We needn’t recap the worst of 2020 again. Suffice to say it was bad.
Commerce waits for nothing and no one, however, and even a global pandemic didn’t stop people from consuming. To paraphrase the wisdom of “Jurassic Park” — retail finds a way.
That’s confirmed in PYMNTS’ Checkout Conversion Index for January 2021. “The lone bright spot for retailers in 2020 was the steady flow of customers through digital checkouts: eCommerce revenues were up by 49 percent from Oct. 11 through Dec. 24 over the same period in 2019, according to Mastercard,” the latest quarterly Index states.
Life-saver though it is, eCommerce is also the way of the world now. That means consumers are moving at their usual speed: one step ahead of brands. Not great, but the gap is closing.
“Savvy eCommerce sellers knew that digital channels required them to offer efficient and intuitive checkout processes — along with consumer-expected benefits like free shipping — to remain competitive in the eyes of consumers,” per the Index.
That means upgrades and enhancements are necessary to compete. The January 2021 Checkout Conversion Index delves into the numbers, offering instructive insights to increase conversions.
Modest and Meaningful Gains
In analyzing responses, PYMNTS researchers found only a slight rise in Index scores from the comparable period in 2019. But viewed against the COVID event, e-tailers scored a win.
Noting that the overall 2.2 percent score increase seen “is less than the 2.8 percent uptick we observed in Q4 2019,” the Index states that “it should be viewed in context of the pandemic’s impact on the industry. Fiscal and human resources were in short supply when retail revenues shrank substantially in 2020, and retailers’ capacity to add or improve services was also severely limited. The multiple checkout innovation obstacles retailers faced mean that the lift in our Index results, although moderate, may indicate marketplace resilience.”
A more compelling story still is told by stats from the bottom-performing retailers in the Index, who brought the digital thunder in 2020 and far outpaced others in their upgrade initiatives.
Per the January Index, “the lowest-performing retailers in Q4 2020 increased their adoption of free shipping and digital wallets, leading to a 5.5 percent increase in their performance during the quarter. Quick-start software-as-a-service (SaaS) eCommerce tools, such as PayPal, Shopify and Square, gave merchants the option of implementing checkout improvements quickly without the burden of building custom sales solutions.”
Getting Features Right
Success (or lack thereof) is now coming down to feature sets, and PYMNTS’ January Checkout Conversion Index has the data showing which features have legs.
While mobile wallet adoption is up across the board, usage remains relatively low. Making a bigger splash are features that speed, streamline and add value to online transactions.
“Free shipping adoption among the bottom 30 retailers increased by about 17 percentage points over Q4 2019, helping enhance the overall checkout performance,” per the new Index.
“This is more than the ‘Amazon effect,’ as even small sellers have begun to see high-threshold shipping as a friction rather than a fee that consumers are willing to tolerate. Consumers now expect their shipping to be free when spending more than the average threshold for big-box retailers — about $40.”
Another important finding in the latest quarterly Index: the power of installment payments.
“Platforms that allow for buy now, pay later plans experienced a boon during the 2020 holiday season, with basket sizes increasing by as much as 30 percent for one platform. These payment options at checkout make it easier for consumers to buy more and encourage longer browsing times,” according to the Index, helping to explain why gainers triumphed over COVID chaos.
“The 2020 consumer was value-driven, choosing to shop with eCommerce retailers that delivered on the brand promises of the sector as a whole — efficiency, ease of use, flexible payment options and affordable (or free) shipping — rather than the capabilities of specific retailers,” the Index states. “Retailers with Amazon-like abilities to streamline online ordering earned increased revenue during the pandemic, while merchants — even popular ones — unable to keep pace with audience demand and expectations did not.”
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