TOP MERCHANTS COMPARED TO THE FIELD - BlueSnap · 2020-06-03 · Q2 2016 Features all top 30 merchants offer Features found in +90% of top 10 merchants TOP MERCHANTS COMPARED TO THE

Q2 2016

Features all top 30 merchants offer Features found in +90% of top 10 merchants

TOP MERCHANTS COMPARED TO THE FIELD

75.2The top 30 merchants have a CCI score more than a third higher than average.

Checkout Conversion IndexTMThe

a collaboration

56.4/Top 30

Average

$162.4B$162.4 billion is our estimate on how

much underperforming merchants will leave on the table in 2016.

• Product review & recommendations

• Shipping same as billing

• Site help - live

• Product review & recommendations

• Shipping same as billing

• Site help - live

• Free shipping coupons

• Security logos

Checkout Conversion IndexTM

© 2016 PYMNTS.com all rights reserved 2

Snapshot for Q2 2016

1 Q2 2016 results are based on an analysis of websites in April 2016

56.4Average Checkout Conversion Index (CCI)

score on a scale of 0 (worst) - 100 (best)

for Q2 2016.

Up 3 points from Q1 2016

10 A’s10 vs. 4 websites with an “A” score of 75+

in Q2 2016 vs. Q1 2016

6 more “A” e-tailers in Q2 2016

than in Q1 2016

182182 seconds

(average time to checkout for Q2 2016)

22 seconds faster than Q1 2016

146146 seconds for top 30 merchants’

average time to checkout for Q2 2016

Top merchants almost 30 percent

faster than average

75.275.2 vs. 56.4

Top 30 merchant vs. average CCI

for Q2 2016

Top merchant score more than a third

higher than average

$162.4B$162.4 billion is our estimate on how

much underperforming merchants will

leave on the table in 2016


Checkout Conversion IndexTM Snapshot for Q2 2016

The makings of a top performer: the top 10 features compared to averageTop merchants beat average merchant significantly on every dimension.

Feature Top 30 merchants Average

Time in seconds 146 182

Total clicks 15 21

Product reviews & recommendations 100% 81%

Shipping same as billing 100% 89%

Free shipping 97% 79%

Coupons 97% 75%

Security logos 97% 63%

Site help - live 100% 83%

Required profile 0% 34%

Total payment methods 8.3 6.0


Checkout Conversion IndexTM Snapshot for Q2 2016

What comes between buy and pay for top and worst merchants by payment successIt takes a lot of effort to get a customer to move all the way through your website and actually try to make a purchase. The last thing you want to do is to have the transaction declined. There are three primary features that distinguish between the firms when it comes to their ability to make sure that transactions are not declined. Unfortunately, these are mainly features of the industry the firm is in and not necessarily things a firm can change. Low value one-time purchases for people using the same currency result in the most payment success.

FeatureHighest payment

success merchantsWorst payment

success merchants

Percentage of transactions in which the transaction is denominated in the same currency as the card being used

100% 15%

Average transaction value $7 $790

Percentage of transactions that are one-time (as opposed to subscription or renewals)

83% 58%


Why we need a Checkout Conversion IndexTM

Why we need a Checkout Conversion IndexTM

Every day, hundreds of millions of shoppers around the world let their fingers do the shopping. They click on their browser, on their PC or their mobile device, and go to a merchant website. They browse, maybe they find some things to buy, and they pay to get it shipped if it’s physical, or downloaded if it’s digital.

$399 billion$399 billion. That’s the estimate of how much U.S. shoppers are going to spend on online retail in 2016. Let’s quintuple that: $2.05 trillion. That’s how much is projected shoppers around the globe will spend in 2016. Big numbers for sure.

$162 billion$162 billion. Sadly, that’s how much we estimate online retailers will leave on the table in 2016. Why? Because millions of shoppers get discouraged by all the obstacles — the frictions — they face from the point when they enter a website through the time they finish payment so they can get the goods. OK, $162 billion is a bit of a guess, but we’re confident the number is huge.

As more commerce moves online via digital and/or mobile channels, understanding how to make it easier for them to buy can mitigate not only lost sales, but also lost customer relationships. Despite the impressive estimates for eCommerce growth, consumers continue to abandon their virtual carts at alarmingly high rates. Why is it so difficult to “close” a customer that has gone to the trouble to find a merchant online, decide what they would like to buy – yet leave before they push the “buy” button?

