An e-commerce business has to be ready for Black Friday, Cyber Monday, Christmas shopping and other peak traffic days. An unprepared e-commerce shop won’t be able to maximise sales and profits during these periods, which present huge opportunities for businesses.
To help you make the most of peak shopping days, we turned to Filippo Bergamin, Head of Retail Industry at kevin., to walk you through his best tips.
Filippo’s professional background is based entirely in payments. He was a natural choice to turn to for advice about big shopping days and what e-commerce businesses need to consider when it comes to payment methods.
Why is it particularly important to optimise the checkout experience before Black Friday and other peak shopping days?
A lot of e-commerce businesses make the mistake of thinking payments are simple to handle and don’t require much consideration. In reality, we know that a big part of the conversion rate is lost during payment.
There are a few things you need to do to make sure that doesn’t happen.
First, know which payment methods are desired by consumers. This can vary from country to country, industry to industry and vertical to vertical, whether you’re a fashion merchant or sell consumer electronic goods.
During days like Black Friday, the dynamics of the shopping process change. You have more traffic, and the consumer is driven by price, rather than factors like a better user experience. With these better prices, the merchant gets less of a profit margin. That makes it vital to balance the checkout experience with a cost perspective.
“Keep in mind that when you offer great deals that have smaller profit margins, and then you lose customers in the payment process, you won’t achieve the high transaction volume you need to turn a decent profit.”
So secondly, you must be able to monitor the cost of your payments. If you ask an e-commerce manager, ‘What does it cost you when a payment goes through?’ they are likely not certain. It’s not their fault; it’s tough to reconcile payments when you use several different payment methods. And these methods change when you cross borders. A business may be unsure how much a certain method costs for certain customers in Spain, Italy or Latvia.
We’re used to thinking on an in-country level for payments. Just within Europe, there are 100 payment methods to choose from! To control this can feel impossible for any e-commerce manager. The quickest, most efficient solution is to find partners that offer a payment method that works for more than one country.
With one kevin. integration, for example, you have a solution requested by customers all over Europe, thanks to the popularisation of account-to-account payments. You don’t have to worry about finding the best A2A provider in Italy, then another in Sweden, and so on. You can have an integration with a single white-label solution that will make life easier, particularly during peak shopping times.
That brings up a great point - what is the advantage of a white-label payment solution, particularly during Black Friday and Christmas shopping?
It’s more important than ever during peak shopping days to keep brand consistency. You want the customer to see your brand from the beginning to the end of the funnel, including during the payment process. With certain payment methods, the consumer is redirected to the payment method’s website, which isn’t ideal from a user experience perspective.
During peak season, it’s a big opportunity for a business to build customer acquisitions. Most merchants see a customer on Black Friday when they have a good deal, and then the customer never returns. They were only interested in that great price, on that single day. That makes it more important than ever to connect the customer to the brand. Once the customer is interested, when the brand is present throughout the experience, you have a greater chance of creating connection and having the customer return.
Shopping cart abandonment is a problem all year round, but particularly on peak shopping days. How can this be addressed from a payment method standpoint?
It’s all about offering the right payment method, in the right country, within the right vertical. Payments can often fail. It can be due to reasons like the card the customer is using has expired, or they forgot their banking password or login to a payment method page.
When a payment fails, you get redirected at the checkout. That means the customer is no longer under control. You may lose the customer, because they don’t want to have to return to the store. A big part of the lack of conversion is the payment failure, so you need to be sure you have a Plan B, and work with a payment provider that has a great track record when it comes to completed transactions, like kevin. does.
What do you think is the best payment method businesses should offer, especially during peak times?
That all depends on the needs of the customer and the needs of the merchant. To explore this, let’s use the example of a consumer electronics e-commerce retailer. They might make a very small margin on Black Friday. Let’s say I bought a product from them for €105. They might have bought it themselves for €90. That’s when you need to be certain that the payment methods you offer don’t eat into too much of that small profit margin.
Businesses also need to consider reconciliation and how easy each payment method makes that. With a high volume of transactions that you likely wouldn’t experience on a normal day of the year, it can be extremely tough to reconcile payments.
Lastly, you have to consider the refund process of your chosen payment methods. More orders will always mean more refunds, and you lose out on the profit margin. It has to be easy to put the refund through and still be cost-effective for the merchant.
Are there benefits to open banking that e-commerce businesses should consider?
Yes, absolutely. International acceptance is one of the biggest reasons to consider open banking. Black Friday and other peak shopping days mean new customers coming in, probably from all over Europe. It’s most effective to have a payment solution that can be used by the majority or all of your customers.
Open banking offers tremendous benefits for the price. That makes it appropriate for days when profit margins are low, like Black Friday and Cyber Monday, amongst others.
Liquidity is another important factor to consider when it comes to open banking. Let’s turn to the example of the electronic goods merchant again. If I buy a microwave, they need to replace that microwave in their inventory, especially if it’s Black Friday and they need to have a full inventory before the next peak shopping day.
If the money I pay for the microwave reaches their account within a day, they can repurchase immediately. Bank transfers with kevin. arrive within a day, two at the very most. If you’re waiting for a card payment to clear, you might wait up to two weeks, or even more, to be able to replace that inventory.
Can you speak to the importance of security during peak shopping times?
During the peak season, there is a greater amount of potential fraud occurring. Fraudsters know that a business has less control on peak shopping days due to the confusion a high volume of transactions can generate. Open banking is the most secure payment method on the market.
From the consumer perspective, open banking involves the same high level of security as logging into their bank. Compare that with a card, when card information can easily be stolen, and it’s simple to see that a customer would prefer the security of open banking.
From the merchant perspective, once the bank transfer is complete, the merchant will receive the money. So there are benefits to both the consumer and the business in terms of security.
Ready to handle peak season?
Far too many e-commerce businesses fall into the trap of treating peak shopping days like any other days in their industry. But doing so can mean lost revenue, the hassle of dealing with fraud and customers who will never return to make another purchase. Instead, kevin. can help you minimise risks to your business while maximising your profits. Get in touch with us today!