- BDAILY PREMIUM -
Merchants around the world were preparing for a different type of Black Friday this year, as consumer demand was understood to be falling due to economic headwinds.
However, global Black Friday figures show that this was not the case, with sales hitting new heights. But with inflationary pressures on consumers rising as we head into 2023, retailers cannot sit back on their heels.
As the challenging economic environment makes it more likely that shoppers will want to hold onto their cash, failing to remain innovative could be detrimental to merchants’ sales performances over the next 12 months.
How can merchants innovate with customers’ changing shopping habits in mind? We spoke with Daniel Cohen, chief product officer, at Netherlands based global payments platform and fintech PayU, to find out exactly that. Read on to find out more…
Making sure that alternative payment methods are available to customers is a key means of increasing checkout conversion rates and ensuring that payment processes are simple and secure.
Doing so allows merchants to reduce high cart abandonment rates, alleviate fraud concerns amongst the most security-conscious shoppers, and process sales sooner than competitors.
Customers prefer to make purchases from merchants that are equipped with the right payment mix and offer streamlined checkout journeys. The more payment options that a merchant offers, the more likely it is that customers will find a payment method that suits their needs.
Simply put, embracing alternative payment methods is essential for a successful online retail event, whether it’s Black Friday or January sales. Here are three key reasons why merchants must integrate them into their payments mix today:
1. Alternative payments appeal to a younger generation
Gen Z is leading the alternative payments revolution. Last year, a study commissioned by retail management software specialist Brightpearl found that more than half of 18- to 24-year-olds had turned to digital payment methods in 2021.
While this was partially due to ongoing store closures thanks to Covid-19, the convenience of digital payment methods also increased their uptake. Furthermore, these shoppers are increasingly buying from platforms like Facebook and Instagram in line with the exponential rise of social commerce.
This is because many enjoy the ability to continue interacting with friends while they have an online shopping spree, not to mention the advanced targeting capabilities of social media advertising platforms.
To tap into this growing market of young shoppers, merchants must embrace the new selling channels and payment methods that their young, digitally savvy customers now prefer.
Failing to do so could mean missing out on a whole segment of keen consumers that are more prepared to spend and shop than generations that have experienced previous recessions more acutely.
This is also important for merchants targeting high growth markets. For example, over half (67 per cent) of the transactions that were processed by PayU in Romania on Black Friday, which reached a total value of $97m (approximately £80.6m), were one-click payments.
2. The alternative payments ‘revolution’ is already underway
While credit and debit cards remain the preferred way to pay online for now, alternative payment methods are continuing to gain popularity across the world.
Merchants that sell to an international audience must offer the preferred local payment options. There are nuances which must be accounted for; in PayU’s latest whitepaper, Cross border e-commerce: what consumers want, the fintech found that Polish shoppers prefer bank transfers to credit cards, which is at odds with consumers in the US and Colombia.
Neglecting these preferences will result in lost sales; 55 per cent of consumers in the US will abandon the purchase if their preferred payment option is not offered by the merchant as will 49 per cent of those in Poland. For a successful Black Friday, merchants must also consider how preferences are changing with the wider macroeconomic environment.
Amidst the rising cost of living, Buy Now Pay Later (BNPL), instalment payments, and other alternative credit products are becoming an increasingly powerful part of the e-commerce landscape, particularly in emerging markets.
By extending more payment flexibility to online shoppers, merchants can expand the affordability and accessibility of e-commerce, driving financial inclusion in the digital economy.
Finally, merchants must consider that it’s likely that a number of new customers will be visiting their app or website for the very first time, as they look for bargains and discounted products.
The presale-registration process can be inefficient and time-consuming for first-time customers, deterring them from completing their purchase. A proven way to mitigate this issue is to offer one-click payments at the checkout.
3. Reduce fraud concerns with enhanced payments security
With the cost of living rising, consumers are more concerned than ever about fraud. According to UK Finance, three in five people are worried about falling victim to financial fraud or a scam. Black Friday has historically been a target for fraudsters; in 2021 more than £15m was lost to holiday season shopping scams in the UK.
This will likely continue to increase across retail sales events in 2023, such as the January sales and the run up to Valentine’s Day. To give shoppers peace of mind, global merchants need reliable alternative payment solutions that can satisfy consumer needs.
Partnering with a trusted payments provider gives merchants the confidence that they are meeting all essential aspects of industry compliance, while receiving a robust and secure portal for accepting and managing online payments.
The rising popularity of retail events like Black Friday means that merchants must stand apart from the competition while simultaneously appealing to customers and adapting to their changing shopping habits.
Working with a trusted Payments Service Provider that offers a range of alternative payment methods puts merchants in good stead to not only navigate economic uncertainty and untap the full potential of Black Friday, but appeal to new markets too.
By Matthew Neville, Senior Correspondent, Bdaily