It’s a problem that costs merchants big – as much as 40.7% percent of their sales, depending on the type of merchant and just how complicated the online checkout experience is for shoppers. To put this in perspective, a merchant with annual revenues of $5 million could be losing more than $2 million in sales opportunities. Worse yet, they may not even know the extent to which this is an issue for them.

That’s why PYMNTS.com and BlueSnap decided to study what actually gets in the way of converting shoppers into buyers – and more importantly, what merchants can do to recapture the sales that they are losing.


The Checkout Conversion IndexTM

The PYMNTS.com Checkout Conversion Index (CCI), a BlueSnap collaboration, measures the friction that consumers experience when they shop online. It does that by identifying website and payment attributes that are most responsible for creating problems during the shopping process and, therefore, are most likely to result in cart abandonment and lost sales for a merchant. The CCI measures this friction.

Online shopping is like skiing. Right now shoppers often face the equivalent of moguls and death cookies on their shopping trip. Skiers fall down. Shoppers leave. Skiers love racing down a mountain on hard pack snow. They want a smooth ride. Shoppers want to get their business done as easily and quickly as they can.

The CCI is based on a team of “shoppers” shopping at over 640 U.S.-based eCommerce sites across 14 merchant categories. Those sites represented over 70% of all U.S. eCommerce retail spend. These merchants ranged from $1 million a year in online sales to the largest e-tailers in the world with more than $79 billion in annual online sales.

We identified more than 55 attributes and used them to score merchants on how easy (or hard) going from discovery to final payment was on their site. To go back to the skiing analogy, we determined things that lead to a smooth ride but also counted up the moguls and death cookies.

We used statistical methods to determine which of these attributes studied introduced friction and lowered conversion rates. The lower the conversion rate, the lower the final CCI score. The CCI has two dimensions – abandonment that happens before a consumer presses the final “buy” button, and problems after pressing the “buy” button. In the end, the CCI for each quarter is based on more than 36,000 pieces of data.

The CCI is measured on a scale of 0-100. The higher the score, the lower the friction, the smoother the process and the higher the likely ratio of conversions from shop to buy, and from buy to pay. A perfect score is 100. There are more details on our methodology in the back.

We are interested in your feedback on this report and where we take it over time. Please send us your thoughts, comments, or questions at [email protected].

mailto:ecommercefriction%40pymnts.com?subject=


Where we are in the journey

Where we are in the journeyEvery quarter, we report where e-tailers are in the journey from friction-ridden websites that make it hard for people to shop, buy and pay, to sites that run so smoothly that it’s better than zipping around one of the best malls. And we let you know how the Average Joe is doing relative to today’s Superstars, as well as how much progress everyone is making. You won’t hear us talk much about differences across e-tailers based on revenue, page views or other measures of size. We continue to find that there isn’t a strong correlation in performance based on size.

To compare quarters, we have to deal with some changes in our merchants. Some drop out and we replace them with more to keep a great sample. But to make apple-to-apple comparisons, we just compare merchants that we tracked in every issue of the Checkout Conversion Index. That’s a total of 642 merchants.

Index this time, and last timeThe big news is the CCI went up from 53.4 in January 2016 to 56.4 in April 2016. That’s a 5.6-percent increase over three months and a recovery from the previous down trend. The frictions both during the pre-payment and during the payment process decreased from January to April.



Who’s acing, who’s flunking, this time, last timeOf course the funny thing about averages is that hardly anyone is average. Virtually everyone is better than average or below average. And so it is with our e-tailers.

Out of the 642 retailers that we looked at in January 2016 and April 2016, 215 increased their score by more than 5 points and only 70 saw their scores decline by more than 5 points. This contrasts with the situation in January, when 133 increased their score by more than 5 points and 211 actually saw their scores decline by more than 5 points. The trend has seem to reversed this quarter. Considering a bigger spread, 88 increased by more than 10 points, while 22 fell by more than 10 points.

Now let’s look at the grade distribution. We’ve adopted a tough-love grading system with few As and many Fs, because we believe websites just need to do a better job at providing a smooth experience and reducing friction. Fortunately, with a quarterly review, everyone gets a “do-over,” as they get to retake the exam and see about improving.

