Brought to you in partnership with Klarna
In the UK market, it is imperative for retailers to offer a compelling and effective digital sales process in order to make an impact with consumers, who are increasingly migrating their purchasing habits online.
The UK has a highly competitive commerce market which means businesses need to go beyond enabling seamless online and mobile commerce. A strong digital presence is extremely important to meet customer expectations, as well as drive transactions and provide consumers with effortless interactions online.
User expectations regarding when, where, and how they shop have skyrocketed in recent years. As a result, merchants are today under greater pressure than ever to deliver an industry-leading service, including optimising payments capabilities at checkout.
UK analyst house Ovum partnered with payments provider Klarna to survey 100 UK merchants with revenues of over £200m per year. The study investigated the state of online commerce and explored how the industry distinguishes between challenges and opportunities.
The survey of merchants highlighted the rapid evolution of the digital retail landscape and the challenges retailers face, as they seek partners who can deliver the required technology and payments solutions.
Some of the key findings were as follows:
Digital channels are fundamental for success
The findings show that in 2015, online channels accounted for 47% of sales – forecasted to increase to 52.5% of sales by 2019. Mobile channels are growing at an exponentially faster rate than online platforms, increasing from 1.8% in 2015 to a forecast of 12.8% by 2019.
These findings show that investment in technology channels is increasingly important to keep up with the trend of being mobile-native. Merchants are increasing their investments in payment capabilities for successful omni-channel platforms to further competitive pressure.
Millennials make up for majority of online shoppers
The impact of Millennial shoppers is recognised across all retail segments, with Millennials now accounting for over 50% of digital sales by volume, particularly amongst e-commerce specialist websites and department stores. Retailers should invest in optimising technology and incorporating user-friendly interfaces to meet the demands of younger customers.
According to the Ovum report, merchants are aware of the importance of the Millennial consumer, with over 90% of merchants reporting that the demands of Millennials are a driver behind their technology investment. This is more prevalent amongst fashion retailers, where 95% strongly agree that they are investing to meet the demands of Millennials.
The focus on frictionless checkouts
An estimated 20-60% of all shopping carts are abandoned, leaving retailers struggling with the high-levels of lost sales. According to 52% of merchants, friction in the checkout process is the top driving factor that leads to shopping cart abandonment. A further 40% of merchants cited reasons such as not accepting a payment method that consumers preferred to use, and 39% cited a lack of lending or credit options.
Improving financial options on commerce channels
Offering new forms of consumer financing can improve competition and gain the interest of new consumers in the UK. When merchants were asked about specific payment methods they would like to introduce, 76% of respondents cited consumer finance at the online checkout.
Not having the liquidity to finance a purchase is a major friction point for many customers, particularly Millennials, but new tools and financing methods can help to improve the checkout process and appeal to a multitude of potential new customers.
However, retailers also understand that financing options can be complicated and expensive. Whilst in-store credit is not a new concept, online credit can be more challenging. That’s why looking to providers who have faster credit applications, real-time decisioning and easy integration can be a strategic advantage for merchants.
Download your complimentary copy of Strategies for optimizing online commerce to read the full report
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