As the economic outlook continues to deteriorate around the world in the face of rising prices and interest rates, consumers are cutting back on their spending and prioritising essential goods and services. In March 2023, consumer confidence in the EU was more than 20 p.p. below its long-term average with nearly 4 in 10 Europeans having reduced their spending on non-food discretionary items.
At the same time, technology is driving change across virtually every industry, and retail is no exception. From the use of artificial intelligence and machine learning to the integration of virtual and augmented reality, growth-minded retailers are embracing the many opportunities that technology provides to enhance their customer experience and build long-lasting relationships with their customers.
How can online merchants respond to these developments? Benoit Boudier, Go to Market and Business Development Lead, Aurelie Cabaret, Head of Marketing for Online Growth, and Lefras Coetzee, Director of Payment Products at Worldline, discuss how merchants can maximise their sales.
Online sales are undergoing a transformative shift, heading in a new direction towards more sustainable levels of growth. Consumers are focusing their spending on essential items because of the current state of the economy: according to PwC, 96% of consumers intend to adopt cost-saving behaviours over the next six months.
Gone are the days when success in online retail solely depended on online stores. Merchants should broaden their horizons and consider diversifying their presence beyond traditional websites in order to reach more customers. New channels are one of the main enablers of future ecommerce growth; for instance, in 2020-2021, sales from marketplaces accounted for 62% of global ecommerce revenue.
And that’s not all. We like to think about small changes that retailers can make to respond to the changing landscape. Online merchants should collaborate with payment providers to maximise their conversion rates. By optimising their acquiring connections, retailers have the potential to increase acceptance rates by up to 10%. In some cases, this can simply be a question of geography. Acquirers usually specialise in distinct markets, allowing them to fine-tune their rules and operations for maximum efficiency in those regions.
Another factor is partner management. By working closely with issuers, we can reduce declines and improve authorisation rates. Furthermore, acquirers can leverage data analytics and transaction management to reduce chargebacks.
'Every day I speak with online retailers who are concerned about the current economic conditions. With our local expertise, we explore how we can provide the best customer journey that simplifies shopping and increases conversions. This is key to thriving when times are tough for end-customers.'
Creating a memorable and engaging customer experience is paramount in today’s retail landscape. This presents an opportunity for retailers to rethink the ways they interact with their customers. While considering multiple channels like social media or the metaverse is essential, the emphasis should be on optimising customer experience to cultivate long-term relationships with your customers and turning them into advocates for your brand.
The payment step is one of the most critical parts of user experience. Arriving at the final stage of conversion, your customers should be able to pay easily. Put yourself in your clients’ shoes on a regular basis; it’s the best way not to lose track of what is essential to them and it’s key to creating a positive end-to-end experience, encouraging shoppers to come back again.
To effectively win customer loyalty, it is crucial to establish a presence where your customers are. That can be marketplaces, platforms, and apps such as TikTok. For example, if 80% of your audience is using TikTok, then your marketing and distribution channels need to reflect that. In addition, tailored offers and targeted promotions can enhance customer loyalty and drive sales on these channels. So don’t shy away from personalisation – according to Bain, 76% of consumers are willing to provide more personal data if it results in a better experience.
'Wherever you decide to sell, make sure your customer journey is seamless. I can’t recommend you enough to test your strategies and actively seek feedback from your clients. There are extended ways to optimise end-users’ buying steps through customisation, localisation, or choice of payment methods. Then, you’ll notice more customers will decide to shop with you again. This is key to reducing your customer acquisition costs and growing your business sustainably.'
Technology is revolutionising the face of online commerce. The rise of Open Banking and the growing popularity of subscription-based business models will play in critical role in the evolution of traditional commence. Payments based on Open Banking are expected to increase almost sixfold to over USD 330 billion by 2027.
One specific avenue for growth lies in leveraging subscriptions. New payment methods can help merchants improve the customer journey and even change their business models. For example, by enabling one-click payments and saving a customer’s card details for subsequent use, retailers can offer products and services based on recurring payments, such as monthly subscriptions. In a recent report by Zuora, it was found that subscription businesses have outpaced S&P500 growth rates by 4.6 times over the past decade.
The trend towards alternative payment methods is making checkouts quicker and is opening up new revenue opportunities. Merchants can see they need to move beyond card payments.
'I always advise merchants to prioritise customer centric technology. By embracing Open Banking, alternative payment methods, and harnessing the power of subscriptions, merchants can create exceptional customer experiences that position their brand for long-term success. It’s the best thing that a retailer can do today to compete against the well-established brands like Amazon.'
In the face of economic challenges, online retailers can still thrive by adopting the right strategies. By leveraging technology, collaborating with payment providers and enhancing customer engagement, retailers can navigate current market conditions and position themselves for sustainable growth. No matter your size or your ambition, Worldline is here to support your ecommerce growth every step of the way. Get in touch today!
Worldline helps businesses of all shapes and sizes to accelerate their growth journey – quickly, simply, and securely. With advanced payment technology, local expertise, and solutions customised for hundreds of markets and industries, Worldline powers the growth of over one million businesses around the world. Worldline generated EUR 4.4 billion in revenue in 2022.
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