TOP MERCHANTS COMPARED TO THE FIELD › ... · 1 Q3 2016 results are based on an analysis of...

Q3 2016

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

TOP MERCHANTS COMPARED TO THE FIELD

75.9The top 30 merchants have a CCI score more than a third higher than average.

Checkout Conversion IndexTMThe

57.2/Top 30

Average

$159.6B$159.6 billion is our estimate on how

much underperforming merchants will leave on the table in 2016.

• Product reviews & recommendations

• Shipping same as billing

• Coupons

• Live site help

• Product reviews & recommendations

• Shipping same as billing

• Coupons

• Live site help

• Free shipping

• Security logos

Checkout Conversion IndexTM

© 2016 PYMNTS.com all rights reserved 2

Acknowledgment

AcknowledgmentSponsorship for the PYMNTS Checkout Conversion Index™ was provided by BlueSnap. BlueSnap has no editorial influence over the Index’s content. In addition, the data model and supporting research was developed exclusively by the PYMNTS.com research and analytics team and is proprietary. Any research, unless indicated otherwise, is conducted exclusively by this team and without input or influence from the sponsoring organization.

http://pymnts.com/

Checkout Conversion IndexTM


Snapshot for Q3 2016

1 Q3 2016 results are based on an analysis of websites in July 2016

57.2Average Checkout Conversion Index (CCI)

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

for Q3 2016

Up 0.8 points from Q1 2016

16 A’s16 vs. 10 websites with an “A” score of 75+

in Q3 2016 vs. Q2 2016

6 more “A” e-tailers in Q3 2016

than in Q2 2016

161161 seconds

(average time to checkout for Q3 2016)

21 seconds faster than Q2 2016

128128 seconds vs. 161 seconds

Checkout time for top merchants

vs. average for Q3 2016

Top merchants more than 20 percent

faster than average

75.975.9 vs. 57.2

CCI of the top 30 merchants

vs. average for Q3 2016

Top merchant score is more than one third

higher than the average score

$159.6B$162.4 billion is our estimate of 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 Ten Features ComparedTop merchants beat average merchants significantly for every feature.

Feature Top 30 merchants Average

Time in seconds 128 161

Total clicks for checkout 17 22

Product reviews & recommendations 100% 82%

Shipping same as billing 100% 87%

Free shipping 93% 78%

Coupons 97% 75%

Security logos 97% 66%

Live site help 97% 88%

Customer profile required 0% 32%

Number of payment methods accepted 8.7 6.1


Checkout Conversion IndexTM Snapshot for Q2 2016

The Moment Between Buying and Paying: Payment Success for Top and Bottom MerchantsGetting customers is a lot of work. You have to convince them to come to your website. Then, when they are there, you have to convince them to buy something. But the work still isn’t over. If a customer’s transaction is declined as they pay, or if the process simply takes too long, the customer might wander away. The good news is there are three main factors, which determine if a transaction is going to be declined. The bad news is these are mainly features of the industry a merchant belongs to and are not under a merchant’s control. The key to a successful payment? Low value, one-time purchases across the same currency.

FeatureTop Payment

Success MerchantsBottom Payment

Success Merchants

Percentage of sales where the transaction is the same currency as the customer’s card

98% 20%

Average transaction value $8 $651

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

75% 52%


Why We Need A Checkout Conversion IndexTM

Why We Need A Checkout Conversion IndexTM

Today, shopping is done with fingers rather than feet. Sure, people still visit brick-and-mortar shops, but there’s a lot of action happening through window-shopping. Browser window, that is. Every day millions of shoppers browse websites on their computers and phones. They browse, they sometimes buy, and they receive. In the U.S. customers will shop online to the tune of $399 billion this year. Quintuple that for an estimate for how much will be spent globally: $2.05 trillion.¹

But merchants may be leaving as much as $160 billion on the table. Why? Because the formula of “browse, buy, receive” doesn’t quite work that way. And it’s not because the customer doesn’t want to buy: it’s because the customer has to jump through so many hurdles between selecting a purchase and paying for it, that they get discouraged and give up. Despite impressive estimates for eCommerce growth, customers are abandoning their virtual shopping carts at alarmingly high rates.

