IMRG Data Report: Reducing Smartphone Checkout Abandonment

Transcription

1 IMRG Data Report: Reducing Smartphone Checkout Abandonment Best practice for optimising your smartphone checkout An IMRG report sharing insight from a study analysing participant performance across a range of datasets that we track to identify common points between those who have the highest (and lowest) rates of performance in smartphone checkout abandonment Supported by:

2 The case for clarity at the checkout When a customer abandons at the checkout, it s among the most frustrating metrics for a retailer. When it comes to smartphones, those rates can be substantially higher than desktop too. This report is the latest instalment in a series where we share insight from IMRG studies that analyse retail participant performance across a range of datasets that we track. This one focuses on identifying common points between those who have the highest (and lowest) rates of performance in smartphone checkout abandonment. The highest rates in the sample we used for this study were almost 70%; but the lowest were under 30%. It seems apparent that this is a metric that can be improved if certain best practice is applied and the key byword is clarity. Andy Mulcahy, Strategy and Insight Director, IMRG Improving frictionless flow for checkout payments J.P. Morgan in this report offers some insight into the reasons for checkout abandonment. The reasons for checkout abandonment are many and varied, as the insights in this report show. As retailers look to optimise the checkout flow for conversion, they must also weigh growing fraud concerns impacting both mobile and desktop transactions. It s against this background that the EU has pushed incoming regulation aimed at easing the friction associated with securely identifying your customers. Making ecommerce transactions safer and simpler is a key focus of the Payment Services Directive II (PSD2), and Strong Customer Authentication (SCA) for ecommerce transactions is a key piece of this legislation. A challenge for retailers will be to ensure that SCA will be implemented in time and mitigate the short-term impact on checkout conversion. Colm O Monacháin, VP Product Solutions, J.P. Morgan 2

3 About this study Much of the content for this report is based upon a dedicated study we undertook in relation to smartphone abandonment rates. In the IMRG Capgemini Quarterly Benchmark, we track a number of metrics that were used as part of the study. The main one was checkout abandonment rate ( the percentage of abandoned sessions after the customer had navigated to the checkout ), split by device (desktop, tablet and smartphone). While we track data from a total of 190 participants in our sales and performance indices, we focused on a sample of 28 in this study the retailers covered included a group of the best (ie those with the lowest checkout abandonment rate) and worst performers, plus a group with average rates. Participants were both large and small retailers, ranging across multiple sectors and product offerings. We then reviewed the retail site checkout pages for each of those participants to see if we could identify common factors that may be influencing a high / low abandonment rate. The elements reviewed were as follows: Item reserve time Returns information displayed Paypal Free delivery Colour of buy buttons Apple Pay Card details automatically stored Guest checkout Images of products Postal optional saved Cross-device baskets Active hyperlinks in checkout New guest experience Number of pages as existing customer Number of payment options Responsive site Shipping options Address validation Smartphone checkout Tablet checkout Load speeds New browser for payment Click and collect This report shares insight gleaned from this study to identify possible best practice, focusing on a few elements from that list specific to the smartphone checkout pages for each of the retailers in our sample. Overview of smartphone metrics Shopper behaviour can vary in accordance with the device they use to engage with a retail site. Quite often, the difference between metrics on desktop and tablet devices is not very sharp, but when it comes to smartphones that difference can be far more pronounced. The following table illustrates this point by comparing the average visitor bounce rate and basket and checkout abandonment rates across these three device types: 3

4 Q4 2017/18 Smartphone Tablet Desktop / laptop (Nov / Dec / Jan) Visitor bounce rate 32.5% % 23.2% Basket 59.9% 64.2% 65.1% abandonment rate Checkout abandonment rate 42% 31% 28% Given the greater number of contexts that a smartphone might be used in plus the higher chance of getting distracted by alerts and messages we might expect the smartphone rates to be higher overall (basket abandonment, perhaps surprisingly, is actually lower on smartphones this might be due to shoppers leaving browser sessions open in the background on these devices rather than closing them down). Yet looking at the participants we used for the purposes of this study, the range was as follows: Low rate Average rate High rate 22-33% 34-40% 42-69% Some of the participants in our sample offered similar product ranges but experience very different abandonment rates. Also if one retailer had a high / low checkout abandonment rate on smartphone, it didn t necessarily correspond with them having a high / low rate on other devices. The smartphone customer funnel The checkout page is a very important one, clearly but actually it is only one stage of what we might identify as the customer funnel. The metrics that we track in our Quarterly Benchmark are defined as follows: View a product page Add to bag Proceed to checkout Complete payment Percentage of total visits that view a product page Percentage of sessions that convert from a product page view to add item to bag Percentage of add to bag sessions that convert to checkout Percentage of checkout sessions that convert to payment The below table provides the market averages for each stage of the smartphone funnel and, to illustrate the importance of optimising each of these areas, gives an example of the number of site visitors that would reach / complete each stage given those market averages (assuming that the site receives a monthly average of one million visitors). 1 IMRG Capgemini Quarterly Benchmark, Q4 2017/18 4

