PayPal CEO Dan Schulman Predicts Death of Retail Checkout Lines

Mobile is changing consumer behavior. We already know from various studies that show a transition of eCommerce from desktop to mobile.

And when it comes to eCommerce, mobile may just be one technology that is displacing shopping on a laptop or desktop computer.

Voice commerce is just scratching the surface of what may transition into a whole new world of IoT devices submerging the consumer into a new multidimensional shopping experiences.

But even mobile is still in its infancy as it is making significant changes to shopping that goes well beyond basic eCommerce.

At a recent talk at the New York Economic Club, PayPal CEO Dan Schulman said that mobile is fundamentally redefining the retail industry.

The line between an online and offline transaction is starting to blur significantly. To illustrate this point, Schulman provided this scenario:

“If you order a Subway sandwich on your mobile phone, customize it, you pay for it there, and then you go into the store, skip the line, pick it up, maybe tap your phone to pick up the rewards points or whatever it might be, was that an online transaction or an offline transaction? It was both.”

The old way to separate offline and online purchases are being broken down by mobile apps on smartphones from grocery to clothing, from food to travel, in virtually every retail segment.

Omnichannel, a seamless approach to shopping across sales channels, is becoming the future and those retailers that do not adapt quickly, will just go away.

“You’re already seeing one store after another close. We’re way over-capacitized in terms of physical retail now. One-third of the malls here in the U.S. are dead or dying already. And I could read you a list of almost a who’s who that are closing stores after another.”

In Schulman’s view, it is not retail that is dying. But the way retail is transacted is dying with people shifting shopping behavior.

Checkout Lines Are a “Vestigial Organ of Yesterday”

Go east to China and modern internet connected retail stores no longer have shopping carts or checkout lines.

Last year we highlighted Alibaba Group’s vision of grocery shopping with its Hema Supermarket that depends on the mobile app for in-store shopping.

Everything from product information to checking out is done on the app while the shopper is picking up items. The mobile app replaces product posters and even extensive product labeling and can offer anything from nutritional information to meal planning.

In the Hema Supermarket scenario, there is still a physical shopping basket or bag, but that could disappear in the future as well with more automation or delivery options.

As Schulman pointed out:

“Those retail stores in China now. It’s almost like a Hollywood set. There’s what’s there and behind it is the warehousing. It’s like bags moving around. You order it and it’s shipped to your house within 30 minutes.”

He further stated that in China, consumers are using WeChat Pay and AliPay so much they are often opening those apps 30 to 40 times per day.

In comparison, he said the average PayPal user is opening the mobile app about 30 to 40 times per year. That is how much old world retail is lagging behind modern retail as seen in China.

He also pointed to Amazon and its test of the Amazon Go store that is effectively a U.S. “Convenience Store” version of modern retail in China.

Amazon Go has no checkout lines as shoppers enter the store with the mobile app, pick the items they want, and just walk out with a receipt on their phone.

Schulman expects that mobile will change how consumers will shop. And as more such automated retail stores comes online, consumers will migrate to those stores. This shift is something the old world retailer has to embrace.

“I think the best payment apps will transcend just payment itself. It will tie into all of your other activities,” Schulman said.

Of course, as the CEO of PayPal, he believes that PayPal is on its way to becoming the App that will help change retail in North America and Europe and blur the lines between an offline and online transaction.

It is easy for emerging markets to adapt to new technologies. But the mature retail markets need to completely rethink their strategy moving forward or face extinction.

What are your thoughts on mobile may change consumer behavior in shopping? Head over to our Facebook Discussion Group or use the comments section below.


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