Grade Sites (%) in Q2 2016 Sites (%) in Q1 2016 Sites (%) in Q4 2015

A (75+) 10 (1.6%) 4 (0.6%) 7 (1.1%)

B (65-75) 162 (25.2%) 110 (17.1%) 141 (22.0%)

C (55-65) 228 (35.5%) 224 (34.9%) 227 (35.4%)

D (45-55) 123 (19.2%) 152 (23.7%) 142 (22.2%)

F (45-) 119 (18.5%) 152 (23.7%) 125 (19.3%)

In Q2 2016 there is a significant improvement in the number of top scores (As and Bs). Ten sites got an A – it is still a poor number but it represents a150-percent increase when compared to Q1 2016. More than 30 sites that flunked in Q1 2016 got to pass this time, and 29 sites that got a D in Q1 2016 got a better grade this quarter. So there has been an improvement for most of the sites in Q2 2016. In fact, more than 62 percent of the sites got an A, B or C this quarter. There is still room to improve in the future. More than a third of the “students” got a Gentleman’s C, and almost a third got a “you’re grounded and you better buckle down” D or F.

While the distribution of sites among grades has not changed much, changes in the current quarter reflect a significant increase in the sites graded with a B and a decrease in sites with a D or an F.



The best, the worst, and the restTo give you a flavor of how the best and worst websites handle friction, we compared the Top 30 websites, the worst 30, and the average. The average Top 30 websites got a CCI of 75.2, giving them an average grade of A. Their scores of the best ranged from a low of 73.1 to a high of 82.9. Only 10 of the Top 30 websites, though, got an A. Three quarters of the Top 30 websites scored between 73.6 (grade of B) and 76.1 (grade of A). The worst 30 websites got a CCI of 25.6, giving them an average grade of F. Their scores ranged from an abysmal 13.6 to a “high” CCI of 31.4.

As a way to easily see the improvement for all merchants this quarter, the bottom 30 merchants, the average merchants and the Top 30 merchants had more than 3 points in Q2 2016 compared to their averages in Q1 2016.



Another way to measure how well websites did in moving folks along the shopping journey to consummating a payment at the end is the time it takes on average for a shopper to take the trip. That was 182 seconds for April 2016, down 22 seconds from January 2016 — a significant improvement on average for all merchants.

And here’s how that looks for the best 30, middling (average), and worst 30 e-tail sites based on time to purchase.



So what does it take to be at the head of the class when it comes to making shopping, buying and paying a smooth experience? Next, we look at the 10 most important features and show how the e-retailers in each grade band are doing.

The makings of a top performer

Feature A (10) B (162) C (228) D (123) F (119)

Time in seconds 142 146 182 204 209

Total clicks 13 19 21 23 23

Product reviews & recommendations

100% 100% 94.3% 78% 30.3%

Shipping same as billing

100% 100% 97.4% 88.6% 53.8%

Free shipping 90% 88.3% 80.3% 72.4% 71.4%

Coupons 90% 96.3% 82.9% 64.2% 41.2%

Security logos 100% 84% 68.9% 55.3% 29.4%

Site help - live 100% 98.1% 88.2% 75.6% 58.8%

Required profile 0% 11.1% 24.1% 54.5% 66.4%

Total payment methods

10.2 6.9 5.9 5.6 5.1



It’s very difficult to get an A. In order to do so, sites need to do well in almost all the features. That is why only 10 of 642 got an A this quarter. Online shoppers were able to finish the journey in two-thirds the time on A sites compared to F sites (146 vs. 209 seconds, respectively). Although, the difference between A sites and B sites is insignificant. Regarding the number of clicks, about half of the clicks were needed to finish the journey on A sites compared to F sites.

For the rest of the variables analyzed, sites graded an A got the maximum possible score, except for Free Shipping and Coupons; one of the 10 sites didn’t offer those features.

Sites that got an F, on average, did very poorly and were far behind top-graded sites. Only 30% of them provided Product Reviews or Recommendations, compared to 100% of the sites graded A and B, and even worse than in the previous quarter, with 40% of them providing the feature. Similar is the case for Coupons and Security Logos, with 41.2% and 19.4% of the sites graded F providing those features, compared to 90% and 100% of sites graded A providing those features.

