The average global online cart abandonment rate is around 70%. Considering that in 2019, retail e-commerce sales worldwide amounted to 3.53 trillion US dollars, the unrealized revenue value is left at over $8 trillion. The retail focus must be increasing the number of consumers who visit a website actually completing a purchase, which can also be interpreted in terms of conversion rate.
Online retailers struggle with conversion rates more than in-store retailers, averaging at around a 3% conversion rate online, while consumers shopping on their phones are even less committed. Brick and mortar stores have a significantly higher conversion rate depending on vertical, ranging between 17% for apparel and 50% for department stores. It makes sense that if the customer has taken the time to come into the store, they are already more engaged in making a purchase. However, even in-store, there is still the issue of customers coming in, speaking to a salesperson about an item for 20 minutes, but leaving without a purchase.
Particularly with big-ticket or luxury goods, one of the main reasons consumers cite for not completing their purchase is that the cost of the individual item or the total cost of the cart is too high, accounting for approximately 25% of cart abandonment. This is considered separately to issues relating to the cost of shipping. Customers hesitate when it comes to finalizing the purchase, and they begin to weigh up the costs.
Affordability = Conversion
High-ticket items become more appealing and accessible to shoppers once the cost is spread into bite-sized monthly installments. The purchase amount is broken up, easing financial pressures consumers might feel while satisfying their desire to own the item immediately. Removing that strain makes it less likely that shoppers will abandon their carts, thereby improving conversion rates. Recent research found that merchants offering installment loans may see such rates increase by nearly 40 percent.
The key is creating awareness at an early stage of the shopping experience and instilling in the mind of the shopper the fact that merchandise can be affordable when paid over monthly payments. This mindset contributes to checkout conversion even at a later stage of the shopping journey. This can be accomplished with simple online ‘widgets’ implemented on the retailer’s eCommerce site. For example:
Real-time monthly pricing: A dynamic widget is displayed on each product page that shows the product price broken down to monthly payments. This already at ‘window shopping’ stage creates awareness for the financing option and makes the product more affordable in the eyes of the shopper.
Checking eligibility: A call to action at any point during the shopping experience for the customer to check their eligibility for financing. This enables the shopper to not only be aware of the financing option but also to know that they are approved for financing and for what amount. This puts the consumer in the correct mindset, giving them the peace of mind that even with high-ticket items, or a larger cart amount, they are in the ‘affordable zone’.
Real-time pricing calculator: Consumers are able to select the number of months they want to pay over as well as the down payment they would be interested in paying, and see the monthly cost of a product before it’s even added to the cart
Re-capture shoppers: An automated email that is sent to shoppers who abandon their cart. This email can feature the financing option and the ability to check eligibility. The consumer can get approval for the monthly payments and are then sent back to the cart to complete the purchase with monthly payments.
The final step: Checkout
Checkout UX is crucial, with Baymard Institute finding that the design and flow of the checkout is frequently the sole cause for users abandoning their purchase during the checkout flow. When offering point of sale financing, an instant decision, merchant branding, and a seamless checkout are critical to conversion rates.
Consumer finance available at the online POS has the ability to increase conversion rates by offering an intuitive, seamless, and error-free loan process and deliver high approval rates for loan applicants. The consumer receives an instant decision, with only a soft-pull credit check taking place.
