Offering online shoppers an option to try before they buy, or the ability to defer payments, represents retail’s next big opportunity, says payments specialist Klarna.
This development is driven by customer demand for flexibility and greater control at the point of sale. Almost two thirds (62%) of consumers feel that increased financing options will encourage them to buy more online, according to a new web guide from payment specialist Klarna, while 33% of shoppers believe one-click purchasing would create a more positive experience.
Retailers not yet offering this mixture of speed and choice at the checkout should be aware their competitors are already presenting consumers with the flexible and innovative payment options they demand. Standing still in this space is the fast route to retailers losing customers to more nimble and forward-thinking competitors.
Consumer financing 2.0
It’s not just a choice of financing deals and payment types shoppers demand; convenience is also key.
The option of customer finance and credit have been offered by retailers such as Next, Debenhams and Littlewoods for years, but this process needs modernising for an internet-savvy, time-poor generation looking for frictionless shopping experiences.
Klarna’s online guide shows that 71% of online shoppers think simplifying the online checkout would make them more likely to complete a purchase – it is a statistic that retailers should bear in mind as they develop their payment strategies.
Fast, easy-to-understand and transparent consumer financing options – sitting alongside a host of other payment methods – can drive customer conversion, basket size and, most importantly, stimulate repeat business.
And getting these options in place ahead of peak trading periods, such as Christmas when customers are buying multiple gifts, or in January when money is typically tight, could prove to be the difference between securing a shopper for life and missing out on a new customer altogether.
Payments on customers’ terms
Currently, more than two thirds of online consumers abandon shopping carts – and for mobile checkouts the figure is even higher. It is a striking statistic that suggests current payment methods are putting off shoppers just at the vital moment of purchase.
Retailers need to do all they can to get a transaction over the line. In an online world, that means understanding their key target market and adapting for the lucrative 18-34-year-old demographic.
These millennials are the most prolific online shoppers, making over 50% of their purchases via the web, but they are also a generation for whom cashflow issues can be a barrier to spending. Today’s younger consumers – also known as Generation Rent – are open to newer, more creative types of pay later and consumer finance solutions, such as spreading the cost of goods over several months or paying after delivery.
But millennials are not the only ones looking for greater choice when it comes to the checkout; economic and political uncertainty across the UK means shoppers of all ages have financial management on their mind and need relevant options to encourage them to spend.
The ongoing growth of online retail is giving consumers greater choice than ever about how, where and when they buy. This ability to choose or browse for items on multiple digital platforms is being serviced by most retailers – but more needs to be done to present a similar level of choice when it comes to paying for goods.
Pay after delivery and consumer financing is a double reward: it can increase sales and strengthen customer relationships. No wonder 78% of retailers want to offer new financing options online.