More customers are shopping online than ever before, and many businesses are rising to meet demand through intuitive ecommerce experiences. However at the same time, cart abandonment remains a frustration for retailers. The cross-industry cart abandonment rate lingers at just below 70%, and represents an estimated $18 billion in lost sales every year.
There are many reasons why consumers might not complete their purchases: for some, shopping carts are a stand-in for window shopping. Other common reasons include steep additional costs (shipping, fees, and taxes), mandatory account creation, and complicated checkout processes. But perhaps the largest barrier is the simplest: shoppers are worried about being able to afford the purchase.
That's one reason why so many retailers are offering "buy now, pay-later" options. BNPLs can help customers afford purchases they may otherwise have to skip by breaking them into smaller monthly installments. But not all BNPLs are created equal, and in fact, some may create as many barriers as they remove.
By easing financial pressure pre-purchase
Social distancing and other public health precautions have made it harder for would-be buyers to window shop at brick-and-mortar stores. Instead, window shoppers are using their online cart to compare products across multiple retailers. While some of this behavior is unavoidable, some retailers have leveraged more flexible payment options to get customers from browsing to buying.
This is particularly true for bigger-ticket items, where affordability is often the biggest differentiating factor. More than 135 million US shoppers have established credit and the means to buy high-ticket items, but are looking for a way to stretch their money and budget their purchases in a more flexible way. In fact, 52% of Americans state that they would use their credit card to make these purchases if provided the option to pay over time without any interest or fees. With $3.1 trillion in untapped credit in the United States alone, that presents a massive opportunity for retail innovation.
By removing payment barriers
Another major factor behind cart abandonment is unnecessary account sign-ups and multi-step payment processes. These are frustrating, time-consuming, and ultimately the hassle can be too much for the shopper to overcome.
Ecommerce is increasingly competitive in the COVID-19 era. Nearly all shopping happens online, and consumers are more likely than ever to comparison shop before making a purchase. At the same time, customer loyalty is much lower than in previous years as customers seek out the lowest price above other deciding factors. 75% of consumers gave new brands a shot in 2020, signaling that availability and ease of transaction dictate much of the buying process.
Just because consumers are more willing to shop at new retailers doesn't mean they want to commit to making an account just to complete a purchase. Businesses that don't offer a guest checkout feature are more likely to experience higher cart abandonment rates. In fact, just over 20% of consumers said they would be more likely to abandon their purchase if they were forced to sign up just to finish their sale.
Many BNPL providers require shoppers to complete an application and apply for financing before they can complete their transaction. On the other hand, Splitit is the only BNPL provider to use a shopper's existing credit cards. That means shoppers never have to leave the retailer's site as part of the purchasing process. They'll enjoy and appreciate an easy, seamless checkout experience that still allows them to pay over time. Splitit partners have seen immediate results. Virgin Pure, for example, has increased checkout conversion +78% and cart abandonment has gone down 10%. "Splitit allows our customers an easy and accessible way to spread the cost of their purchase with as few barriers and pain points as possible." shares Simon Vingoe, Head of Sales and Marketing at Virgin Pure. Other BNPL companies force customers to run through a time-lengthening checkout process—which is a surefire way to lose their business.
By picking the most flexible BNPL option
Not every BNPL provider is the same. Most differ based on several key factors. This can include the time it takes for a credit check, approval decision, and more. A BNPL provider has to offer great consumer experience as well as the back-end integration to make for fast checkouts.
Splitit provides a best-in-class experience for both customers as well as retailers. With Splitit, customers can use a BNPL solution that ties into their existing credit card. This means they won't sacrifice points on their purchase or have to manage any additional lines of credit on top of the card they decide to use with their Splitit purchases.
BNPL can help businesses do more with ecommerce, all while reducing the impediments to checkout that create abandoned carts. Splitit takes this a step further as a technology that helps consumers use their credit cards differently. When shoppers use Splitit, they end up completing their transactions far more often, and more frequently too. Splitit merchant partners routinely see cart abandonment rates decrease by 10% or more and average order value increases of at least 20%. With Splitit, businesses can turn abandoned carts into bigger, more frequent sales.