significant. Those are some of the other factors that we use.
Matt Steinmetz: All right, well, unfortunately, Jason, we are out of time, but I do want to thank you again for joining us today and sharing all of your perspective and insights. I learned a lot. I'm sure our audience did as well. So thank you.
Jason Test: Awesome. Thanks for having me, Matt. It was great.
Speaker 1: Thanks for listening to this episode of The Honey Buzzcast: eCommerce Industry Trends& Insights. To learn more about how Honey can help grow your business, reach out to honey- partner- support @ paypal. com, and be sure to follow us on Apple Music, Spotify, or wherever you listen to podcasts.
This week's episode is from Jason Test's session at AdWeek's virtual event: Future of Shopping. Jason, Vice President of Digital and In-Store Commerce at PayPal, shares insights into shopping trends throughout the pandemic. You'll get to hear how the pandemic put us on the fast track to a digital-first world and the new role of incentives and rewards programs post-pandemic.