5 Stage of the smartphone customer funnel Percentage of visitors that reach that stage of the funnel Numbers of site visitors that reach that stage (assuming average of one million visitors per month) View a product page 50.5% 2 505,000 Add to bag 16.4% 82,820 Proceed to checkout 57.9% 47,953 Complete payment 53% 25,415 In this example, the total number of orders that would be completed on the site is 25,415. It is important to understand that the metrics used in this example are market averages, so no retailer actually matches those figures exactly. It is also not necessarily the case that a retailer who has a high percentage at one stage of the funnel performs very strongly across all stages. Nevertheless, improving the rate at the checkout stage is the area where the impact on overall business performance is most obviously perceptible. We will now look at some of the possible factors that may correlate with a high / low checkout abandonment rate. Does cost correlate with abandonment? One factor we may assume could correlate with having a high checkout abandonment rate would be the average basket value for that retailer. So, logic may suggest, if the average spend is high, it may take a bigger decision on the part of the customer to complete the purchase. Below, each of the participants in our study is plotted on a chart, aligning their average basket with their checkout abandonment rate on desktop. 70% 60% 50% 40% 30% 20% 10% 0% IMRG Capgemini Quarterly Benchmark, Q1 2018/19 5

6 As can be seen, there is no obviously-discernible correlation between spend and abandonment (the same is true across all devices). So, for example, the retailer with the highest average basket value has a relatively low checkout abandonment rate, while some of those with the highest rates have a relatively low average basket value. This suggests that cost, taken in isolation, is not a significant factor that influences a shopper s propensity to abandon their basket at the checkout. Which factors influence checkout abandonment? The below chart lays out some of the most interesting elements we reviewed as part of this study into smartphone checkout abandonment. It shows each of the retail participants used as part of the study, with them lined up in order of checkout abandonment rate (left to right, lowest to highest). Each of the icons in the rows show what each are doing within those elements. These are explained in turn below. Number of pages logged in / new user The first element refers to the number of pages that an existing customer (ie one that has logged into the site) is presented with at the checkout. Logic would suggest that making this process as frictionless as possible would offer the strongest potential for reducing abandonment, but actually many of those with a single-page checkout are toward the lower end of performance the majority of the strongest performers actually offer a three-page checkout, even though the customer may have purchased before and something may be known about their inferred preferences for delivery / payment etc (so they wouldn t need to re-enter them every time). Similarly for new customers (site visitors that have not logged into the site the second row in the above chart), generally speaking it is those who offer a three-page checkout that perform more strongly. There is some evidence here to suggest that shoppers still like to have the details of their order partitioned into clear stages, as per the below example: 6

7 This key thing here appears to be related to clarity; this is not to suggest that removing friction from the shopping experience is not an important aim, but rather that, as we often find to be the case in many areas of online retail, shoppers like to be well informed about what they are getting and how they are getting it. It s possible that one-page checkouts don t perform as effectively at the moment as it s not quite in line with customer expectation. That s not to say expectation won t change in time, but we have heard from a few different retailers who have implemented a one-page checkout and reverted to multiple pages again due to low performance. Shoppers also don t like surprises at the checkout. The below chart is taken from the IMRG Consumer Home Delivery Review , where we asked respondents whether they had ever abandoned their basket at the checkout due to delivery concerns and why: Why have you or people in your household ever abandoned an online purchase at the check-out stage because of delivery concerns or issues? 68.2% 11.1% 3.8% 32.9% 29.1% No convenient delivery option available Delivery timeslots are too vague The additional cost of delivery Delivery is limited to the cardholder's address Other As can be seen, the primary reason is around additional costs being added on that they were not expecting. The following image gives an example of how this can appear on a smartphone checkout: 3 IMRG UK Consumer Home Delivery Review