It’s a problem that costs merchants as much as 40 percent of their sales—depending on the type of merchant and just how complicated the checkout process is for shoppers.² 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. As more commerce moves online, understanding how to make it easier for the customer to buy is crucial for retaining customers.

The PYMNTS.com Checkout Conversion Index (CCI), a collaboration with BlueSnap, measures the amount of friction consumers experience when they shop online. It does this by identifying the website and payment attributes that are most likely to create problems during the checkout process and result in abandoned carts and lost sales.

1 These numbers are based on forecasts for 2016. “Online Retailing: Britain, Europe, US and Canada 2016”, Centre for Retail Research, available at:

http://www.retailresearch.org/onlineretailing.php and Statista (2016) “Retail e-commerce sales worldwide from 2014 to 2018 (in billion U.S. Dollars),

available at: http://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

² This is based on the analysis of conversion rates for the sites in the study with data available.

http://www.retailresearch.org/onlineretailing.php

http://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/


The Checkout Conversion IndexTM

The CCI is based on a team of “shoppers” shopping at over 630 U.S. based eCommerce sites across 14 different merchant categories. These sites represent over 70 percent of all U.S. eCommerce retail spending. These merchants ranged from having revenues of $1 million a year in online sales, to including some of the largest e-tailers in the world who have more than $130 billion in annual online sales.

We identified more than 55 attributes and used them to score merchants on how easy (or hard) going from selecting a purchase to making the final payment was on their website. We determined what lead to a smooth experience, but also tallied up the hurdles.

We used statistical methods to determine which of these attributes introduced friction and lowered conversion rates. The lower the converstion 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. 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 likelihood of conversion from browse to buy, and then 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 and its evolution 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 clunky websites that make it hard for people to shop, buy, and pay, to transforming into sites that run so smoothly its better than zipping around the mall. And we let you know how the average Joe is doing compared to today’s superstars. You won’t hear us talk much about differences across e-tailers based on revenue or page views or other measures of size. We continue to find that there isn’t a strong correlation in performance based on size. In fact, the larger the merchant, the larger the range of performance.

Occasionally merchants will drop out and we’ll replace them with others to maintain a consistent sample. But when we discuss performance over quarters, in order to make an apples-to-apples comparision, we just compare the merchants whom we’ve kept tabs on in every issue of the CCI. For this issue, that’s 635 merchants.

The Index: Now vs. ThenGood news: the CCI continues its upward trend. The CCI rose from 56.4 as of April 2016 to 57.2 as of July 2016. That’s a 1.4 percent increase over three months, continuing last quarter’s upward trend. Last quarter’s increase was explained by a reduction of friction during the pre-payment and the payment processes. However, this quarter’s increase is the result of reduced friction during the pre-payment process. Friction during the payment process remained flat.

Q4 2015 Q1 2016 Q2 2016 Q3 2016



Who’s Acing, Who’s Flunking; Now vs. ThenThere seems to be no middle ground when it comes to e-tailers: they are either superstars or flunking. There are very few “average” perfomances. Overall e-tailers are continuing to improve.

Out of 635 retailers, 142 increased their score by more than 5 points between April and July. Only 81 saw their scores decline by more than 5 points. Between January to April, 215 increased their score by more than 5 points and 70 actually saw their scores decline by more than 5 points. Taking into consideration a bigger spread, 48 increased by more than 10 points while 26 fell by more than 10 points. Last quarter, 88 merchants 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. However, every quarter brings a new report card and a chance to improve.

Grade Sites (%) in Q3 2016 Sites (%) in Q2 2016 Sites (%) in Q1 2016 Sites (%) in Q4 2015

A (75+) 16 (2.5%) 10 (1.6%) 4 (0.6%) 7 (1.1%)

B (65-75) 189 (29.8%) 161 (25.4%) 110 (17.3%) 140 (22.1%)

C (55-65) 206 (32.4%) 227 (35.7%) 223 (35.1%) 224 (35.3%)

D (45-55) 119 (18.7%) 119 (18.7%) 148 (23.3%) 141 (22.2%)

F (45-) 105 (16.5%) 118 (18.6%) 150 (23.6%) 122 (19.2%)

Similar to last quarter, there is a significant improvement in the number of top scores (As and Bs): 16 sites got an A. That may not seem like a high number, but it’s a 60 percent increase from Q2 2016. In fact, the number of merchants that got an A has increased 300 percent since Q1 2016.. There’s improvement for the low scorers too: 13 sites that flunked in Q1 2016 made a passing grade this quarter, while the number of sites that got a D last time remains the same. Overall, almost 65 percent of the sites got an A, B or C this quarter, which is an improvement of the 62.7 percent from last quarter. However, there is still room for improvement. Almost a third got a Gentleman’s C and more than a third got a D or F.


