Getting Back in Shape: Spending-wise
Posted by Marwan Forzley | Filed under CEO Post, Consumer Spending Index
Macro conditions are beginning to affect day-to-day consumer spending. For years, American consumers took on growing debt loads disproportionate to their incomes and savings. Innovest’s October 2008 report, Credit Cards at a Tipping Point, describes the mortgage market collapse as only one symptom of a larger problem and that credit cards will be next. Falling house prices, higher cost of living and unemployment rates are now exacerbating the financial health of the consumer and will result in a spike in charge-offs in 2009, as well as mounting risk for banks and issuers with heavy exposure to credit card lending.
The front end of this wave of credit erosion is being heralded by many retailers that offer their own credit cards to customers, such as Target (TGT.N: Quote, Profile, Research, Stock Buzz), Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), Lowe’s Companies Inc (LOW.N: Quote, Profile, Research, Stock Buzz), and Gap Inc (GPS.N: Quote, Profile, Research, Stock Buzz). Typically used as loyalty programs and promotional tools, these store-branded credit cards tend to have low approval barriers to entice users. Faced with defaults on a potentially massive scale, retailers are less equipped than banks to deal with the resulting financial burden. Target, for one, said that it is cracking down on late accounts and warns of possible lower-than-expected third quarter profits due to further credit loss. The Federal Reserve’s quarterly survey of bank loan officers released November 3rd stated that 20% of domestic banks, on net, reported having reduced credit limits on credit card accounts for even prime borrowers.
As a provider of a cash-based online payment option for retailers, we are seeing a shift away from credit usage as a direct result of the credit crunch. Some merchants are reporting a 10% increase in shopping cart drop-outs due to credit “sudden death” – the unpleasant discovery that credit is no longer available – a result of tightening lending standards as credit issuers scale back approval rates on new cards and reduce credit limits on existing accounts.
What is the shape of things to come for consumers? It is inevitable that heightened awareness of the struggling economy will influence spending behavior at large. We see evidence that consumers will move towards managed spending that gives them more control. Out of prudence and in some cases, simple necessity, online purchases will be made increasingly from available funds. Our quarterly Online Spending Index indicates that 37% of consumers have decreased usage of their credit cards over the last 3 months and 32% show preference to pay now options versus paying later.
The expansion of e-commerce over the past decade, offering previously unattainable efficiency and distribution, was a road paved with credit instruments. However, current economic conditions challenge the long-held practice of relying solely on credit and give rise to a new type of shopper, who spends more strategically. It’s about financial well-being and about tools that help consumers achieve a healthy financial lifestyle
Tags: approval rates, Consumer spending, credit cards, credit crunch, debt, e-commerce, financial health, innovest, merchants, online payment, online shopping, Online Spending, online spending index, shopper
eBillme Online Spending Index - Q4 08 Data
Posted by Samer | Filed under Consumer Spending Index
The impact of the credit crunch is expected to affect holiday shopping as projected consumer spending online remains steady at $100 - $250 on average. Index results for the fourth quarter show that the credit crunch is causing shoppers to reduce their credit card usage and impacting consumer access to credit resulting in a shift to cash alternatives. 31 percent of respondents indicated that they would purchase more online if they could better control their finances and pay with cash; an opportunity for online merchants to optimize checkout with cash alternatives.
Retailers: Get an in-depth look at the complete Spending Index by attending our next webinar
Thursday November 13, 1 pm EST
Register now: https://www2.gotomeeting.com/register/279533410
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Q4 Index
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Q3 Index
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| Looking forward over the next 90 days, how much do you believe you will spend online? Please include any online purchases such as gifts, airline tickets, or digital goods like music | ||||||||
| I do not plan to purchase anything online in the next 90 day |
10%
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9%
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| Less than $50 |
11%
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14%
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| $50 to less than $100 |
17%
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17%
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| $100 to less than $250 |
24%
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23%
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| $250 to less than $500 |
19%
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18%
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| $500 to less than $1,000 |
12%
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12%
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| $1,000 to less than $2,000 |
4%
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4%
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| More than $2,000 |
3%
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3%
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| Total |
100%
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100%
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Considering any online purchasing you expect to make, please select agree or disagree to each of the following: |
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Security and Shopping |
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| I want to use more payment options that protect me from online fraud |
77%
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77%
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| I would buy more online if I felt more protected against identity theft |
56%
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57%
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The Economy |
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| I am delaying purchases due to uncertainty in the economy |
48%
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48%
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| I would purchase more online if I could control my finances and pay using cash |
31%
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32%
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| I would purchase more online if I could pay using available funds through my bank’s bill pay web site |
29%
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28%
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| I am closer to my credit limit than I was a year ago |
34%
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| I used my credit card less often over the last 90 days in favor of non-credit payment options |
45%
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Shopping Online |
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| I am more likely to buy products online that I can research thoroughly |
83%
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| I have heard of “Cyber Monday” as the start of the holiday online shopping season |
41%
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| I plan to do most of my holiday shopping on “Cyber Monday” |
13%
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| I prefer to avoid shopping on “Black Friday” in favor of shopping online |
46%
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Compared to last year’s holiday season, how will this year be different for you?
