EBay pushes PayPal in its new scheme to bridge digital and retail shopping

EBay and fashion label Rebecca Minkoff have brought to life the enviable computerized closet from Clueless — only this time you can make over your closet from your phone.

This morning, eBay debuted a new type of dressing room at the designer’s Greene Street store in New York’s Soho. The dressing room features a computerized mirror display, which in itself is pretty cool. But what may prove more interesting is how eBay is using the display to push mobile payment platform PayPal.

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Minkoff’s smart dressing room works well. In a demo, the smart room was able to recognize the shirt I brought in, recommend clothes to pair with it, and send instructions to a sales clerk — if I needed another size or color, for example. At the end of my session, the mirror gave me the option to check out right from my stall.

The only form of mobile payment the smart dressing room accepts is PayPal. Those who have the PayPal app on their phone can check in when they enter the store, so when they’re ready to pay, they just hit a button on the mirror display. Then a salesperson comes to the door, offers to pack up the goods, and sends the customer on her way.

For those without PayPal, sales clerks have a tablet point of sale enabled with a credit card reader.

I didn’t get a chance to make a purchase with PayPal’s app, so I can’t say whether it is as seamless as eBay’s PR team says it is (I only attended a demo, and the store won’t be payment-ready until Saturday when it officially opens). However, if it does provide that kind of frictionless payment experience for customers, it could help PayPal better access the physical retail market — a market ten times the size of the e-commerce space, according to Healey Cypher, head of retail innovation at eBay.

That’s a big opportunity, but not an easy one to tackle. Smart dressing rooms are not new, but they are difficult to get right. Prada spent millions digitizing its stores in the early 2000s, and Macy’s recently announced the rollout of smart dressing rooms in five of its stores. For Macy’s, the smart dressing room experience is as much about getting consumers the products that they need quickly as it is about making the check-out process frictionless. For that, Macy’s has linked up with Apple Pay.

Apple Pay is a scary prospect for PayPal, which, though its desktop and mobile payments platform has been around for far longer, doesn’t have nearly the user base that Apple’s iTunes has. Still, that doesn’t mean that PayPal is dead in the water.

There’s real potential for mobile payment adoption in retail, especially in apparel. Cypher says that when consumers try clothes on in fitting rooms, 70 percent of the time that leads to a sale, “So what we’re trying to do is get people in the fitting room,” says Cypher.

The time to tap into that market is now. Mobile payments may be fast catching on. Not even a month into the release of Apple Pay, nearly one percent of transactions at Whole Foods are made with Apple’s new platform. PayPal will need to move fast to make its mobile payments system equally relevant.

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EBay and PayPal are soon to be separate companies, so it’s possible that eBay’s smart dressing mirror will branch out to accept other forms of mobile payment. For the moment, however, PayPal is the only mobile payment system Rebecca Minkoff will be accepting, and that may hold true for the other companies using eBay’s smart display.

At the very least, eBay is looking to expand the use of its innovative display. Rob Veres, senior director of innovation at eBay, says the company is focusing on other partnerships for its digital display and will be rolling out new products in the coming months. Right now they’re working with Stanford Shopping Center on an updated digital directory that will not only guide customers to the stores they’re looking for, but push information about sales and discounts. Ultimately, he says, eBay will be looking to create a more personalized shopping experience with these directories.

“It will recognize you as you approach and … recommend stores and sales,” says Veres.

If eBay can really get consumers to interact with its digital displays, all the while pushing PayPal as its preferred method of payment, there’s hope that the mobile payment app will see some meaningful traction. Neither smart shopping nor mobile payments is an easy win, though, and the company has a lot of ground to cover in terms of user base. Still, these new digital displays are certainly an interesting play.

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