The trend this quarter points to overall improvement. Sites are getting better and there are several more sites with As and Bs than in the previous quarter. As and Bs sites in Q3 2016 were 32.3 percent of the merchants in our study, while in Q2 2016 those represented 26.9 percent of the sites and in Q1 2016 they represented 18 percent of the sites. There’s still work to be done, but on the whole, merchants seem to be getting the message: the payment process matters.

The Best, The Worst, and The RestTo give you a sense of the difference in performance we compare the top 30 websites, 30 average websites, and the worst 30 websites. The top 30 websites averaged a CCI score of 75.9 earning them a solid “A” on the whole. Their scores ranged from a low of 73.9 (B) to a high of 82.3 (A). Keep in mind, it’s not easy to get an A— only 16 of the top 30 websites were able to get there. Three quarters of the top 30 websites scored between 74.5 (grade of B) and 76.7 (grade of A). The worst 30 websites averaged a CCI of 23.8 giving them an average grade of F. Their scores ranged from an abysmal 11.8 to “high” of 30.5.

Not all merchants improved their score this quarter. Top and average merchants have a higher score this quarter, but the bottom merchants, decreased their scores.

Q4 2015 Q1 2016 Q2 2016 Q3 2016



Another way to gauge how well websites did is to measure how long it takes on average for a shopper to go from buy to pay. A purchase took 161 seconds as of July 2016, down 21 seconds from April 2016—a significant improvement on average for all merchants. This improvement is reflected among top and worst performing merchants too. The graph below is a snapshot of how long it takes customers to complete a purchase for the best 30, average 30, and wost 30 e-tailers.

Q4 2015 Q1 2016 Q2 2016 Q3 2016

An interesting fact, is that the range between the top and bottom merchants has decreased over time. In the first quarter of 2016 , there was a difference of 131 seconds between the top and bottom merchants, but that has decreased to 48 seconds this quarter.

What does it take to lead the class when it comes creating a smooth online shopping experience? The table below examines the 10 most important features of a smooth online shopping trip and breaks down the numbers by merchant grade.



The Makings of a Top Performer

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

Time in seconds 119 134 163 188 184

Total clicks for checkout

17 20 22 24 25

Product reviews & recommendations

100% 100% 93.2% 78.2% 28.6%

Shipping same as billing

100% 100% 97.4% 83.2% 43.8%

Free shipping 93.8% 91% 75.2% 71.4% 66.7%

Coupons 100% 96.8% 76.2% 67.2% 37.1%

Security logos 93.8% 85.2% 68.9% 54.6% 32.4%

Live site help 100% 98.4% 92.2% 76.5% 68.6%

Customer profile required

0% 9.5% 26.2% 47.1% 68.6%

Total payment methods accepted

8.8 6.9 5.9 5.7 4.9



Bottom line: 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 16 of 642 got an A this quarter. Online shoppers were able to finish the journey in two thirds of the time on “A” sites (119 seconds) compared to “F” sites (184 seconds). This is consistent with last quarter, where the difference was 146 vs. 209 seconds. However, last quarter, the difference between A and B sites was insignificant, but has since changed. A sites, on average, are 11 percent faster than B sites. In terms of the number of clicks, the difference between A and F sites has narrowed since the previous quarter when A sites required half as many clicks as F sites. This quarter A sites required 32 percent fewer clicks to complete a purchase than F sites.

Surprinsingly, this quarter not all the A sites have security logos. This is not because some sites stopped displaying their security logos. Rather, some of the new sites that joined our study and received an A, do not provide security logos. This, however, did not stop them from earning an A overall because they scored so well on other features.