Industries that shine, and those that don’tWhen it comes to industries, none of them are doing great — based on the average CCI across the websites — but almost all industries are doing better than in the previous quarter. Anyway, the best industries barely made a C. Six of 14 industries got a D or F. Two industries improved their scores moving from a F to a D, but both were barely over a CCI of 45. Subscription retail, which started with a D in Q4 2015 and moved to an F in Q1 2016, came back and got a pass degree this time.

There’s still a lot of distance, based on friction, between the best and the worst. The highest scoring industry — Mass Merchants with a CCI of 63.5 — was 23 points ahead of the lowest scoring industry — Marketing and Other Software Services, with a CCI of 40.5. This range has increased from the previous quarter, when it was 21.5.

There was a significant change in the rankings of the top half industries. The most important change to highlight is Mass Merchants, which moved from being the seventh ranked industry to the top one in this issue. We will discuss in depth Mass Merchants in the Deep Industry Dive below in this report.



IndustryLetter grade in

Q2 2016CCI Q2 2016

Letter grade in Q1 2016

Variation of CCI from Q4 to Q1

Letter grade in Q4 2015

Mass merchant C 63.5 C 6.3 C

Apparel & accessories C 62.9 C 3.4 C

Sporting goods C 62.4 C 3.2 C

Housewares and home furnishings

C 61.2 C 1.5 C

Computer and electronics

C 61.0 C 4.7 C

Hardware and home improvement

C 60.8 C 1.8 C

Health and beauty C 60.1 C 2.2 C

Automotive parts and accessories

C 59.1 C 0.6 C

Travel D 51.7 D 3.5 D

Books, music, video and entertainment

D 51.0 D 4.7 D

Delivery services D 47.1 F 4.3 F

Subscription retail D 46.0 F 1.1 D

Gaming F 41.6 F - F

Marketing and other software services

F 40.5 F 1.9 F



Bigger really isn’t better, so farAn important factor about the size of the merchants is that bigger merchants still don’t overperform smaller ones when analyzing frictions. If anything, smaller websites — perhaps run by more agile firms, and perhaps having to deal with less legacy software and fewer things to sell — are almost as good as the big guys. But overall, really, size doesn’t matter much.

We’ve divided the e-tailers into five size categories: the top and bottom 20 percent and then the middle three groups of 20% each.

Overall results are very similar to results in Q1 2016, except for the group of the larger 20% of the merchants. On average they did almost the same, but the range of their results is smaller. The worst company of the larger 20% got a CCI of 16 in Q1 and a CCI of 31 in Q2, concentrating their results on higher scores.

Index score and range of the largest and smallest merchants – Q2 2016

Smaller 20% Mid-small 20% Middle 20% Mid-large 20%

Maximum

78

61

33

77

62

37

83

61

41

76

59

17

80

61

31

83

56

14

Larger 20% All merchants

Average Minimum

Index score and range of the largest and smallest merchants – Q1 2016

Smaller 20% Mid-small 20% Middle 20% Mid-large 20%

Maximum

79

57

25

73

59

35

Larger 20% All merchants

Average Minimum

58

36

76 77

17

57

78

16

5853

12

79



In regard to the time it took to make the purchases, our shoppers raced through the websites of the smallest retailers in an average of 156 seconds, compared to a slog of 197 seconds for the websites of the biggest retailers.

Why do the websites for the smallest retailers score as high as the big ones? Larger sites are better at providing some of the features of the purchasing experience, while small sites seem to have strengths in providing a fast and smooth purchasing experience and other important features.

Both small and big merchants provide in similar percentages of several features, such as Product Review and Recommendations, Address Confirmation, Rewards, and a higher total number of payment methods.

On the other hand, the smaller sites take the advantage in providing a faster purchasing experience, providing a Progress Bar, Same Shipping as Billing Address, Coupons and Security Logos.

On average, the features in which smaller merchants are doing better are compensated by big merchants doing better in other sets of features. In the end, all groups have a very similar average score, which oscilates between 57 and 59.

Data on next page




Deep statistical dive

Product Versus Service MerchantsEvery issue, we take on a topic and do a deep dive into the data. This time we are going to compare product and service companies, and analyze the differences between them.

Our index has 564 merchants that commercialize products, drawn across a range of industries, and 78 merchants that commercialize services, which are primarily in Travel and Marketing and Other Software Services.

