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A customer clicking “pay” means the sale is pretty much a done deal, right? Not so fast. What if that final step isn’t actually a leap towards revenue? What if that transaction stumbles at a final hurdle? In this increasingly global landscape, the lack of payment method options is causing exactly that misstep for e-commerce players.
The general theory is that e-tailers expect checkout conversion rates greater than 80% once a consumer has selected the product or service, entered all their personal details, remained on the site, and then try and pay. In reality, nearly 50% of online shoppers say they will abandon a purchase at checkout if their preferred option is not available. This means that the actual conversion – and therefore revenue rate – is far less than 80%.
Amid a pandemic-induced shift to online transactions, consumers now have a stronger sense of what they want in terms of ease-of-use, customer experience, communications, site aesthetics, fulfilment, and everything in between. Consumers expect their e-commerce experience to have been tailored specifically for them.
Accessibility to local preferred payment methods (LPMs) form just one component of this, albeit an important one. E-tailers, as well as payment companies servicing e-tailers, need to ensure that all aspects impacting the customer experience are optimized, if they are to truly capitalise on the global e-commerce opportunity in front of them.
The conversion rate conundrum
Whilst it is clear that the user experience is having a direct impact on cart abandonment, it seems that this isn’t translating into action. According to statistics, the global average cart abandonment rates are between 60% and 80%. In fact, companies looking to sell to consumers from different regions across the globe can miss out on 77% of their potential business if they don’t accept LPMs, as more than three-quarters of all global e-commerce purchases are made using them.
At first glance, this is obviously a concerning rate of abandonment. But in the context of the wider e-commerce landscape, it’s potentially disastrous. When COVID-19 hit, e-commerce in the US alone experienced 10 years’ worth of growth in just three months. In Europe e-commerce revenues saw an increase of US$71bn year-on-year, leading to predictions that 2021 would see another revenue jump of 30%. That’s not to mention Asia, which now accounts for nearly 60% of the world’s retail sales online.
With 53% of people surveyed by UNCTAD saying that they intend to continue shopping online after the pandemic ends, this initial shift is now a long-term proposition and those initial lost conversions i.e. sales, reflect the possibility of a much longer-term problem – especially if your competitors have reacted quicker to these trends and demands.
How can businesses increase sales in any market?
To begin with, there needs to be an intention to understand and acknowledge the new consumer climate and what they expect in the post-pandemic world. From a global perspective, LPMs form a large component of this demand.
However, it is critical to keep your global offering locally relevant. For example - don’t offer UK preferred payment methods to Indian customers or US preferred payment methods to Asian customers. Ensure that an LPM is relevant for the market and customer base and where relevant, give them a couple of choices. More than that, showcase those accepted payment types. Old payment method logos could lead to mistrust. And on that same issue of ‘trust’, instilling confidence early on by informing customers how they can pay before they actually reach the payment page, will lead to increased conversion and basket sizes.
Additional tips for fostering a better consumer relationship and ensuring improved conversion rates include; aligning the language on the payment method page to the language your customer has been shopping in; providing small information bubbles for each payment method option so customers can make a more informed choice; and make sure to show your trading name on the payment method, as customers won’t necessarily be familiar with your legal name.
Plugging in and partnering, not going it alone
These small and simple gestures may seem insignificant, but they can make or break trust with a consumer. However, what is not simple, is the level of digital transformation required to bring these value-add propositions to the table. With ‘transformation’ being the key word.
Integrating – and then managing – local payment methods is costly, complex, and time-consuming – often taking as long as a year, and can cost more than $1 million to integrate a single LPM to an existing infrastructure.
Embedding the tips highlighted above requires a quality, multi-faceted infrastructure. Each LPM brings with it a unique funds flow, compounded by numerous operational, regulatory and legal complexities. That is why many brands are leveraging partnerships to expedite their speed to market and reduce costs versus building in-house.
By outsourcing a local payments infrastructure, businesses can integrate LPMs faster, which addresses the customer’s needs more rapidly hence increasing revenue, and could also provide a competitive advantage. Partnering with a dedicated provider of LPMs will also enable deeper and more expansive access to consumers in different markets; the option of the provider managing the entire funds flow for each LPM on behalf of the business tapping into it; and additional monitoring and optimisation services to get the best conversion rates for each LPM.
Businesses that leverage a local payments infrastructure can rapidly and cost-effectively tap into the global audience that awaits.
By putting this service into your basket, consumers are more likely to pay for what they’ve put in theirs.
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