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US Retailers’ Trillion Dollar Checkout Conversion Problem

US Retailers’ Trillion Dollar Checkout Conversion Problem

  • Dialing In On How Businesses Can Turn First-Time Shoppers Into Repeat Customers
US Retailers’ Trillion Dollar Checkout Conversion Problem

Whether consumers are buying groceries or clothing and accessories, their shopping and payment preferences have undergone a seismic change over the course of the last 16 months. 

Digital and mobile shopping that were once seen as complementary to consumers’ physical shopping experiences have become the primary means of engagement.

Delivering a frictionless and omnichannel shopping experience that meets digital-first needs is thus key for retailers to win not only the business of customers but also their long-term loyalty, according to Greg Greiner, vice president of product at checkout network Bolt.

In an interview with Retail Bum, Greiner discussed the conversion problems retailers are facing today on both online and mobile channels and approaches that can help convert one-time shoppers into returning customers. 

The 3Cs of checkout abandonment 

From the moment a customer logs onto a retailer’s desktop or mobile website to search for products to when they enter their credit card details to complete the transaction, a variety of factors influence their likelihood of making a purchase. Unfortunately, problems such as too many steps to checkout and a clunky user experience get in the way of checkout conversion, all too often. 

According to Greiner, these problems that lead to a suboptimal experience often stem from one of the three factors: unexpected costs, a clunky customer onboarding experience, and unnecessary checkout friction.

“If I’m expecting something to cost X dollars, and then shipping costs way more than I was expecting, or if there are some other fees that I wasn’t expecting, that would cause me to drop off. Another reason [for dropping off] is retailers are actually requiring you to create an account, or that they have an account wall where it’s unclear how to proceed,” Greiner said. “Lastly, if the checkout process is unnecessarily complicated or extended, consumers abandon their purchases,” he added.

These 3Cs are even more exacerbated in the mobile channel, which is increasingly becoming the center stage of consumers’ interactions with brands both in-store and online. Research shows that 90 percent of consumers ages 25-34 and 78 percent of consumers ages 18 to 24, prefer shopping on mobile.

“This is an area where retailers are still struggling quite a bit,” Greiner said. 

When consumers encounter friction on desktop sites, they are likely to complete their transaction since they are more focused, he added. On mobile, however, they are more likely to get distracted and abandon the transaction, especially if the time to checkout is longer or if they are required to create an account prior to making a purchase.

“The combination of those three leads to the majority of unintentional drop-offs in the checkout flow,” Greiner said.

The (massive) cost of checkout friction 

Research by Baymard Institute shows that 70 percent of shoppers drop off from the checkout process on desktop websites and a stunning 85 percent drop off on mobile channels. While a decent portion of these shoppers might not necessarily be looking to actually make a purchase, retailers forgo a significant portion of their sales to competitors that offer a superior checkout experience. 

“If you look at it on a dollar basis, that’s a huge, huge lost opportunity,” Greiner said.

“We estimate that it’s almost a trillion dollars in abandoned checkouts in the U.S. every year, so it is a massive untapped opportunity.” 

The good news is that retailers are aware of their checkout problem. The bad news is that many retailers lack the technological prowess to streamline their checkout experiences. This problem is magnified by the fact that consumers expect an Amazon-like shopping experience from all of their online purchases. Ironically, delivering that experience is a bigger challenge for many digitally native players today.

“Their uniqueness is not necessarily their technology, but it’s their products, their shopping experience, their loyalty experiences,” Greiner said.

Regardless of whether a merchant is brick-and-mortar focused or digitally native, it is imperative to carefully assess and deliver an experience that is customer-centric.  

“Every first-time purchase that you lose is also a potential lifetime customer that you’ve lost as well,” Greiner said.

The path forward

A variety of approaches can help improve conversion, but the ultimate goal — and challenge — is often turning one-time shoppers into returning loyal customers. That is challenging because retailers do not always see the same customers frequently enough to deliver the kind of personalized experiences customers expect.

Retailers can ensure customers’ long-term loyalty by delivering identity-powered experiences that can help unlock personalized payment and one-click checkout experiences, Greiner said.

Embracing an API-enabled, decentralized checkout solution can thus go a long way as it not only enables merchants to deliver an identity-powered experience to first-time shoppers but ultimately, it can turn those customers into repeat customers. 

“That can be a really powerful experience where you give some of those benefits of the Amazon experience to shoppers,” he said.

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