How Do I Pay Thee? Let Me Count the Ways By Sally Curran
November 8, 2007
Even with the enormous popularity of PayPal, it's important to address the needs of all kinds of buyers, including those concerned with the safety of shopping online, as well as those worried about adding to their credit card balance.
Investigating some of the latest alternative payment options and integrating them in to your site can help entice that segment of online shoppers not comfortable with traditional methods to make the plunge. The good news is that analysts say the market is maturing to the point where employing alternative payment methods is far simpler to do than it was a few years ago, and is a relatively easy way to boost conversion rates.
More Ways to Pay Means More Ways to Sell Sucharita Mulpuru, a senior e-commerce analyst for Forrester Research, said that last year online businesses pulled in $220 billion in profits while spending merely $15 billion in advertising. Of that $220 billion, travel accounted for $70 billion, Amazon.com and eBay made $40 billion, and the top 100 retailers earned $50 billion. Other longtail business produced $60 billion, accounting for nearly 30 percent of online profits.
People shop online, Mulpuru said, for three main reasons: convenience, selection and cost. The key to getting a piece of the pie is overcoming stagnant conversion rates (2.5 percent to 3 percent in the past several years) and shopping cart abandonment.
Alternative payments (any non-plastic payment, checkout tool or aid that assists in an online transaction) hold a lot of promise when it comes to these hurdles. Nearly 40 percent of offline purchases are made with checks or cash. And the lack of such an option online, Mulpuru said, can lead to lost sales.
She also said that consumers are becoming more interested in alternative payments because of security concerns with traditional methods (28 percent of Internet users won't shop online for safety reasons), familiarity with these options because of increased market adoption and frustration with credit cards.
Jim Hunt, enterprise merchant relationship team leader for PayPal, noted that these nontraditional methods are quicker to use, too. Right or wrong, many people shop online at work, and when the boss suddenly strolls into the neighborhood, plastic is painfully slow.
E-tailers see benefits, too. Mulpuru said that offering alternative payments provide new incremental customers and have been shown to increase the average order value of a site's sales. When a site has more payment options, it generally yields more sales, so it's a win-win for everybody involved.
Add ecommerce-guide.com to your favorites Add ecommerce-guide.com to your browser search box IE 7 | Firefox 2.0 | Firefox 1.5.xReceive news via our XML/RSS feed
IE 7
Firefox 2.0