Sites that got an F lagged far behind on all features. Only 28.6 percent of them provided product reviews or recommendations, compared to 100 percent of the sites graded A and B. This is a decrease from the past two quarters. During Q2 2016,. 30.5 percent provided product reviews/recommendations and 41.6 percent provided them during Q1 2016. Similarly, only 37.1 perecent of F sites provided coupons and only 32.4 percent provided security logos. By comparision, 100 percent of A sites provided coupons and 93.8 percent provided security logos. F sites have a lot of room for improvement for sites at the bottom.

Industries That Shine, and Those That Don’tWhen we compare industries by average CCI, none of them are doing well—but most of them have improved since the previous quarter. And by not doing well, we mean the best industries barely made a C. Six of fourteen industries got a D or F. No industry improved their grade and one (subscription retail) even dipped from a D to an F. Subscription retail also earned an F during Q1 2016, so it seems like it’s improvement during Q2 was only temprorary.

Even though the grades are so low, there’s still a huge difference between the best and the worst. The highest scoring industry—Apparel and Accesories (CCI of 64.1)—was 24.2 points ahead of the lowest scoring industry—Marketing and Other Software Services which had a CCI of 39.9. This range has increased over the current year, during Q2 there was a 23 point difference, and during Q1 a 21.5 difference. Overall top industries are improving every quarter and bottom industries are doing worse each quarter.

There were significant changes for the top half . Mass Merchants, which was the top scoring industry in the previous quarter, fell to third place out of fourteen. Apparel and Accessories rose from second place last quarter to the top of the list in this quarter. Sporting Goods moved from third place to the second and Hardware and Home Improvement jumped from sixth place to the fourth.



IndustryLetter grade in Q3 2016

CCI Q3 2016Letter grade in Q2 2016



Apparel & accessories

C 64.1 C 63.1 C 59.6 C

Sporting goods C 63.9 C 62.4 C 59.2 C

Mass merchant C 63.8 C 63.3 C 58.1 C

Hardware and home improvement

C 62.8 C 60.8 C 59.0 C

Computer and electronics

C 62.7 C 61.2 C 56.3 C

Housewares and home furnishings

C 62.1 C 61.1 C 59.9 C

Health and beauty C 61.4 C 60.1 C 57.9 C

Automotive parts and accessories

C 60.8 C 59.1 C 58.5 C

Books, music, video and entertainment

D 51.5 D 51.0 D 46.3 D

Travel D 50.6 D 51.7 D 48.2 D

Delivery services D 48.8 D 47.1 F 42.8 F

Subscription retail F 44.9 D 46.0 F 44.9 D

Gaming F 41.9 F 42.1 F 41.7 F

Marketing and other software services

F 39.9 F 40.5 F 38.6 F



Bigger Really Isn’t Better, Does This Still Hold?In previous issues of this index, we found that bigger didn’t necessarily mean better. In fact, smaller websites were almost as good as websites by big merchants, perhaps because smaller firms are more agile: they aren’t bogged down by legacy software and have smaller inventories. However, this quarter, bigger did in fact do better. We’re still waiting to see if this will hold true over time,. but in the meanwhile, we’ll take a closer look at the results.

We divided e-tailers into five size categories: the largest and smallest 20 percent and then three middle groups of 20 percent each.

Overall the largest 20 percent of the sites seem to have the highest scores, but we’ll have to wait until next quarter to learn if this is a trend.

During the first quarter, the largest 20 percent of the sites scored roughly the same as the rest of the sites, averaging 58 points. During Q2 their average rose to 62 points. While all of the merchant groups also saw their scores increase, the largest 20 percent of merchants had the highest increase. This quarter, the trend continues and the average score for this group of merchants was 65, while the rest of the size groups had scores that increased only slightly or not at all. Therefore, in Q3 2016, larger merchants are leading with a score of 65 points, followed by middle and middle-small merchants who scored 63, a difference of 3.2 percent.

Index score and range of the largest and smallest merchants – Q3 2016

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

Maximum

78

63

31

77

63

32

76

61

46

82

59

23

80

65

19

82

57

12

Larger 20% All merchants

Average Minimum






Maximum

78

61

33

77

62

37


Average Minimum

61

41

8376

17

59

80

34

6256

14

83



Maximum

79

57

25

73

59

35


Average Minimum

59

36

76 77

17

57

78

16

5853

12

79

With regard to purchase time, large retailers are closing in on small retailers. This quarter our shoppers zipped through the websites of the smallest 20 percent of retailers in 150 seconds and the largest 20 percent in 159 seconds. Last quarter, it took shoppers 156 seconds to shop on small retailers’ sites and an agonizing 197 seconds to make it through a large retailer’s site.