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| My overall spending this holiday season will… | ||||||||
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| My overall spending online this holiday season will… | ||||||||
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| My price comparison shopping online this holiday season will… | ||||||||
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| My available credit this holiday season has… | ||||||||
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Tags: black friday, credit crunch, cyber monday, holiday shopping, online shopping, Online Spending, online spending index
Online Shopping Index
Posted by Samer | Filed under Consumer Spending Index
Last Quarter we released the first set of data for the eBillme Online Shopping Index.
Some of the data was reviewed on a webinar conducted by Bruce Cundiff from Javelin Research. The webinar can be viewed on our website at www.eBillme.com under the resources section.
Q4 is upon us and we will be releasing the next set of data shortly. As you know, we ask the same questions every quarter to try to measure consumer spending sentiment over the next 90 days. The next set of data will cover spending sentiment until Dec 31, 08.
In addition We also ask seasonal questions, that we believe are relevant to online retailers. In Q3 we asked consumers to indicate how their spending patterns will be for the Back to School season. This Quarter, we are asking consumers to tell us about their holiday shopping intentions. Some of the topics we will gather data on are:
Cyber Monday
Black Friday
The Economy
Spending compared to last year
Online/Offline preference
Charitable Donations
Price Comparison
We are looking forward to bring this data to the online merchant community.
Tags: black friday, Bruce Cundiff, charitable donations, charity, consumer sentiment, Consumer spending, cyber monday, holiday season, holiday shopping, holiday spending, online consumer spending, online shopping, Online Shopping Index, Online Spending, price comparision, shopping index
Optimizing the cart with cash alternatives
Posted by Marwan Forzley | Filed under CEO Post
What a difference a few weeks make since we announced our 12 M financing round. No shortage of bad news in the economy, from financial institutions and worsening reports on the state of consumer confidence. By now, we all know that the market conditions are tough and the credit crunch is impacting consumers. Perhaps that despite all the noise in the market, there is one thing that is clear – Access to credit is going to be a lot tougher to get and that obviously will impact the bottom line.
To react to this new reality, given the change in landscape a new set of strategies and tools are required to help recover losses and adapt to the changing dynamics of customer needs.
The future of payments is about enabling the customer to “pay now”. There is clear shift in sentiment and attitude towards secure cash payments. With limited access to credit, people are looking for ways to buy products and pay from available funds. More important they need a way to pay now so that they sleep better at night and feel comfortable about the purchases they are making. Enabling this functionality at the checkout is an immediate tool that is available today that will enable your business to meet the needs of your customers.
I have traveled to many trade shows recently and listened to merchants discussing key strategies for growth. One constant strategy discussion is to expand to international markets, especially Europe, on the assumption that they are higher growth markets. While that is true, it is important to note that most international markets are actually cash societies. In addition to looking at international growth strategies, adding a secure, cash payment option that enables customers to pay now is an opportunity that addresses the needs of large segments of consumers that exist today in the US market.
Tags: cash alternaties, checkout, credit crunch, payment alternatives
$12 Million Round completed
Posted by Samer | Filed under Press Releases
eBillme, the only cash based alternative payment option that leverages online banking for eCommerce checkouts, online and in the call center, announced that the company has raised $12 million in a recently completed round of financing. The financing was led by the multibillion-dollar, global venture capital firm, Canaan Partners, as well as existing investor Celtic House Venture Partners, investors in software and Internet services companies. Maha Ibrahim, General Partner at Canaan Partners, and Pierre-André Meunier, P.Eng., Partner at Celtic House, will join eBillme’s Board of Directors.
