Hear that? It’s the sound of billions of dollars per quarter in sales that never materialize due to friction in the checkout process. Want to hear something better? Try this: for the first time in the four years since PYMNTS began tracking checkout conversion, eTailers report that they’ve lowered aggregate volume of sales at risk at checkout by $76 billion within a single year.
Did someone say happy holidays? Capping as it did the biggest holiday selling season since time began at nearly $880 billion, point-of-sale (POS) investments made by merchants paid off, contributing to stellar 2019 receipts. That means fewer cart abandoned, more engagement — and more revenue. eCommerce was about 15 percent of that $880 billion total, and it’s not a coincidence.
Merchants and marketplaces have been on a tear, upgrading checkout features, offering alternatives like buy now, pay later and stepping consumers through an easier process overall. PYMNTS has tracked the vicissitudes of paying online since 2016. Our February 2020 Checkout Conversion Index™ shows the strides made by merchants and their tech partners in enhancing the most important part of the shopping experience: when shoppers hit “buy.”
What Exactly Are “At Risk” Sales?
The thing about aggregate volume of sales at risk is that it has always risen along with actual sales, frustrating eCommerce players. The size of the problem can be illuminated thusly: retailers put close to $156 billion in sales at risk in Q2 2018 — a number that ballooned to a potential $174 billion in Q1 2019 — according to PYMNTS research. Though not all “at risk” sales are lost, metrics used to measure online checkout conversion factor in those variables.
Compare Q1’s $174 billion at risk to Q4’s $97.8 billion. Retail strategizing and technology moves brought down at-risk sales figures by almost 44 percent in just 12 months.
Insult “the Amazon effect” all you like, but as online sellers got tired of dizzying cart abandonment figures, they started acting … like Amazon. As the Index states, “This improvement in checkout conversion speaks to retailers’ responses to increasing market pressure from Amazon, as well as continuing pressure from consumers to get their digital acts together.”
Top Merchants Do It Right
Top performers provide all key features that online shoppers expect (loyalty rewards, free shipping, shopper profiles) which are provided by 100 percent of the top 30 merchants. Of the bottom 30, zero percent have rewards programs.
Desktop shoppers convert at about twice the rate of mobile shoppers, even though more browsing is done on mobile devices.
Guaranteed refunds became “table stakes” for high-converting eTailers.
Less confusion in design, with fewer brand logos on checkout pages, not more than seven or eight payment types accepted (eight is the magic number for top merchants), converted better.