Payment Processing : Online Payment Systems Come of Age for American Eagle, Orvis

For merchandise sellers not rooted online, alternative payment programs such as PayPal and Bill Me Later once carried the stigma of being designed primarily for consumers with bad debt. But as representatives from two major integrated retailers, American Eagle Outfitters and Orvis, noted during a session at August's eTail Conference in Baltimore, that's no longer the case.

Online alternative payment programs haven't only overcome their stigmas, American Eagle and Orvis both found ways to integrate them into their back-end structures. What's more, they got buy-in from upper management. Here's how:

PayPal Purchase, Store Return
For American Eagle, the process started more than two years ago, according to Julie Katruska, director of finance for the AEO Direct division of American Eagle. "It required partnering with not just our direct team, but also our full American Eagle team, and talking about legacy systems with them," she said. "We figured out how to integrate these alternative payments into our whole back-end structure."

To get to this point, Katruska's unit worked with the store division and the company's IT people on how to implement a PayPal system for American Eagle. "It was getting a buy-in from corporate and IT, and making sure [we answered] any questions they had — such as how customers could make returns in stores," she said. "When we looked at the ROI, alternative payments being very customer-centric spoke to our executive team."

American Eagle also explored the following before implementing PayPal:

• consulted extensively with both the vendor and Forrester Research reports;
• asked customers for payment preferences;
• asked other retailers about the sales lifts they had upon implementing alternative payment programs, and how their implementations went; and
• put together a return on investment report.

One of the biggest challenges for American Eagle was accommodating customer returns in stores. "More people return [online purchases] in stores, because it's a lot easier," Katruska said. "I'd rather they do it in a store, too, because there's always a chance for an upsell in a store."

American Eagle has been able to build a system wherein online purchases made using PayPal are noted in companywide invoices that store cash registers can access. Individual stores can offer customers store credit or cash back for their online PayPal purchases, Katruska said.

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