Overall, why are large merchants doing so much better? The explanation for this is that larger 20 percent of the merchants have improved their sites for almost every feature. They closed the purchase time gap. In addition, they cut down on the steps involved for setting up a profile in order to make a purchase, and started offering reward programs for loyal customers.


Deep Industry Dive

Apparel and AccessoriesEvery issue we tackle an industry and take a deep dive into what’s working, what’s not, and where they are on their journey to achieve the ideal shopping, buying, and paying experience.

This issue, we’re going to examine the Apparel and Accessories industry since it’s CCI jumped from second place to first this quarter. We’re going to take a look at the features that make this industry important, and what they did to improve their score. Of all of the merchants we studied, 69 fall in the apparel and accessories category.

The average shopping trip at an Apparel and Accessories site took 160 seconds to complete roughly the same it took for the average merchant in the overall index –161 seconds. However, whithin the industry there’s been a huge variation. The fastest apparel store was able to complete the purchase process in 50 seconds and the slowest one in 324 seconds.

Ordering from an apparel store requires 22 clicks on average, the same amount required by an average retailer. For the smoothest apparel store it took only 5 clicks to make a purchase, while for the one with the most friction it took 46 clicks. For the top 10 performers making a purchase required an average of 17 clicks, for the bottom 10 it required an average of 24 clicks.


Deep industry dive: Apparel and accessories

The twelve most popular features for apparel and accessories merchants are listed below.

Feature Apparel and accessories Average merchant

Inventory status 81.2% 66.2%

Product reviews & recommendations 88.4% 82%

Social sharing 76.8% 53.8%

Product details 95.7% 95%

Progress bar 76.8% 68.1%

Shipping same as billing 97.1% 86.8%

Free shipping 85.5% 78.4%

Coupons 92.8% 74.9%

Mobile version of website or mobile-optimized 92.8% 88.8%

Site help - live 97.1% 87.5%

Customer profile required 15.9% 31.5%

Number of payment methods accepted 7 6.1


The score change for apparel merchants is explained mainly by improvements for some of the features listed above. While most of the features remained the same, there were improvements in the average time it took to purchase, inventory status, progress bar, shipping same as billing, free shipping and total number of payment methods accepted. For a few features, the number of merchant providing those features decreased, such as the case with product reviews and recommendations, address confirmation and guarantee or refund. Even so, overall the improvements outweighed the decrease in features, so total score improved. The graph below tracks the evolution of features since Q4 2015.



Below is our report card for Apparel and Accessories merchants

Grade Number of merchants Percent of apparel merchants Percent for all industries

A 2 2.9% 2.5%

B 37 53.6% 29.8%

C 21 30.4% 32.4%

D 6 8.7% 18.7%

F 3 4.3% 16.5%

While fewer than one third of the merchants in the average industry earn As and Bs, in Apparel and Accessories 56.5 percent of the merchants earned the top scores. In the average industry, 35.2 percent of merchants earn Ds and Fs, but for Apparel and Accessories, only 13 percent of merchants earned Ds and Fs.

Q3 2016 Q2 2016

Q1 2016 Q4 2015

Q3 2016 Q2 2016

Q1 2016 Q4 2015

Total Number of Payment Methods

Q3 2016 Q2 2016

Q1 2016 Q4 2015



Feature Article

Fewer Clicks Rain More Dollars For Online Merchants Online shopping is a serious moneymaker for retailers. Shoppers in the United States are expected to spend nearly $400 million this year, and when shoppers from around the world are considered, there is more than $2 trillion in sales to be collected by merchants, according to the Q3 PYMNTS Checkout Conversion Index.

But most merchants miss out on the chance to make even more money from mobile and online sales. According to Index data, online retailers will lose more than $150 billion in potential sales due to frustration from the obstacles and friction customers encounter while trying to complete an online transaction.

