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EcommerceBytes-NewsFlash, Number 2834 - June 26, 2012 - ISSN 1539-5065    1 of 4

A Field Trip to The Home Depot to Test PayPal Point of Sale

By Ina Steiner
June 26, 2012

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A Wall Street analyst decided to do some homework in order to go beyond the hype of PayPal's Point of Sale retail system. Citi's Mark Mahaney walked away from the field trip, conducted in March, with a mixed view of PayPal's in-store opportunity.

Mahaney's team visited 11 Home Depot stores in the San Francisco Bay Area to test the PayPal Store Checkout experience - not an exhaustive, scientific study, he explains, "but a useful gut-check."

He said there was low adoption and low awareness of PayPal's in-store checkout option among shoppers. Cashiers at two of the 11 stores indicated said they had come across a "handful of people" checking out with PayPal, while the rest of the cashiers said Citi analysts were among the first consumers using PayPal.

In addition, Home Depot associates, while themselves well trained, indicated very few customers were aware about the back-end registration and setup that needed to be completed prior to using PayPalís in-store checkout. (Before using PayPal at The Home Depot stores, customers must activate Store Checkout in their PayPal account. There's no charge to consumers for using PayPal Store Checkout, which is available to anyone with a Personal or Premier PayPal account.)

PayPal must compete with other options on the self-checkout consoles. Mahaney said PayPal is more prominently visible as an option at the cashier-assisted checkout terminals (one of two buttons on the screen), while PayPal appears as one out of the nine icons on self-checkout consoles. "Hard to see PayPal gaining a lot of traction in a sea of nine," he wrote.

Mahaney called the checkout process "intuitive," but wrote in his report, "we felt that punching in 18 numbers (10 digits for the telephone number followed by up to 8 numbers for the PIN) would likely be a tad cumbersome for many consumers." (Note that customers can also choose to use the PayPal payment card, a store-only spending card linked directly to their PayPal account.)

His conclusion? "All in, we walked away with mixed views on PayPal's in-store offering. PayPal has a clear TAM expansion potential with this offering, but we are still unclear about this productís core consumer use-case & incremental value proposition."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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