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Partnering with fintechs and insurtechs can give retailers an upperhand, writes Richard Hankin,.

With the rise of Amazon and the popularity of online shopping, consumer expectations are evolving almost as quickly as items are promised to get shipped by.

To compete with these tech giants, traditional retailers need to look at how they can improve their online presence and retain consumer loyalty in a whole new landscape. And big tech players haven’t been blindsided by this opportunity either. They are ready and eager to step into the battle for customer loyalty.

Recently, Google’s parent company, Alphabet, was cleared to deliver commercial products by drone after successfully completing thousands of flights in Australia. The announcement signifies just how far big tech companies will go for customer satisfaction, while at the same time reducing traffic and emissions.

Key to online retailers’ future success lies in exploring new ways to maintain customer loyalty by exploring additional services outside their core products. Like Google and its drones, the current state of e-commerce demands retailers move outside of their comfort zone with new offerings and services. Alibaba-owned Lazada, for instance, has recently shared its plans to move deeper within the financial services space with loans and trade financing. As we’ll come to see, the next battle for customer experience (CX) and loyalty will unfold within the financial services and insurance spaces.

Partnerships that play to retailers’ strengths

Equipped with a breadth of customer data, retailers are in an opportunistic position to explore new partnerships and revenue streams underpinned by their close proximity to consumers and a strong understanding of their needs.

When it comes to product categories that lie beyond the scope of the retailer’s core business, a partnership can help bridge gaps and bring in additional revenue opportunities. There are a number of such partnerships retailers can explore, such as banking and financial services, which can help retailers stay one step ahead of their customers’ needs while driving economies of scale.

A Bain & Company report found that among respondents, 65 per cent of Amazon Prime members would consider a free online bank account offered by Amazon. Even 37 per cent of shoppers who don’t shop with Amazon would be willing to trial a bank account with the tech company.

A growing facet of financial services that cannot be ignored is insurance, and with the rise of insurtechs, insurance is becoming increasingly personalised and unbundled – meaning, insurance purchased from various insurers rather than a single provider. Integrating an insurance offering to an online retailer’s platform adds value and peace of mind to customers, which, in turn, adds to customer basket size and lifetime value.

Insurance at point-of-sale moves beyond extended warranties and guarantees that traditionally cover only manufacturer faults to provide bespoke policies and product protection against things like accidental damage, vandalism, and theft.

A global study commissioned by Cover Genius found that 30 per cent of consumers across Australia, the UK, and the US would be more likely to purchase more expensive items online if they were offered insurance at the point of sale.

Offering insurance, then, is a win-win situation: you provide customers with an even more personalised and trustworthy online shopping experience, which, in turn, can positively influence their purchase behaviour and ultimately is new ancillary revenue for retailers.

Partnerships with global insurtechs mean retailers can fast track integration into their ecosystems and offer customers a seamless, personalised and valuable shopping experience – regardless of the platform used for purchasing. It also helps to keep customers engaged and loyal within the retailer’s ecosystem and, with the option to provide auto-renewing policies and instant claims payments or the option to receive claims via store credit, creates more convenience for customers as well as additional revenue beyond the initial policy purchase.

These kinds of symbiotic partnerships with fintechs and insurtechs offer retailers the opportunity to evolve their product offerings by looking outside of their core products to add ancillary revenue streams.

Tech-driven innovation is an investment in your customer

Changing customer attitudes, growing risks and falling trust in traditional insurers and financial institutions mean retailers need to build stronger CX. And they need to incorporate tech alternatives to meet these needs.

Part of Amazon’s appeal for financial services is its perceived trustworthiness, which stems from keeping the customer at the centre from the company’s start as well as decades spent improving the customer experience with innovative technology.

UK online fashion retailer ASOS has also caught onto this. Its sales jumped up 32 per cent, an increase ASOS boss Nick Beighton thanks to advances in technology. In fact, that period alone the retailer had launched more than 300 tech initiatives.

It further argues the case that by investing in technology, you are keeping your business relevant in the eyes of customers. As time goes on, the bar for what shoppers consider an attractive, valuable shopping experience will only continue to get higher. Smart solutions, like insurance at the point-of-sale, based on innovative technology can help retailers position themselves for success in this evolving marketplace.

Becoming the everything store 

Retailers are often measured against Amazon. Many have followed its global rise from an online bookstore to the ‘everything store’ that combines consumer retail with cloud computing, FMCG, entertainment, data science, robotics and now healthcare. The company also recently led the $12-million investment in Indian digital insurance startup Acko last year.

In the last two decades, Amazon has become a global entity with synergies and economies of scale that make international conglomerates sigh with envy. Amazon is seemingly everywhere and involved in everything. And that’s what consumers are coming to expect.

They want brands to capitalise on their loyalty, to use their data transparently for their own benefit, to be offered tailored services and one-stop-shop experiences.

In the Amazon age, retailers must embrace new tech, new revenue streams and new ways of doing things to build trust with consumers. Retailers must always look for innovative offerings, such as insurance at POS, to enhance their CX and continue to stay relevant in the digital era where big tech has the upper hand – and the delivery drones.

By Richard Hankin, Head of Retail Partnerships at Cover Genius