The e-commerce landscape is changing rapidly, causing retailers to be on shaky ground. Due to the rising costs of living and inflation, consumer spending habits have changed. Retailers are hedging their bets to offset the rising cost of business and expanding services, while consumers continue to reevaluate shopping habits.
Even though retail ecommerce sales are expected to grow 8.9% in the United States this year, and reach 8.1 trillion US dollars by 2026, customers remain cautious, so a potential market promise does not guarantee profitability. However, retailers need to overcome the fear, uncertainty and doubt (FUD), to understand that difficult times are an opportunity for innovation and adaptation.
It is essential that retailers recognize the importance of online checkouts and include payments in their strategies as the e-commerce industry continues to grow. Building a payment platform that offers a variety of options is a great way to increase sales. brand loyalty With the right technology, retailers will be able to win in both today’s ecommerce ecosystem as well as tomorrow’s, and retain customers.
Understanding Today’s E-Commerce Customer
Understanding each customer can be difficult. Retail roadmaps are based on personal preferences, consumer psychology and purchase histories.
As consumers’ purchasing power is decreasing as average selling prices rise, and since nearly all consumers are planning to adopt cost saving behaviors in the next six-month period, retailers need to adjust their payment strategy according.
You can, for example, use a 2023 PWC report According to the report, 49% of Generation Z are concerned about today’s economic problems and have taken steps to reduce non-essential expenditures. Only 43% of millennials do this. The older generations are split, with Generation X and Boomers divided by 47% of the former and 37% of the latter.
As consumers cut back on non essential spending, retailers must close sales because every transaction is important. Retailers who want to take charge of the consumer buying experience should accept multiple payment methods and work with various service providers — as a personalized payment checkout experience is necessary to encourage and entice consumers to buy.
Adopt a diverse portfolio of payment options
The number of advanced payments methods (APMs), which are available to retailers, is often limited. This is surprising, as there are so many payment options. This is a “bottom-of-the barrel” approach, which forces consumers to look for brands that offer them enhanced payment methods to purchase goods or to pay when and how they choose.
In addition, many payment service providers have proprietary APIs. This means that retailers must negotiate with each provider separately to add a payment method to the checkout. Retailers are unable to scale due to the coding and integration complexity, as well as the fact that many PSPs offer only the payment method without providing the infrastructure needed to improve the customer’s checkout experience.
If the abandonment rate of online shopping carts is 69% or more, then retailers should offer all payment options to customers.
A diversified payment strategy includes options like Open Banking, BNPL (Borderless Payment Network), and digital wallets. It also involves considering cross-border payments to allow customers the ability to use payment methods local to their area.
Paying for loyalty is a part of the payment
Retailers should not only offer advanced payment methods but also include loyalty as part of the payment process. Loyalty goes beyond hype. Brand loyalty has been linked to consumer purchases for decades. Retailers have a great opportunity to increase brand loyalty by tying loyalty schemes to payments.
Around the globe, more and more innovative partnerships have been formed. According to Research and Markets Loyalty is a must reward programs In the Asia Pacific, market shares are increasing and rising. In India, China and Singapore, the demand for rewards and loyalty programs has grown significantly. Latin America has also seen an increase in the demand for loyalty and rewards programs, due to rapid digitalization of payments systems.
Innovative Payments and Technology
It is said, “If they build it, then they will come.” This phrase is true for retailers who want to offer all the payment options consumers expect while also enabling rewards and loyalty schemes. Retailers should use cloud technology to mitigate cart abandonment by identifying, adding payment options, and enabling reward and loyalty schemes.
The cloud technology has evolved a lot in the past two decades. Hosting entire payment platforms, and orchestrating payments are now things that were once impossible. Cloud-based payment platforms allow retailers to do away with the need to maintain large mainframes or outdated legacy system, since everything is done on the cloud.
POPs enable retailers to add payment connections and methods immediately without having PSPs negotiate. All the information is at one location. Retailers are able to test new payment methods and route them based on the transaction value or location. This makes workflow automation easier. When combined with the right POPs, retailers are able to see data about customer buying behavior, allowing them to create hyper-personalized deals based on a customer’s purchase history and preferred payment method.
POPs simplify the process of expanding payment options for consumers, both now and in future. Retailers can adapt and innovate despite difficult times. Fear, uncertainty, and doubt disappear as consumers gain the ability to pay and buy irrespective of hardships — and that’s a strategy anyone can get behind to win in e-commerce.
