Digital Wallets Drive D2C Brands’ Holiday Sales

In a bid to win consumers’ holiday spending, D2C brands are removing payment friction.

This, as data shows that online shoppers are increasingly seeking out brands that offer them quick, convenient transactions.

According to PYMNTS’ study, “Deal Or No Deal: The 2022 Holiday Shopping Report,” which draws from a census-balanced survey of more than 3,000 U.S. consumers in November about their holiday shopping plans, use of Apple Pay for online transactions grew 63% year over year, while the use of Google Pay and Venmo doubled.

Read the report: Deal Or No Deal: The 2022 Holiday Shopping Report

Offering consumers the payment methods they seek can help drive conversion.

“If you look at the checkout process today, it’s a big point of friction,” Karma Co-founder and CEO Jonathan Friedman told PYMNTS in an October interview. “You need to put in your input, you need to sign up, you need to add your credit or debit card, which is why [merchants] still experience around 75% shopping cart abandonment.”

Indeed, digital wallet acceptance can play a significant role in influencing consumers’ choices of where they shop. Research from PYMNTS’ August Mobile Wallet Adoption study found that, among consumers who checked out with a mobile wallet during the preceding 24 hours, 41% said that at least once in the last month they had chosen a specific merchant because they could use their preferred wallet to pay

Download your copy: Mobile Wallet Adoption

Moreover, the Deal or No Deal study found that the share of eCommerce shoppers using buy now, pay later (BNPL) for their holiday season purchases rose 24%. In an interview with PYMNTS, Maurice Contreras, CEO and founder of direct-to-consumer (D2C) brand Volcanica Coffee, spoke to the opportunity that this payment method presents.

“Delayed payments or spreading payments is a new area for us — we’re seeing some customers use that a little bit, so that’s a new trend,” Contreras said. “[It’s] really good for us, because we have some coffees that are over $100 per pound, [so it’s] helpful for somebody that can buy it and spread the payments out over a few months instead of one time.”

Yet other brands are holding off on BNPL. Nicolas Capuono, chief customer officer at intimates brand Adore Me, spoke to this decision in an interview with PYMNTS as part of our “Commerce Voices” series in collaboration with Checkout.com.

“I’m sure that this type of solution in two years will be very mainstream,” Capuono said. “We need to anticipate the development, the design and the experience because it will take time to make it seamless.”

Overall, offering consumers the payment methods they want is key, as smooth checkout experiences are among the differentiating factors that D2C brands have separating them from other eCommerce options.

In fact, data from “Building A Better Online Checkout Experience: The Key Features That Matter To Customers,” created in collaboration with Checkout.com, which draws from a survey of 2,030 U.S. consumers, shows only 11% of shoppers experienced a frustrating checkout process for their most recent purchase directly from a brand.

Get the study: Building A Better Online Checkout Experience: The Key Features That Matter To Customers

Meanwhile, 13% were frustrated with the checkout process when purchasing from a merchant’s app or website, 16% when purchasing from a digital marketplace and a whopping 38% when purchasing from a social media platform’s marketplace.

Indeed, consumers now expect to be able to pay for their retail purchases with saved payment information. The PYMNTS study “How We Pay Digitally: Stored Credentials Edition,” created in collaboration with Amazon Web Services (AWS), which drew from a survey of more than 2,100 U.S. consumers, found that two-thirds of those who had made online retail purchases in the prior 30 days had done so with stored credentials.

For more: How We Pay Digitally: Stored Credentials Edition