Checkout Conversion

Fewer Clicks Rain More Dollars For Online Merchants

Apparel and accessory merchants are getting increasingly better at nailing online sales. The Q3 edition of the Checkout Conversion Index™ reveals the secret sauce of their success and takes a deep dive into the factors that continue to drive abandoned online shopping carts. While progress is being made, lost sales opportunities are still projected to total more than $159 billion.

Online shopping is a serious moneymaker for retailers. Shoppers in the United States are expected to spend nearly $400 billion this year, and when shoppers from around the world are considered, there is more than $2 trillion in sales to be collected by merchants, according to the Q3 PYMNTS Checkout Conversion Index.

But most merchants miss out on the chance to make even more money from mobile and online sales. According to index data, online retailers will lose more than $150 billion in potential sales due to frustration from the obstacles and friction customers encounter while trying to complete an online transaction.

Any lost sale is painful for merchants, and $150 billion accounts for a lot of abandoned shopping carts. However, there is a fix, and the secret to rescuing some of that lost revenue may lie in the way retailers collect payment for a purchase, according to Andy Barker, Magento’s head of payment strategy.

While many conversion strategies have found ways to get shoppers to add items to their digital shopping cart, more attention needs to be paid in order for those items to become completed transactions, Barker told PYMNTS in a recent interview.

"I think there's a longstanding conversion issue that exists, and it's centered around payments," Barker said. “There’s been a lot of focus and effort on the responsiveness of the design, of getting those products into the cart, but the true challenge is turning that cart into an actual order, and in many cases, that centers around the actual collection of payment.”

Getting To The Heart Of The Problem

Barker noted that, in his experience, one of the biggest challenges for retailers looking to increase their conversion rates has been a lack of understanding. Merchants often set up a payment procedure and forget about it, assuming that their chosen solution is the right one for all customers, he explained.

"What happens in the eCommerce environment, then, is that those customers get frustrated, and then, they tend just to drop off and go somewhere else and drastically impact conversion," he said. "In many cases, the merchant doesn't actually know what the problem was."

So, what is the problem, then? Consumers, trained by modern technology and convenience, expect the checkout process for mobile and online transactions to be as easy as paying for a purchase at a cash register in a brick-and-mortar location, according to Barker. Instead, they often face clunky, slow or confusing online checkout screens, causing them frustration.

That friction and confusion can be so discouraging to many customers that they’ll even abandon the purchase. Forty percent of online sales, depending on the merchant, are abandoned due to frustrations like these, according to index data.

Barker noted that retailers looking to make the checkout process easier for consumers do not have the benefit of face-to-face interaction with customers. So, to figure out what's causing frustration for their clients, they have to watch conversion and acceptance data carefully.

“The disparity in having that one-to-one interaction with humans prevents them from being able to immediately identify that there’s a problem and then immediately call to action to correct that problem,” he said. “If they’re not actively looking at approval, acceptance and conversion rates, based on the tenders that they’re using, in many cases, they can have a problem without actually fully knowing what the problem is.”

Fewer Clicks, Happier Customers

Once merchants have a better understanding of the frustrations being felt by consumers, one of the most important things they can do to ease friction is reducing the number of steps consumers must complete between picking out their items and completing the transaction, Barker noted.

"From my perspective, the optimum checkout flow is one that collects the necessary information from the consumer and lets them check out with the least amount of steps," he said. "Anytime you have a page or change, then there's an opportunity for a customer to either change their mind or for something else to go wrong."

That sentiment is supported by data from the index. According to PYMNTS’ research, the merchants with the best checkout conversion grades allow shoppers to move quickly and easily through the payment process.

Customers shopping at merchants with the highest scores took an average of just 128 seconds (just over two minutes) and 17 clicks to complete their purchase. Shoppers at retailers with just average checkout processes, however, spent 161 seconds and 22 clicks on the site.

Barker said that, while merchants are working to make checkout simpler, there is still a long way to go. The average index score on a scale did improve in our latest edition, but by less than 1 percent.

“You saw an evolution in the 2000s to move to these one-step checkout processes,” he said. Now, merchants should look to let customers pay while providing as little information as possible. “Only ask for the information that’s necessary for the transaction; that’s what the ideal transaction is.”

What’s Next?

As more money is spent via online and mobile retailers in the coming years, it is crucial for merchants to understand just how much they’re letting walk out the door due to customer frustrations. It’s $150 billion now, but with more commerce moving to digital channels, it could soon be more.

In order to keep that money from walking out the door, merchants need to understand what is frustrating their customers and what can be done to fix it. Barker said that he sees an opportunity for a company to come in and push what has become a stagnant market, as Apple did with the introduction of the iPhone, by giving customers what they really want.

“The market was focusing on the wrong things. The iPhone came out and disrupted that, and it forced the collective to start looking at the cellphone differently,” he said. “The industry needs to look at how we leverage the mobile device to be able to start getting payments to fade in the background.”

It appears that simplicity is the key for merchants looking to boost their conversion rates and keep customers happy.

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About The Index

The Checkout Conversion IndexTM (CCI), in collaboration with BlueSnap, measures the payments conversion problems that arise when consumers encounter friction in their digital shopper experience. The CCI is based on a team of “shoppers” shopping at over 750 U.S.-based eCommerce sites across 14 merchant categories that collectively drive more than 70 percent of all online retail spend. We identified more than 55 attributes and used them to score merchants on how easy (or hard) going from discovery to final payment was on their site.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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