Perfecting Payments for Black Friday Profitability

  • Junaid Osman, Head of Product at PayU GPO

  • 06.11.2023 10:30 am
  • #payments #platform

What was formerly a cornerstone of the retail calendar is shaping up very differently this year. Black Friday has become a global retail event as a result of globalization and repeated, all-encompassing success. Over the course of its short history, Black Friday has seen international records breaking year on year. In 2022, Black Friday broke $9 billion in sales for the first time in the US, while in Colombia the total number of transactions grew by 40% to 642 million.

Yet in 2023, early forecasts point to a mixed picture. On the one hand, consumers have pulled back the purse strings across the year, and rising interest rates continue to diminish spending further. On the other, deals and discounts are likely to tempt even the most selective and value-focused consumers to spend. According to Salesforce, the most effective tactic to attract shoppers to a website in the first half of 2023 was sending them a discount code.

To add further complexity, merchants must remember that while the economic headwinds continue to blow strong, consumer expectations have evolved over the years. Demand for personalized shopping experiences, transparency, and convenience have grown, as has the demand for omnichannel experiences. It’s perhaps for this reason that cart abandonment has averaged as high as 77% at peak retail times.

As such, merchants across the world will have to prepare for a different kind of Black Friday this year. With lower spending but heightened consumer interest anticipated, merchants must find alternative ways to leverage the growth opportunities Black Friday offers. Sales performance could be adversely affected if they fail to remain innovative. It’s critical that nothing stands between customers and the ‘pay now’ button.

So how can this be achieved? Retailers have a wide arsenal of strategies at their disposal to enrich the shopping experience on Black Friday. From exclusive first-time discounts to innovative loyalty programmes, the date presents an opportunity for merchants to distinguish themselves in an ever-crowded marketplace. The importance of payments must also not be overlooked. And by this, I’m not just referring to the array of options offered, but the security, efficiency, and user-friendliness of the entire transaction.

Here are three payment tips that can help to drive success in 2023:

Meet the customer’s payment expectations

Payment habits have shifted significantly since the pandemic, but a number of merchants still fail to meet them. The use of Buy Now Pay Later (BNPL) in particular has rocketed as an alternative to credit; Black Friday saw BNPL orders rise by 78% in the US last year, while our internal data reveals BNPL saw a 255% increase in South Africa compared to 2021. Simply put, providing BNPL as a payment solution will not only help capture a competitive advantage, and fuel growth by influencing customer purchase decisions.

Optimise websites for mobile platforms

Rising smartphone ownership, coupled with increasing internet penetration across the world, has seen mobile commerce adopted en masse. For instance, by 2025 mobile commerce sales in Latin America are forecast to be near $107 billion, representing almost fivefold growth since 2019. This will have a huge impact on Black Friday. Across the Atlantic in South Africa, 53% of the Black Friday 2022 purchases made via PayU’s platforms originated from mobiles. It’s clear that merchants need to be fully equipped to leverage this trend.

To do so, all retailers must ensure that the mobile checkout is simplified as much as possible by minimizing the number of steps required. They should clearly highlight mobile-first payment options such as Apple Pay, and ensure webpages are responsive to smartphones. We all know how frustrating it can be when this last step is overlooked!

Ensure the payment gateway is optimized

Traffic is almost guaranteed to be significantly higher on Black Friday. In 2022, PayU GPO processed more than 780K transactions on Black Friday in Romania, equivalent to six times more transactions than a normal day. 

As a result, the payment gateway must offer fast and smooth transactions. Slow and unreliable payment can lead to customers abandoning their shopping almost immediately when presented with the problem - particularly in a mobile environment. Merchants will also need good approval rates as they are crucial in building customer trust, providing social proof, and reducing perceived risks, ultimately boosting sales and enhancing a retailer's reputation in a competitive marketplace. Merchants can sidestep the problem by adopting the latest technology and working with payment partners that offer them round-the-clock customer support to minimize downtime if anything does go wrong. In Poland, PayU GPO processed transactions with approval rates above 92% on Black Friday last year.

In 2023, Black Friday may not be as crucial as it once was. That said, there is still a significant opportunity for merchants to capitalize on heightened consumer interest – even if it is cautious. To maximize their chances of success, merchants must prepare by integrating a well-crafted payment system.

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