Most checkout processes are full of friction. Companies need to shift their mindsets to realise that the checkout process is fundamentally crucial for their bottom lines.
Payments company Stripe released its first ever State of APAC Checkouts report recently, which contained new data illustrating how and why top 500 e-commerce sites across 5 APAC markets have made basic checkout mistakes, increasing chances of cart abandonment.
On the occasion of this report’s release, we had the opportunity to speak with Jon Stona, Head of APAC Marketing, Stripe. Here is an exclusive interview with him.
What are the major highlights of the Stripe report (State of APAC Checkouts report)?
The report provides a detailed analysis of the 500 top e-commerce websites across Australia, New Zealand, Japan, Singapore and Malaysia, looking at how well they are set up to maximise sales conversations. The report also surveyed 500 consumers across the region to uncover insights around current shopping behaviours and trends, payment preferences, and factors that affect the checkout experience. Through this, we have uncovered common and avoidable errors in the checkout pages of many of the region’s most visited websites. The major highlights are:
- The vast majority of sites (95%) have five or more basic errors on their checkout pages.
- The four major types of errors are checkout form design, mobile optimisation, localisation and buyer trust and safety.
- Some of the other common errors include not supporting digital wallets such as Apple Pay and Google Pay, not allowing customers to save their payment information for future use, and not displaying descriptive error messages in real-time with incorrect information (e.g. invalid card numbers) was entered.
- One-third (34%) of Asia Pacific consumers say they would abandon a purchase if it takes more than two minutes to check out.
- Merchants are failing this two-minute test, with more than half (53%) of consumers saying that, on average, it takes them more than three minutes to complete a purchase.
- As a result, nearly a quarter (24%) of online shoppers abandoned a purchase in the past year because of a long checkout process.
What is the uptake rate of e-wallet payments (such as Grabpay, Apple Pay) vs traditional credit or debit cards for checkouts in APAC? Similarly, how does Paypal compare with Stripe as popular payment methods?
Digital wallets have become the new “normal” in Asia-Pacific, with 46% of consumers choosing wallets as their preferred online payment method compared to 20% in North America and Europe. Mobile wallets also allow businesses to offer a one-click payment experience. The result is consumers complete a transaction three times faster than having to enter payment details manually.
The study also showed that 13% of consumers abandoned a purchase in the past year because their preferred payment method wasn’t available. In Asia-Pacific, only 30% of online payments are made using debit or credit cards, while 46% of online payments are made using digital wallets.
Factors such as offering the right alternate payment methods and ensuring a localised checkout experience by translating the checkout page based on the country and displaying local currency can significantly help merchants increase conversion rates and reduce costs.
Why are the majority of APAC businesses still not set up to take advantage of ever increasing e-commerce opportunities? What’s stopping them from doing so?
Based on our observation, there are three major obstacles:
- A lack of prioritisation
Often, companies take the checkout process for granted compared to other aspects of the customer funnel. For instance, advertising spend in APAC is expected to grow to US$229 billion this year. There is a lot of effort that goes into driving awareness for brands to attract customers. In contrast, that same degree of resourcing and effort aren’t dedicated to the final steps of the purchase funnel.
Companies need to shift their mindsets to realise that the checkout process is fundamentally crucial for their bottom lines. Why waste billions of marketing dollars attracting customers to their website, only for these customers to quit at the last mile?
2. Underestimation of impact
Companies may not realise the impact that even basic optimisations can have on their conversion rates. A Stripe study found that offering address auto-complete can increase conversion by close to 0.8%, and using specific error messaging can increase retry rates following a card decline by as much as 3.5% (for example, changing the message from “Your card was declined” to “Your card was declined. Try a different card.”) Still, there is no one silver bullet to deliver a perfect checkout — the best are designed with dozens of best practices in mind. In isolation, each optimisation effort might seem too minuscule to matter. However, the aggregate effect of a myriad of minor tweaks and micro-optimisations can be powerful to a business’s bottom line. These increases, while individually small, quickly add up, especially for high transaction ecommerce businesses.