“This recent financing represents a significant milestone for eBillme and comes at a time of exciting company growth,” says Marwan Forzley, President and CEO of eBillme. “We will use this funding to further our merchant acquisitions and our expansion into new markets and consumer segments. Canaan Partners is highly regarded in the investment industry and we are excited to work with them to drive even greater growth for our company.”
eBillme transactions occur securely, bank to bank, with no personal or financial information required or transmitted over the Internet. Because shoppers pay directly from their online bank account, they don’t release any financial information online. This helps consumers manage their spending and debt, while better safeguarding themselves from identity theft and fraud risks. eBillme’s buyer protection program takes security a step further. Provided at no cost to shoppers and retailers, the buyer protection features have the same or a better level of buyer protection than premium credit cards. Protection features include a return guarantee, price guarantee, in-transit protection, and fraud protection. Consumers can shop with confidence knowing their eBillme transaction is guaranteed and protected.
“eBillme’s technology addresses a growing demand for truly secure, online payment methods that aren’t credit based,” said Maha Ibrahim of Canaan Partners.
“eBillme allows consumers to shop online with confidence that each transaction is protected, and it gives merchants an opportunity to capture new sales. As the alternative payments industry continues to grow, we are excited to help eBillme continue their market leadership and expand their payment offering across multiple channels.”
Tags: alternative payments, checkout, ebillme, ecommerce, ecommerce checkout, online banking, online shopping
eBillme™ Announces Online Retail Spending Index
Posted by Samer | Filed under Uncategorized
Consumers plan to spend an average of $100-$250 online over the next 90 days according to the eBillme Online Spending Index, a quarterly survey examining consumer online spending released today by eBillme, the payment option that brings online banking to the checkout allowing consumers to pay securely online or in the call center with cash.
The eBillme Online Spending Index, conducted by Javelin Strategy and Research, and to be released quarterly by eBillme, polled 1,600 consumers to measure projected online spending for the quarter and the influencing factors including the economy, available payment options, security, and financial control. This quarter, the Index also polled consumers about their online spending for back-to-school shopping.
According to the Online Spending Index, the economy and credit crunch are having an impact on consumer buying this quarter, especially when it comes to female shoppers.
- 48% of consumers are delaying purchases due to uncertainty in the economy
- 32% of consumers are willing to spend more if they could purchase online with cash revealing a general shift towards cash preferences
- Female consumers indicated a 5% decrease in credit card sentiment further indicating a shift towards cash
“Consumer spending online is an indicator for consumer preferences, attitudes, and offline trends in society,” says Marwan Forzley, President and CEO of eBillme. “The Index results show a significant shift in consumer behavior, especially among female consumers. We have noticed that as compared to men, a higher percentage of women are concerned with fraud, identity theft and the economy. In fact, 38% of women said that they would purchase more online if they could control their finances and pay using cash.”
This quarter’s Index also surveyed respondents about their projected back-to-school spending. 18% of consumers plan to shop for back-to-school purchases online with females and 18-24 year olds representing the majority.
“We thought it was most important to bring this critical information to the retail industry and give online retailers a projection of consumer spending for the upcoming quarter and an opportunity to gain critical insight on customer behavior,” says Forzley. “We look forward to releasing this data quarterly to provide a snapshot of consumer online shopping activity and track the various trends that will be uncovered.”
eBillme and Javelin Strategy and Research will be presenting a Webinar to discuss the research findings and consumer trends from the data. The Webinar will be presented on September 24th at 1PM EST. To register, please visit http://tinyurl.com/66kau6.
About the Index
The Index is based on data collected from an online consumer deployed in August 2008, with a sample size of 1608 respondents. The survey targeted US adults (age 18 +) and was based on representative proportions of gender, ethnicity and income as compared to the overall US online population. Overall margin of sampling error is ±4.4 percentage points at the 95% confidence level.
The next Index will be released in November, 2008. Data from the index will be posted on the eBillme website,
Tags: Credit Card Spending, ebillme, online banking, online bill pay, Online Spending, online spending index, Pay cash, Pay now