On average, product merchants did much better than service merchants. Product merchants had an average CCI of 57.7, while the average CCI for service merchants was 46.3. That 24.6% difference in the Index results from product merchants performing better on almost all dimensions than service merchants..

On the one hand, it took 30 seconds less to finish shopping product merchants than the time it took for service merchants – 178 seconds versus 208 seconds, respectively. Regarding page submissions, the different is not significantly different, with 21 page submissions for product merchants versus 23 for service merchants.

Furthermore, other features which are provided better by product than service companies are Product Reviews and Recommendations, Social Sharing, Shipping Same as Billing, Address Confirmation, Quick Add to Cart, Coupons, and Guarantee or Refund.

In the case of Product Review and Recommendations, 83.5% of product merchants have the feature against 61.5% of service merchants. For Social Sharing, the difference is outstanding, 57.8% versus 15.4% for product and service companies, respectively. For service merchants, in the Travel industry Social Sharing was available for 19% of the merchants but only for 11.1% of the Marketing and other Software merchants.

The difference in the provision of features is huge also for the Shipping Same as Billing feature. 93.6% of product companies provide the feature, versus 50% of service companies providing the feature. One of the explanations of why so few service merchants provide this is because in most cases, services do not need to be shipped. Flight tickets or software services in general are going to have only a billing address and no need to provide a place to ship the products. On the other hand, this is necessary for most product merchants.


Deep statistical dive: product versus service merchants

Something similar happens with Address Confimation. This is not very necessary for service merchants and only 19.2% of them provide the features. On the other hand, 36% of product merchants provide the feature.

For Coupons and Guarantee or Refund, 46.2% and 44.9% of service merchants provide those features, respectively, versus 79.1% and 62.2% of product merchants providing the features. There are no particular industry characteristics that would allow us to explain that.

One of the few features that service merchants provide more than product merchants is Rewards, — 37.2% for service merchants versus 28.9% for product merchants. In particular, Travel sites are very good at providing Rewards. In fact, Travel is the industry which has the highest percentage of sites providing Rewards, with 61.9% of the merchants. On the other hand, Marketing and Software Services is the worst performing industry regarding Rewards. Only 8.3% of the Marketing merchants provide rewards. Either way, on average, service merchants still surpass product merchants in Rewards.

The chart below compares the features for product and service merchants in Q2 2016.


Deep statistical dive: product versus service merchants

If we compare the evolution of product and service merchants from Q1 2016 to Q2 2016, we can see that the trend seems to be that product and service merchants are providing more features, but the gap between them still remains. The gap has only increased for Coupons and for Guarantee or Refund. For Shipping Same as Billing, Site Help-Live, Product Review and Recommendation, Mobile version or Optimized, Security Logos and Rewards, the gap between categories has decreased.


Deep industry dive

Deep Industry Dive – Mass MerchantIn each issue, we take on an industry and do a deep dive into what’s working and what’s not for the e-tailers in this industry, and where they are on the journey to a frictionless shopping, buying, and paying experience.

This time we describe in depth the Mass Merchant industry since there was a significant increase in the CCI scores of the companies in the industry, which moved it from being the seventh ranked industry of 14 to be the highest ranked industry of the 14. There is no need to explain what Mass Merchants are, but if you still have doubts, these are companies such as Amazon.com, Target Corp. or Walmart. We are going to dive into the features that make massive merchant important and how they made it to improve in such significant way from the previous quarter to this one. Twenty-two are the mass merchants which are part of the Index.

The average mass merchant took 193 seconds to complete the shopping, buying and payment process, making them slower than the average merchant by 11 seconds, but whithin the industry there’s been huge variation. The fastest mass merchant was able to complete the shopping process in 106 seconds and the slowest one in 414 seconds.

Ordering from a mass merchant requires as many clicks as an average retailer – 22 versus 21. For the smoothest mass merchant it took only 5 clicks to finish shopping, while for the one with more frictions it took 59 clicks to finish shopping. For the Top 5 it required an average of 12 clicks and for the bottom 5 an average of 34 clicks.


Deep industry dive

When taking a look at the common features for mass merchants, the nine most popular ones are Product Review and Recommendations, Shipping Same as Billing, Free Shipping, Coupons, Mobile Version or Optimized of the Site, Guarantee or Refund, Site Help – Live, Inventory Status and Total Number of Payment Methods. On average, mass merchants did better in each single measure.