3. A lack of tooling
Building from the previous point, it can be difficult to stay on top of the dozens of micro-optimisations. Companies must remember that consumer behaviour never stands still, and therefore, neither should user experience. Processes like checkouts should be dynamic, living entities — not something that gets launched once and remains static.
To tackle this, companies should turn to SaaS-based technology that can automatically handle errors and optimisation, learning from the millions of other websites that it serves. SaaS checkouts continue to improve in the background so that e-commerce companies don’t have to spend precious time and resources on never-ending optimisations.
What are the key errors that APAC ecommerce sites are making, which prevent shoppers from having a smooth and seamless checkout experience? How can they resolve these shortcomings?
Most checkout processes are full of friction, devoting customers from having a smooth and seamless experience. Some of the most common errors are:
- 70% don’t allow customers to save their payment information for future use.
- 58% of checkouts don’t display an error message in real-time when an invalid card number was entered.
- 58% don’t show an error message in real-time when an expired card was used to make payment.
- 53% don’t confirm card type when a card number was entered, missing the opportunity to validate payment details in real-time.
- 52% don’t support address auto-complete.
Most importantly, there needs to be clear roles and responsibilities over the checkout process. Sometimes, the checkout process is a shared responsibility within organisations and consequently lacks the focus of a dedicated team. Marketing may think that optimising checkouts is Product’s job, while Product might assume it’s on Engineering.
The reality is that the checkout flow needs to be owned by all of these teams, and there needs to be a common goal: prioritise the user experience.
What are the steps CMOs should take to make sure that customers don’t face checkout issues or feel discouraged in shopping in any way?
Owning the checkout process in e-commerce is often seen as a technical role, but in today’s e-commerce driven world, it has inevitably bled into the marketing remit. According to Gartner, customers are more likely to renew a relationship with brands if their interactions are fast and easy — this includes the crucial last stage: checkouts.
It’s time for CMOs to pay more attention to the last mile. Beyond A/B testing and increasing conversion rates, there’s a lot more that goes into optimising checkouts than simply shortening forms or changing Call to Actions (CTA). These tried and tested tactics are only scratching the surface, and modern marketers should be doing more. The marketer of today has to start learning about things like localisation, mobile optimisation and User Interface.
To ensure that the billions of marketing dollars that go into paid advertising or SEO feed back into the bottom line, marketers must ensure that the customers driven to their product via these advertisements and SEO strategies can complete the final step: the checkout.
The quality of a checkout process has become a significant part of the customer experience. The same way user interface and experience overlap between marketing and IT priorities, so does the checkout process. From a customer perspective, there is only one experience with a brand. There is no ‘marketing experience’ and a separate ‘IT experience’. There is only the singular customer experience, and so teams across departments need to collaborate and work in tandem to provide that seamless customer experience.
How do you see the general outlook of the ecommerce industry in APAC?
In checkout design, we increasingly see that David is beating Goliath. This is because great checkout design comes from scale. While the Goliaths of the internet rely on in-house teams to take advantage of their own individual scale, smaller websites using SaaS-based checkouts are utilising the deep expertise of external software providers and the learnings from millions of websites.
This mirrors other functions in the e-commerce industry — from payments to accounting, smaller, more agile organisations outsource their needs to SaaS organisations that have deep expertise in their fields.
On a broader scale, the pandemic has accelerated retailers’ initiatives to grow revenue and innovate — by either expanding geographically, improving customer experience, or adopting new business models. For instance, according to a Forrester study, more than half (55%) of APAC retail respondents said they are adopting new business models like subscription services and 1 in 2 (51%) businesses want to expand their geographic reach over the next 12 months.
E-commerce is evidently booming. The shift to online purchasing will only gain more traction, with retail e-commerce sales in APAC projected to be greater than the rest of the world’s sales combined by 2023. While that presents a massive opportunity for individual brands, it means that the space is becoming crowded and saturated. It’s become an e-commerce world of competitors and clones, and APAC having the worst customer loyalty in the world doesn’t help.
This means that brands cannot become complacent. To tap on the ever-growing and ever-competitive market of e-commerce, brands must look for ways to differentiate themselves and create compelling customer experiences. Every conversion rate percentage matters in such a competitive and frenetic landscape.