As consumer demands continue to grow, offering high-quality ecommerce experiences and enhancing the customer journey has never been more important for attracting and retaining online shoppers. However, regardless of consumers’ calls for personalised and easy-to-navigate online stores, retailers are failing to address their customers’ fundamental demands when it comes to the final stages of the transaction process. A new study by PPRO reveals that 44 per cent of UK consumers will abandon a purchase if their favourite payment method isn’t available. In fact, this increases to 51 per cent for Millennials (those born 1980-1993), closely followed by Generation Z (those born 1994-2001) at 48 per cent – arguably the two most active generations when it comes to online shopping.
During a particularly turbulent and unpredictable time for the retail industry, online competition has become increasingly fierce. Therefore, retailers simply cannot afford to lose out on sales at the checkout page. Whilst consumers clearly value the availability of preferred payment methods; this essential requirement is often overlooked by retailers, leading them to lose a sale at the very last hurdle – a common cause for the declining conversion rates.
Retailers need to realise the importance of enabling their customers to make a purchase with their preferred payment methods. Otherwise, retailers run the risk of not only missing out on that single transaction, but also losing a potentially loyal customer. In the current client, every penny counts more than ever.
Why are online shoppers abandoning their baskets?
According to a recent study by Baymard Institute, the average cart abandonment rate currently sits at 70 per cent. Brands must recognise what’s causing consumers to leave at the point of payment to address this worryingly high statistic, and this starts with looking at what shoppers value, need and expect in a customer journey.
Consumers demand speed and convenience when making purchases online. Many retailers invest heavily in a website to ensure it is easy to navigate, streamlined and built with the customer in mind, to keep up with competitors – but this investment will be made in vain if the checkout and payment processes do not follow in the same nature.
The need for speed and convenience has been exacerbated by the so-called ‘Amazon Effect’ which has led consumers to demand instant gratification and set increasingly high expectations for one-click shopping online. As a result, long-winded, manual processes simply will not do. Over half of UK respondents would abandon a purchase if the checkout process was too complicated, whilst 37 per cent would avoid using a merchant that required them to enter payment credentials every time. An additional 40 per cent of UK consumers prefer to use a merchant that they already have their payment credentials saved. Together, these figures underline the urgent need for retailers to enable a fast and seamless transaction experience, with appropriate payment methods and preferences.
Offering alternative payment methods
While the majority (91 per cent) of UK consumers are confident using, or have previously used, debit and credit cards for online purchases, there is also a growing number of consumers turning to alternative payment methods – specifically 42 per cent of Millennials and 35 per cent of Generation Z. Payments are certainly not a one-size-fits-all approach, and with over 450 significant local payment methods in use across the globe, it is no longer adequate for retailers to simply offer only credit or debit card payments tor UK consumers.
From an increasing use of PayPal through to prepaid cards, mobile wallets (Apple and Google Pay), Pay Later products such as Klarna and Clear Pay, or new bank transfer products like PayByBankApp in the UK, retailers must reflect this change in buying behaviour and ensure a broad range of payment options are offered at the online checkout. With global mobile wallet spending set to balloon to nearly $14 trillion USD by 2022, those that don’t risk excluding a significant proportion of consumers – and losing out on market share as a result.
Although speed is essential for online payments, familiarity with a payment method is equally as important. Customers build up a certain element of trust when adopting a preferred payment option, with as many as 23 per cent of UK consumers claiming they never adopt a new method. This indicates that whilst brands should seek to embrace and include new payment methods; they should keep a range of options available – so as not to discourage customers from clicking the final ‘buy’ button.
Shaping the future of online customer experiences
Before Covid-19, analysts predicted that online shopping will more than double its share of the retail market in the next ten years – this stat is likely to be even higher now. The growth in online sales means the retail marketplace will only become more crowded with multiple brands offering similar products at similar prices. Those who prevail and maintain a competitive edge will be the brands that provide a seamless customer journey – from start to finish.
Given the importance of variety when it comes to payment methods and preferences to UK consumers, retailers must offer a range of payment options at the online check out page that encompasses both traditional and newer alternative methods. By acknowledging consumer payment needs, customers will have no reason to abandon their baskets at the final stages of completing a transaction.
Whilst high basket abandonment rates may seem like an inevitable part of business in today’s highly competitive retail industry; it certainly doesn’t have to be. The negative impact of conversion rates can have a detrimental effect on the success of a business, no matter the size, especially within an already turbulent and uncertain marketplace. There are, however, clear and actionable steps online brands can take to address the issue, simply by being aware of the payment needs of today’s consumer.
Online retailers can gain and maintain loyal customers by having checkout options that bring simplicity, convenience and speed to every transaction - no matter who the customer is, no matter the ticket value and no matter how the customer chooses to pay. Those who acknowledge this reality will be best-placed to compete in the evolving digital retail market.
James Booth, VP Head of Partnerships, EMEA, PPRO