Feature Mass merchant presence Average merchant presence

Product reviews & recommendations

100% 81%

Shipping same as billing 95.5% 88.5%

Free shipping 77.3% 79.4%

Coupons 81.4% 75.2%

Mobile version or optimized of the site

95.5% 87.4%

Guarantee or refund 81.8% 60.2%

Time in seconds

Min Average Max

Total clicks

Min Average Max


Deep industry dive

The change in the scores of mass merchant from Q1 2016 to Q2 2016 can be explained mainly by an improvement on average of all features these companies provide. For example, more sites are providing Site Help – Live, Security Logos, Rewards, Guarantee or refund, Coupons, Free Shipping, Address Confirmation and Progress Bar. While the number of total clicks increased since Q1, this was not sufficient to counteract the improvement in the total number of payment methods and the improvements in the other features just mentioned. This can be seen in the following charts.


Feature Story

Size doesn’t matter.Larger multibillion dollar retailers do no better at eliminating the friction associated with transacting online than their smaller million to ten million dollar merchant counterparts.

It’s a headscratcher, but an important conclusion reached after examining the performance of the 650 websites that account for 70 percent of eCommerce volume in the U.S. over the last nine months.

When examining those sites using the 45 variables that we’ve determined introduce friction in the pre- or post-checkout process, there’s absolutely no appreciable difference in their ability to make the shopping experience better for the consumer who uses a mobile device to buy things online. Large retailers leave their customers abandoned at the virtual checkout aisle at the same rate that the smaller guys do.

We also think that’s pretty big news – and a bellwether for how the future of these larger players may pan out in a world that’s hurtling very quickly toward a digital-driven future.

We’ve estimated that underperforming merchants collectively lose $162 billion annually when they fail to convert a shopper to a buyer on their site, exclusive of the costs they’ve spent in getting them to their virtual front door.

Why any merchant of any size would leave that kind of money on the table is a puzzle. One, however, would logically expect that larger merchants would have the time, people, money and bandwidth to do something about it – namely, perfect an experience that’s consistent with what consumers now expect when they let their mobile devices do the shopping.

But that’s also why Karen Webster, CEO of PYMNTS, and Ralph Dangelmaier, CEO of BlueSnap – collaborators on this study - find this a troubling leading indicator.

Nine months of data and over 10,000 data points have surfaced four major blind spots that interfere with giving these larger retailers a leg up in the all-important checkout conversion game.

We think that the identification of these four checkout conversion blind spots comes not a moment too soon.


Feature Story

Physical foot traffic at these large retailers is declining and the small percentage loss of foot traffic on a massive base of in-store sales hits their bottom lines hard. Added to that, the failure to convert their online customers at a higher rate only makes the gap between on and offline sales that much larger given the rapid growth trajectory of online sales.

The impact of this “failure to convert,” however, goes beyond a loss in sales.

Many of the retailers that reported earnings last quarter reported an increase in online sales, but not at the levels that the Street expected. Checkout abandonment is one of the underlying contributors to that result. Investors, in turn, lose confidence in their abilities to cross the digital chasm – and punish their stock price as a result.

Despite the facts that 90 percent of all retail sales still happen in stores today and Amazon’s 20 percent of all online sales account for less than 2 percent of all retail sales, retailers as diverse as Macy’s, Target, Kohl’s, Williams-Sonoma, Restoration Hardware, and Bed Bath & Beyond are feeling the brunt of this lack of confidence.

The Conversion Data Blind Spot It’s hard to fix a problem that retailers don’t know they have.

Now that’s perhaps a bit of an oversimplification, but it’s a fact that retailers don’t really know how bad their checkout experience is for the mobile shopper. And they don’t because they don’t have the right data that would allow them to pinpoint where the real frictions occur in the process once a consumer shows up at their virtual front door.

Of course, it’s not as though these larger retailers don’t have data – they do. But disparate pieces of it are available from multiple sources since large retailers also maintain multiple processor relationships. Separate systems and processors handle a retailer’s mobile apps, mobile browsers and the web – and each come with their own set of reports. For a large retailer, those reports are lengthy and often confusing. Getting a consolidated view of their customers across all of those acquiring relationships to really understand how they are performing is time-consuming, if it’s done at all.

