Ecommerce in Europe kept growing in 2016 and will probably also do in 2017. E-merchants can expect great opportunities of development but still, there is one issue that should be considered : cart abandonment rate is sizeable and happening at 46% at the payment stage.
Discover the 3 key factors that e-merchants should consider in order to choose the right online payment strategy:
1. How is the product or service consumed?
It is possible to buy all kinds of products or services online. There are two scenarios:
- The purchase of your product or service is carried out on an ad hoc basis, for example, when you buy a television. In this situation all payment methods are possible, as long as they are secure: e-wallet, bank card, bank transfer … the more options you propose, the more likely the consumer will be to find their preferred payment method and the less likely they will be to abandon their basket.
- The purchase of your product or service is on a subscription or pay-as-you-go basis and so requires recurring payments, for example, when you subscribe to a television rental or VOD service. In this situation a payment method suited to recurring payments must be proposed in addition to the classic online payments mentioned above. E-wallets or bank card are certainly good payment options, but are vulnerable to inconveniences such as fraud, theft, payment platforms or expiry dates. Direct debit is currently method to overcome these disadvantages in order to keep customers on track for payments and increase their customer lifetime value.
2. Characteristics of the target group
Depending on the age group, payment preferences vary. This is especially true for the millenials, a generation that puts more emphasis on a frictionless, convenient and secure payment experience than any other. As a consequence, millenials are particularly attracted by innovative online payment methods such as the e-wallet.
If you plan to market your offer internationally, do not forget to take into account local payment preferences.
Is your offer is aimed at European consumers? Take advantage of SEPA direct debit. SEPA is a European initiative that aims to ease and improve the efficiency of cross-border payments and turn the fragmented national markets for euro payments into a single and unified domestic market. SEPA intends to make international payments as fast, easy and secure as domestic payments.
3. Cost of use and technical benefit
Using a payment solution involves a cost. Be sure to measure the human and financial resources required to integrate and manage your selected payment methods. If the method of payment is effective, it should make it possible, by converting visitors better into customers, to make the cost (initial cost and cost of each transaction) profitable by increasing the volume of transactions.
In the digital age, it is out of the question to manage payments, failed transactions or collect data manually. Automation is key. An effective means of payment is also a solution that allows information to be easily collected and processed by allowing your accounts department to simply reconcile accounts, and also enabling your marketing department to have customer information related to payment within your CRM thanks to integration possibilities with the other business solutions used in the company.
A payment strategy is not just about multiplying the methods available to the consumer. Of course it is important to do this in order to reduce cart abandonment, but there are other factors to take into account, especially with regards to simplifying procedures for the merchant and supporting their business model.
Choosing the appropriate payment methods is therefore very important to a business’ strategy, especially since the advent of e-commerce has forced commercial and marketing strategies to reinvent themselves. Payment can indeed be considered the 5th P of the marketing mix (in addition to the price, product, point of sale, promotion) due to its impact on sales.