8 In this example, the first thing that the customer discovers when they get to the checkout is that they will have to pay an additional fee for delivery (there is no free option listed) which probably serves as an unwelcome surprise in many cases. So optimising the checkout should focus on providing clarity for the customer above all else as the common maxim about next-day delivery has it: customers don t necessarily need their delivery next-day, they just want to know when next-day is. Commentary from Colm O Monacháin, J.P. Morgan As the chart above shows, there are many factors that influence cart abandonment. From September 2019, PSD2 will mean that SCA is required for all online transactions. Online and mobile channels have created additional pressures on retailers to ensure your SCA solution is as frictionless as possible. Without this in place there is a real risk that your customers will not be able to complete transactions, having a huge impact on checkout abandonment. Credit card providers already have a scheme in place to ensure SCA, called 3D Secure (3DS). This service is offered by credit card providers and gives additional protection to customers, by introducing another layer of password protection. 8

9 Responsive or dynamic In the responsive or dynamic row, the letter R signifies responsive design and D signifies dynamic design. In short, a responsive site detects the device that the site visitor is using and adjusts the content to suit the screen size and type accordingly. Responsive sites do not alter the way that the content is ordered or categorised as such, they just restructure how the existing page content is laid out to be appropriate to the device. A dynamic site may present the site visitor with a different layout that has been specifically structured to fit the device. So, for example, how the navigation options are presented on a smartphone may actually be different from the options presented on a desktop. Overall, it is the dynamic sites that seem to perform the best in our sample. This may be reflective of the greater focus required in terms of how each of the site sections should be laid out on the part of the retailer, whereas responsive sites automate that process more efficient perhaps, but also arguably incorporating less strategic thought around overall design. Cross-device basket This refers to items that have been added to the basket on one device showing up when that same customer logs in on another device. Every retailer in our sample had that functionality, as it has been built into platforms as a standard element now as a necessary part of modern omnichannel retail businesses. Conclusion The thing that stands out from this study and, in truth, other similar studies that we have undertaken is the need for clarity for shoppers. It remains the case that a well-informed customer has a greater chance of being a content one; a quick review of retail-specific complaints on social media and review sites are testament to that. It s so often the notknowing or when something unexpected happens that triggers negative feedback from customers. The study provides a snapshot around some of the factors that may influence a high smartphone checkout abandonment rate. In reality, there is of course no universal or easy solution; every retailer is different and there may be multiple reasons contributing to abandonment. It is also not likely that checkout abandonment can be dramatically reduced simply by making one isolated change such as by moving to a three-page checkout, for example. The checkout forms part of the overall experience and has to be viewed within that context if it is to be genuinely optimised to reach its full potential. However, checkout abandonment rates can vary quite widely between retailers and it seems apparent that by focusing on ensuring clarity for the customer and avoiding nasty surprises it is a measure that can be improved to hone retail performance. 9

10 Commentary from Colm O Monacháin, J.P. Morgan While authentication methods can reduce fraud, they can also potentially impact the speed and convenience of the online shopping experience. Having frictionless payment experience is beneficial for customers, and therefore retailers, as seamless payments can reduce the potential for card abandonment. However, retailers may need to change their systems to handle the next version of 3-D Secure (3DS 2.0), as well as working on how to meet customers expectations. And because there will generally be more challenges to payments, SCA needs to be implemented in a way that minimises disruption to the purchasing process. To this end the regulations could spark a wave of innovation that ultimately improves the online shopping experience. As retailers plan their implementation of SCA, they should work closely with their payment providers to understand the latest best practices. About IMRG For over 20 years, IMRG (Interactive Media in Retail Group) has been the voice of e-retail in the UK. We are a membership community comprising businesses of all sizes multichannel and pureplay, SME and multinational, and solution providers to industry. We support our members through a range of activities including market tracking and insight, benchmarking and best practice sharing. Our indexes provide in-depth intelligence on online sales, mobile sales, delivery trends and over 60 additional KPIs. Our goal is to ensure our members have the information and resources they need to succeed in rapidly-evolving markets both domestically and internationally. About J.P. Morgan Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. a global financial services firm with assets of $2.5 trillion and operations worldwide. It is a leading provider of payment, fraud management and data security solutions, capable of authorising payment transactions in more than 130 currencies. J.P. Morgan, through its Merchant Services business, has uniquely combined proven payment technology with a long legacy of merchant advocacy that creates quantifiable value for ecommerce companies. Its processing platforms provide integrated solutions for all major credit and debit card payments as well as mobile payments and processed more than $1 trillion in payment transaction volume worldwide in According to The Nilson Report, it is also the top merchant acquirer of ecommerce transactions in Europe 1. Source: 1 The Nilson Report, #1110, May

11 Chase Paymentech Europe Limited, trading as J.P. Morgan is regulated by the Central Bank of Ireland. The information herein or any document attached hereto does not take into account individual client circumstances, objectives or needs and is not intended as a recommendation of a particular product or strategy to particular clients and any recipient of this document shall make its own independent decision. 11