PayPal's NYC pop-up store could be a smart strategy

Oct. 10, 2011 | by James Wester

Last week several outlets reported on a PayPal pop-up store appearing at 174 Hudson Street in the New York City Tribeca neighborhood. According to the reports, the store is intended to showcase PayPal's new in-store payment products so merchants can see them in a more realistic setting. 

Monday on its corporate blog, PayPal confirmed the reports and officially unveiled the new store.

"We’re excited to officially announce PayPal’s Shopping Showcase, a special invitation-only installation where we’re giving a behind-the-scenes look at our newest products," said PayPal's Senior Director of Emerging Opportunities Carey Kolaja.

In the post, the company discussed the strategy behind opening the temporary location in New York City.

"(W)e’re setting up shop to demonstrate how PayPal really is the future of shopping," Kolaja said.

Kolaja explained that consumers have changed the way they shop and that retailers must change too.

"But while so much of current thinking is focused just on the future of 'checkout,' here at PayPal we’re creating a better shopping experience, from start to finish, no matter what’s being bought, where it’s being sold, or how it’s being paid for," Kolaja said.

The pop-up store builds on the "sneak peaks" PayPal gave of its mobile and offline strategies last month, Kolaja explained. The outlet will be about expanding on that vision and showing merchants and select members of the media PayPal's "complete set of solutions" that include a mobile digital wallet and point of sale solution.

Initial reports said the store is supposed to be open for approximately 3 months, but Kolaja's post did not specify how long the location will be open. A spokeswoman for PayPal said the company isn't providing any details beyond what is the in blog post at the moment.

A savvy offline strategy for an online payment company

For retail consultant Mike Wittenstein, an authority on customer experience and design, the pop up location is a good idea for PayPal, one that will give them a chance to explain how they actually plan to connect their online expertise to the offline retail world.

"This is a fabulous idea for (PayPal)," Wittenstein said. "Pop-up stores are a proven model that work and they work well."

He said that since PayPal hasn't been viewed as an offline payment option, introducing it to merchants in a setting where they can get a feel for the new products, and see how to make it easy to introduce the products to their customers, is a big opportunity for PayPal.

"Bringing [PayPal] out in the open is important if it shows they can be added seamlessly, smoothly and quickly," Wittenstein said. He added that merchants will eventually have to be able to describe a product they've only just started using to consumers, who also don't know PayPal in a retail setting.

Wittenstein explained that a pop-up location for PayPal will help to reduce merchants' fear of a new payment method, improve usability and let merchants see where the benefit is for them.

"If [PayPal] does it right they will show a clear picture for retailers to see how this works," Wittenstein said.

As for PayPal opening a merchant showcase during the holiday season, a time when most retailers have their minds on other issues besides seeing new technology, Wittenstein said the timing could have been better but it might prove to be a very smart strategy.

"The timing for this would have been better four months ago," Wittenstein said, "but the best time is always right away." And Wittenstein said that by opening the location now, and working out how to present the solutions over the next few months, the store could be ready to shine for the National Retail Federation show in New York City in January.

The NRF "Big Show" is the annual retail conference where merchants from around the world descend on New York City to see new technologies after the rush of the holiday season has passed. 

"It would be a terrible waste not to do this (project) for the NRF," Wittenstein said.

Wittenstein also said that the success of PayPal in the offline world could have bigger implications for payments in general.

"PayPal is the first electronic payment method that can be adopted," Wittenstein said, explaining that as opposed to credit or debit cards, which are provided to consumers through issuers, the decision to participate in PayPal is up to consumers to opt-in. 

That sentiment echoes the message PayPal is delivering as well. In her blog post, Kolaja said PayPal's approach to the offline world is one premised on making payments more about consumer and retailer convenience.

"Keeping up with technology is hard, not just for retailers, but also for the range of customers that they serve," Kolaja said. "So, without mandating any technology upgrades or favoring one solution over another, we’re making the connection between merchants and consumers more convenient, more personal and more relevant."

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Topics: Mobile Payments , Payments , POS , Specialty Stores , Technology

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