Any lost sale is painful for merchants, and $150 billion accounts for a lot of abandoned shopping carts. However, there is a fix, and the secret to rescuing some of that lost revenue may lie in the way retailers collect payment for a purchase, according to Andy Barker, Magento’s head of payment strategy.

While many conversion strategies have found ways to get shoppers to add items to their digital shopping cart, more attention needs to be paid in order for those items to become completed transactions, Barker told PYMNTS in a recent interview.

"I think there's a long-standing conversion issue that exists, and it's centered around payments," Barker said. “There’s been a lot of focus and effort on the responsiveness of the design, of getting those products into the cart, but the true challenge is turning that cart into an actual order, and in many cases, that centers around the actual collection of payment.”

Getting to the heart of the problemBarker noted that, in his experience, one of the biggest challenges for retailers looking to increase their conversion rates has been a lack of understanding. Merchants often set up a payment procedure and forget about it, assuming that their chosen solution is the right one for all customers, he explained.

"What happens in the eCommerce environment, then, is that those customers get frustrated, and then they tend just to drop off and go somewhere else and drastically impact conversion," he said. "In many cases, the merchant doesn't actually know what the problem was."


Feature Article

So what is the problem, then? Consumers, trained by modern technology and convenience, expect the checkout process for mobile and online transactions to be as easy as paying for a purchase at a cash register in a brick-and-mortar location, according to Barker. Instead, they often face clunky, slow or confusing online checkout screens, causing them frustration.

That friction and confusion can be so discouraging to many customers that they’ll even abandon the purchase. Forty percent of online sales, depending on the merchant, are abandoned due to frustrations like these, according to Index data.

Barker noted that retailers looking to make the checkout process easier for consumers do not have the benefit of face-to-face interaction with customers. So, to figure out what's causing frustration for their clients, they have to watch conversion and acceptance data carefully.

“The disparity in having that one-to-one interaction with humans prevents them from being able to immediately identify that there’s a problem, and then immediately call to action to correct that problem,” he said. “If they’re not actively looking at approval, acceptance and conversion rates, based on the tenders that they’re using, in many cases, they can have a problem without actually fully knowing what the problem is.”

Fewer clicks, happier customersOnce merchants have a better understanding of the frustrations being felt by consumers, one of the most important things they can do to ease friction is reducing the number of steps consumers must complete between picking out their items and completing the transaction, Barker noted.

"From my perspective, the optimum checkout flow is one that collects the necessary information from the consumer and lets them check out with the least amount of steps," he said. "Anytime you have a page or change, then there's an opportunity for a customer to either change their mind or for something else to go wrong."

That sentiment is supported by data from the Index. According to PYMNTS’ research, the merchants with the best checkout conversion grades allow shoppers to move quickly and easily through the payment process.

Customers shopping at merchants with the highest scores took an average of just 128 seconds (just over two minutes) and 17 clicks to complete their purchase. Shoppers at retailers with just average checkout processes, however, spent 161 seconds and 22 clicks on the site.

Barker said that while merchants are working to make checkout simpler, there is still a long way to go. The average Index score on a scale did improve in our latest edition, but by less than 1 percent.


“You saw an evolution in the 2000s to move to these one-step checkout processes,” he said. Now, merchants should look to let customers pay while providing as little information as possible. “Only ask for the information that’s necessary for the transaction; that’s what the ideal transaction is.”

What’s next?As more money is spent via online and mobile retailers in the coming years, it is crucial for merchants to understand just how much they’re letting walk out the door due to customer frustrations. It’s $150 billion now, but with more commerce moving to digital channels, it could soon be more.

In order to keep that money from walking out the door, merchants need to understand what is frustrating their customers and what can be done to fix it. Barker said that he sees an opportunity for a company to come in and push what has become a stagnant market, as Apple did with the introduction of the iPhone, by giving customers what they really want.

“The market was focusing on the wrong things. The iPhone came out and disrupted that, and it forced the collective to start looking at the cellphone differently,” he said. “The industry needs to look at how we leverage the mobile device to be able to start getting payments to fade in the background.”

It appears that simplicity is they key for merchants looking to boost their conversion rates and keeping customers happy.

Feature Article


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.

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TOP MERCHANTS COMPARED TO THE FIELD › ... · 1 Q3 2016 results are based on an analysis of...

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