But if the checkout conversion process isn’t monitored with the same diligence as many of the marketing components of their site are, merchants aren’t well equipped to understand the root cause of abandonment at the moment of truth: checkout.

The result is an executive team that intuitively knows that they could do better at converting shoppers to buyers, but lacks the right data to make the right decisions that would improve it.


The Hardware Blind Spot Physical retailers know physical retail and the systems that support it extraordinarily well. The sophisticated systems that they have developed and deployed over time to support their massive point of sale environments come with a huge set of advantages and disadvantages.

The advantages, of course, are that these larger retailers are able to efficiently and accurately manage and track inventory, manage and track customers, and manage and optimize store operations, among other things, throughout their physical channels. They’ve also integrated all of those systems into their in-store point of sale systems, which work very well.

As digital emerged as an important, growing and viable channel, retailers accustomed to managing systems that handled payments and operations in a physical world presumed that operating in a digital world would be roughly similar to their existing physical environments, only digital.

That has caused many large retailers to then simply try and extend their existing POS payments provider to serve their online needs – often in the name of getting a good fee that leveraged in-store transaction volumes and tapping into a known relationship that had served them well in a physical channel.

That’s become a strategic and fatal assumption.

Large POS acquirers that support the physical world have left the user interface to the hardware/POS vendors. That was OK when all a consumer did was swipe her card at a terminal on a counter. In the online world, the payment technology plays a more direct role in delivering an optimal user experience at checkout. There is no swipe. There is, instead, a lot of keystrokes needed to “checkout.” The growing volume of online sales, particularly with the recent explosion of mobile, has left many of these POS-centric payment providers hard-pressed to meet these critical user requirements.

Although the pre-transaction fees leverage of large scale POS pricing has its advantages, unfortunately for the retailers and their shoppers, many of these legacy POS acquirers lack the technology to create the kind of checkout experience that shoppers on a mobile device will tolerate. And more keystrokes mean more potential for abandonment.

The Strategic Blind Spot Merchants have a product strategy. They have a website and home page strategy. They have a marketing and social media strategy. They also have a pricing and promotional strategy. They have a strategy for every step associated with getting consumers to their virtual front doors.

But they lack a checkout strategy that gets the consumer from the front door through the back door with a purchase.

Feature Story


Merchants desperately need that plan – and that plan needs to focus on improving the checkout experience where the friction – and the source of checkout abandonment - occurs. Is it time to checkout? Number of clicks? Lack of alternative payment methods? Lack of transparent coupons and promo codes? Or is it all of the above?

There are ten things that all “best in class” merchants do to minimize checkout friction. That must be the starting point for the development of a checkout strategy that’s as robust in its thinking for how consumers leave the site with a purchase as it is in getting them there in the first place to buy.

The Omnichannel Blind Spot Omnichannel is retail’s holy grail, but that shouldn’t be the primary focus now for the larger retailers. Instead, retailers should today be focused on enabling a best in class experience in every channel that the consumer uses to interact with them – and then bring them together – omnichannel-style on the back end. It is simply impossible for physical retailers with their legacy systems to deliver an omnichannel payments system that also delivers the best customer experience across every channel they intend to serve.

Creating an omnichannel experience sets up the expectation that the consumer must have the same identical experience online as they have in the store. Delivering on that promise means that the retailer would have to integrate to all of the systems across their physical and retail channels: integrate their online systems to their instore inventory system, to their loyalty program, to their display tech, to offers, coupons and promotions – not to mention the various alternative payments options that may already support.

The larger the merchant, the greater the number of systems – and complexity. Complexity means more time needed to plan and manage the integrations. And time, in a digital world, isn’t a luxury that retailers have in a world where the advantage goes to the players who can deliver a better experience first.

There are, however, some mega-retailers who have taken this approach and are starting to see results. The world’s largest retailer, for all of its recent shellacking in the news, seems to have taken a page out of the checkout conversion handbook with its use of Walmart Pay online and now for in-store mobile purchases.

Walmart perfected its in-store channel and, separately, its online channel. That included giving its customers the ability to buy online and pay in cash in the store and have all of their offers, coupons and promotions available online.

Walmart Pay and the 20 million consumers who access it each month while in the store, is leveraging its Walmart.com experience to produce an omnichannel experience for its consumers – one that is designed to optimize checkout conversions across all channels, while maintaining a single view of the customer. And the customer maintaining a single view of them.

