Payment optimization is a complex technical matter on the invisible back end, but for the consumer, it comes down to being met with a frictionless and familiar payment experience.
This is often the deciding factor for whether consumers complete purchasing the items they’ve accumulated in their online carts or simply abandon them. Such is the criticality of the matter.
“Once you get a customer to the point where they have items in their cart and they’re ready to buy, you want to make every step in that process not only obvious, so they know what is required from step one to the point where they complete the checkout, but you also want to make sure that the payment options they have fit the way they want to spend their money,” Carlisha Robinson, chief product officer at Overstock.com, told PYMNTS as part of the Nuvei PYMNTS Merchant Series on payments as a revenue accelerator.
Data shows where interest in payment choice and optimization is concentrated. The study “New Ways To Pay: Aligning Consumer And Merchant Payment Preferences,” a PYMNTS and Nuvei collaboration, found that those earning over $100,000 used 3.8 payment methods in the prior 30 days, while those with annual incomes between $50,000 and $100,000 used 3.5 payment methods. Consumers earning under $50,000 annually used 2.8 payment methods.
It supports the notion, as Robinson said, that “from the business perspective there are not too many ways for a customer to spend money. What you want to do is optimize those ways to match where they’re shopping from.”
Robinson said payments platforms and online checkouts need device detection capabilities to do this well, noting that “you don’t offer a PayPal button if they’re not on a mobile phone” to illustrate the importance of pairing consumers with the right methods at key moments.
Get the study: New Ways To Pay: Aligning Consumer And Merchant Payment Preferences
Proffering the ideal payment methods to the right person at checkout has benefits beyond conversion. Loyalty is another area where pairing payment and the individual pays off.
“What we see is the easier that process is for them to check out using whatever platform or method of payment they would like to use, the more likely we will see a repeat customer, a customer that will buy more from us more frequently,” Robinson said.
With Overstock.com’s move to a focus on home goods exclusively and given the heavy competition in that space, combined with a down economy, payment optimization is a competitive advantage for merchants, leading to the drive for more choice at checkout.
Robinson said that serving the right mix of payment options also creates more opportunities “to raise the average order size of the cart by upselling and cross-selling,” adding that “it just increases the lifetime value and conversion metrics in the cart itself.”
Touching on the rising trend of digital wallets as a preferred payment method, Robinson said Overstock.com is researching digital wallets but has yet to add this option to its checkout.
“We’re focused on PayPal, Apple Pay, credit card, traditional [methods], and of course buy now, pay later,” she said.
“We’ve also recently introduced a new Mastercard with a partnership through Citi Retail Services, which is giving our customers a really rewarding credit card to purchase Overstock.com goods” while earning loyalty rewards in the process.
Read: Overstock Taps Influencers and Ads to Get Customers ‘Comfy’ With Rebrand
With its near-universal consumer appeal, buy now, pay later (BNPL) is proving more useful to a repositioned Overstock.com with its focus on helping consumers fill out dream homes.
As is the case in most uses of BNPL, the option is typically used by Overstock.com shoppers on larger purchases like furniture and durable goods including refrigerators and appliances.
“It helps people with the buying decision,” Robinson said. “Typically, when you see cart sizes get into the four digits, a $1,000 mattress or a $2,000 patio set, things of that nature, you see people wanting to spread those payments out a little more. It allows them to get the item they want right now.”
There are many nuances to payments optimization as a revenue accelerator, some quite technical in nature and often best handled by third parties with checkout tech expertise.
What’s not complicated about it is the simple basic notion of not disappointing consumers at the end of their shopping journey by failing to provide one or more options they prefer.
“The one thing that you can do that can tank a conversion is to make the checkout process too hard,” she said.
“The last thing you want to do is get someone through the shopping funnel, they get to the cart, and then they abandon because the type of payment that they prefer to use isn’t available, or the payment process is too difficult.”
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