Offering high-quality customer experiences and enhancing customer journeys are two topics that have been reoccurring retail themes for the best part of a decade, if not longer. 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 transaction process – to their detriment.
In fact, a new study by PPRO has found that 44% of UK consumers will abandon a purchase if their favourite payment method isn’t available. This increases to 51% for Millennials (those born 1980-1993), and is closely followed by Generation Z (those born 1994-2001) at 48% – arguably the two most active generations when it comes to online shopping.
The failure by retailers to meet consumer preferences during the payment process means that many customers are abandoning baskets at the very last hurdle, which could leave retailers suffering from declining conversion rates as a result. During a particularly turbulent and unpredictable time for the retail industry, the online competition is becoming increasingly fierce. Therefore, retailers simply cannot afford to lose out on sales at the checkout page.
According to a recent study by Baymard Institute, the average cart abandonment rate currently sits at 70%. Brands must recognise what’s causing consumers to leave at the point of transaction 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.
More than half of UK respondents would abandon a purchase if the checkout process was too complicated, whilst 37% would avoid using a merchant that required them to enter payment credentials every time. An additional 40% 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.
While the majority (91%) 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% of Millennials and 35% 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 to r 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% 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.
Before COVID-19 happened, analysts predicted that online shopping will more than double its share of the retail market in the next ten years. It might be even more now. This means the marketplace will only become more crowded with multiple brands offering similar products at similar prices. This is where a seamless customer journey – from start to finish – will enable brands to create and maintain a competitive edge.
Given the importance of buying methods and preferences to UK consumers, retailers must also offer a range of payment options at the online check out page – and provide customers with no reason to abandon their baskets.
In today’s highly competitive retail industry, high basket abandonment rates can seem like an inevitable part of business, but they don’t have to be.
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 and how big or small the ticket value. Those that do will see a positive impact on successful online transactions, and be best-placed to compete in the evolving digital retail market.