Feature Story


Feature Story

Achieving Checkout Conversion Nirvana Now, it’s not all bad news this quarter either.

When digging deeper into the third quarterly Checkout Conversion Index, we can see improvement. Checkout is about 22 seconds faster on average for all merchants, and for the top 30 sites, is nearly 30 seconds faster. The overall Index has improved too – at 56.4 (out of 100), it’s up 3 points. But even on a heavily weighted scale, there are still only 10 “A” scores (where A is a 75+) and 162 Bs (where a B is 65 to 75). Nearly 40 percent of the list scored a D of an F.

The reality, however, is that larger retailers are clearly feeling the pain of crossing the digital chasm, and need a roadmap for how to get there successfully.

What started out as a way to simply benchmark the overall progress of the online merchant community in optimizing mobile checkout, we hope, has evolved to become a useful diagnostic tool – one that helps merchants refocus their checkout conversion efforts in order to boost their digital sales, delight their customers and lay their claim to the $162 billion that they may be missing when too much friction gets in the way of making a sale.


Methodology

Checkout Conversion IndexTM MethodologyTo determine what hurts conversion rates and creates friction in the shopping process, we first looked to existing research to see what consumers reported as important in driving their shopping behavior online. Friction comes in two ways. First, from consumers abandoning shopping carts due to shopping design and features. Second, when a payment “fails” after the consumer pushes the buy button.

We shopped over 650 eCommerce sites and tracked the presence or absence of the key design features. As part of the process, analysts applied perspective on how easy (or difficult) it was to complete the shopping journey. Additionaly, we collected data on post payment processing. Finally, we used statistical techniques to analyze which factors contributed most to friction and ultimately cart abandonment.

Site Selection As part of the analysis on the cart abandonment, we selected a variety of merchant categories, including both product and service industries, to observe a good mix of consumer eCommerce experiences.


Methodology

Research ApproachTo evaluate and quantify the impact on conversion rate, we shopped each site – from landing page to submitting payment. We collected nearly 50 variables for 684 websites that we shopped.

Factors present after the consumer decided to make a purchase were evaluated based on data that were used to construct over 30 categorical variables.

ScoringThe calculation of the final CCI was based upon the prevalence of friction-causing and friction-reducing factors.which existed during each site experience during the checkout process as well as post payment (for example if a payment is declined). Each factor was part of a broader category (time, shopping, comfort and trust, etc.). We used statistical regression techniques to determine which factors are the largest drivers of conversion.

The final CCI score is the sum of all factors multiplied by their appropriate weight.

Categories and Factors Which Drive ConversionThe final factors fall into the following categories:

TimeMeasures the effort and time to complete a shopping journey

Shopping convenienceMeasures site features that support decision-making and simplify checkout such as reviews and recommendations, moblle access and shipping decisions

Comfort and trustMeasures assurances or ability to resolve issues such as security or help features

RelationshipMeasures attributes to build a relationship with the customer such as requesting a profile or ability to send marketing information

PaymentMeasures ease of using desired payment such as payments accepted, transaction amount, currencies, the payment method and whether the transactions were one time or recurring


About

BlueSnapBlueSnap is a global payments technology company that optimizes global, mobile checkout and drives higher payment conversions by as much as 40 percent for eCommerce merchants worldwide. Their Powered Buy Platform fuels the growth for businesses eager to serve the global consumer and take advantage of the incremental sales opportunities that they represent.

Learn how BlueSnap is fulfilling its promise to eliminate friction and convert more shoppers to buyers worldwide at home.bluesnap.com.

PYMNTS.comPYMNTS.com is where the best minds and the best content meet on the web to learn about “What’s Next” in payments and commerce. Our interactive platform is reinventing the way in which companies in payments share relevant information about the initiatives that shape the future of this dynamic sector and make news. Our data and analytics team includes economists, data scientists and industry analysts who work with companies to measure and quantify the innovation that is at the cutting edge of this new world.

FeedbackWe are interested in your feedback on this report. If you have questions, comments, or would like to subscribe to this report, please email us at [email protected].

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Disclaimer

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TOP MERCHANTS COMPARED TO THE FIELD - BlueSnap · 2020-06-03 · Q2 2016 Features all top 30 merchants offer Features found in +90% of top 10 merchants TOP MERCHANTS COMPARED TO THE

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