Five lessons from behavioral economics to decrease shopping cart abandonment
Understanding the new state of online retail in Europe
Ecommerce in Europe is thriving. Online sales reached $393bn in 2020, turbocharging revenue growth for digital retailers across the continent. And with online sales expected to exceed the half a billion-dollar mark by 2025, there's boundless opportunity for retailers to innovate and unlock more growth.
At this pivotal moment, our exclusive new report deep dives into the trends shaping retail across Europe. We've surveyed 10,000 consumers from 16 European countries and 550 senior executives at top ecommerce businesses to uncover unique insights and perspectives to help retailers unlock this growth potential.
Here are some of the key learnings from the report.
1. Localized payments win customers in Europe's new growth markets
Europe saw some of the world's largest ecommerce growth during 2020. And not just established markets. Countries such as Greece, Portugal, Ireland, and Poland saw a rapid increase in consumer adoption of ecommerce, paving the way for powerful new ecommerce markets across the continent.
Yet, not all retailers were ready to capture this opportunity. Our research found that 43% said they weren’t prepared when new markets within Europe wanted to buy their goods because they didn't have the necessary payment methods to capture that demand and revenue.
This matters because 60% of consumers say they'll abandon their cart if they cannot pay using their preferred payment method. In other words, selling online to European consumers without accepting their preferred payment method is akin to leaving money on the table.
Half of the retailers we interviewed are responding to this challenge by expanding the range of alternative payment methods they offer. Yet there's a lot of work to be done, with 68% telling us they don't offer local payment methods in every country they serve. Closing this gap will be critical in the next 12 months.
2. Payments will differentiate brands, attract new customers and boost basket sizes
While cards remain the dominant form of online payment across Europe, consumers are beginning to experiment with newer forms of payment. Thirty percent of consumers tell us they actively want to try new payment methods based on their digital payments experiences in 2020. This creates an exciting opportunity for retailers to show they understand their customers by allowing them to utilize these payment methods.
Buy Now Pay Later (BNPL) is one example. The payment method has received plenty of consumer interest in the past 12 months, with 23% saying they've used it at least once. This includes many consumers aged between 45 and 74 — a demographic that isn't usually considered a prime target for this payment method.
And what's most exciting for retailers is that BNPL proves an effective tool to get consumers to buy more. Our data shows consumers using BNPL tend to buy 50% to 200% more items per transaction than they do when using other forms of payment. Given these numbers, the 62% of merchants that aren’t yet set up to offer BNPL will need to change course fast or risk falling behind.
Crypto is another movement building momentum. And while only 5% of online shoppers say they've used it to make a purchase in the past 12 months, 29% intend to do so in the year ahead. It's no wonder then that crypto is climbing up the payment agenda. Just under half of ecommerce executives say accepting crypto payments will be an important marketing tool. And 42% consider it as a smart way to improve the speed and security of payments.
3. Personalized experiences are the next frontier in the ecommerce experience
Digital retailers cannot stand still in the battle for ecommerce supremacy. And while localizing the payment offering for each market and offering all key payment methods is essential, it's likely to become table stakes very soon.
So what's next on retail's radar? According to the consumers we surveyed, it's all about getting a personalized end-to-end experience.
Our data finds that 74% want to receive more personalized and customized content when shopping online. At the same time, 71% would like to access more bespoke products which they can help to design.
The prize for getting this right is immense. Research by Accenture estimates that digital personalization in ecommerce could unlock $2.9 trillion for retailers within ten years. This is leading some retailers to move away from loyalty schemes to personalization tactics and the data that drives them.
Yet, with only 22% of European merchants saying they are investing heavily in personalization, they risk being outplayed by brands in the US who are already making personalization a top priority.
4. Digital payments are set to be the catalyst of business-model innovation
Europe's retail landscape has changed dramatically in the past year. That change is set to continue: 97% of ecommerce CEOs say they need innovative business models to stay relevant, profitable and resilient in the next 18 months. And over half say that digital payments will be the catalyst for that change.
That might mean developing subscription offerings: over half of consumers say they would subscribe to receive goods regularly from their favorite brands. Today, only 21% of retail ecommerce merchants provide monthly or weekly subscription options showing there is plenty of room for innovation and growth in this space.
We also find consumers increasingly looking to shop in the social channels where they spend most of their time. This trend is especially prevalent amongst Gen Z and Millenials, where 63% say they hope to shop more frequently within social media apps. Yet, in response, only 26% of ecommerce merchants say they'll increasingly use social media as direct sales channels.
And what about the future of the high-street? We found that 39% of consumers are not ready to abandon the high street entirely and would like to retain the choice of shopping in-store. Therefore, hybrid shopping experiences may be the way to go for retailers, with 68% of consumers saying they’d like to visit experiential showrooms to meet brand representatives and trial products before buying online.
Get ready for the future of retail
Whatever trends and predictions ecommerce merchants in Europe choose to heed, one thing’s for sure: payments will be a catalyst for unlocking more revenue and giving customers the experiences they crave. Find out more by downloading our new report and getting the insights needed to unlock every opportunity for growth and success.
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