Speed to Beach

For e-commerce companies, there is no metric more important than the checkout process conversion rate. This is the page that brings in your actual revenue. Even a miniscule increase of 1% in conversion rate can add thousands of dollars in real money to your business.

Checkout process conversion rate is even more important for another reason: shopping cart abandonment. According to Baynard Institute, the average shopping cart abandonment rate for e-commerce stores hovers around 68.63% (as at January 2016). This means that 7 out of 10 people leave your site after committing to the purchase process.More

The travel industry spends billions of dollars each year on digital marketing, yet 81% of online travel bookings are abandoned, according to a study by SalesCycle. That is estimated to be worth nearly $1.78 trillion dollars (2014). That’s a big number and of course growing, and a lot of potential revenue left floating around. What strategies are there that can mitigate this?
I think a lot of travel shopping is aspirational in nature. As a consumer, I want to search for a trip that I want to take, even before I’m actually committed to taking the trip. For travel, eCommerce has made this easy to accomplish. The challenge is then for eCommerce merchants to “convert” these searches into real purchases. At Paays, we’re focused on 2 main levers to enable conversion in this space: purchase financing, and an improved user experience.
User experience is always key. I call this clicks-to-commerce. Friction is not good.
However on financing, are consumers concerned about using instalments payments as option at checkout? See the below thread in a conversation on Trip Advisor. Are attitudes to alternative checkout options changing?
The auto industry was first to introduce POS financing for a big-ticket item, 15-20 years ago. Purchasers then focused more on what the monthly (lease or loan) payment was, vs. the total purchase amount. At Paays, we believe we are now at the same juncture in history for big-ticket items (travel, home furnishings, etc.) in eCommerce. The technology we’ve built in our Paays app., enables consumers to shift their thinking and searches to monthly payment affordability, vs. total purchase prices. This is a real paradigm shift.
Globally, how do Affirm, Klarna and Paays position themselves competitively at travel check out? What are the innovations and opportunities presented in this emerging space?
That’s a great question. And I think to be in the same discussion as such successful companies as Affirm and Klarna, is what we Aspire to at Paays. What we are all competing for is the “real-estate” in the merchant checkout window. In addition to the usual credit card and PayPal options, there will be at least one, if not more, payment financing options, like Affirm, Klarna, or Paays. But there won’t be 50 of these, and each country is likely to have local champions who are very focused on the particular nuances of the consumer/merchant/lender characteristics in that jurisdiction. Away from this, we compete for the consumer’s attention and ultimate conversion through offering the best User Experience (optimizing the journey), coupled with the best (and broadest) financing options.
So if instalment payments are an edge to a travel merchant and if a simple process for the consumer is key, then seamless integration to the merchant’s check out is also essential?
I see that vendors such as Paypal have a four-step process to create an installment plan button at checkout. Is it a question of an installment payment button appearing next to credit as an option?
I would say that the “Minimal Viable Option” that a merchant should have is to show the financing option at checkout. However, empirical evidence from physical POS Financing suggests that creating awareness of financing options (monthly payments) early in a consumer journey (like on the merchant’s main page, and at every SKU level) is really powerful in flipping the mindset of the purchaser to monthly payments. This leads to the consumer having more buying power, and leads to higher conversion and AOV, and lower cart abandonment for merchants.
In terms of the application and approval process, there are a number of technology innovations that we’re incorporating into the Paays checkout and Paays API, that enable for a very swift and slick applicaiton, approval, and purchase confirmation process. We are obviously very conscious of the consumer’s time, as well as their intent, and our objective is to get them through a very positive journey, in the least amount of time (and clicks) possible.
Henry Harteveldt, founder of travel industry research firm Atmosphere Research Group says 41% of U.S. travelers expressed an interest in using installment payments for trips that cost $2,000 or more. “We believe that in the next 2-5 years, installment payments will become a ‘must have’ feature for all consumer-focused travel sellers – suppliers and intermediaries alike.”
Is that time frame correct? Does geography pay a roll in adoption?
I think that’s the high end of the time-frame given the scale of demand from consumers and merchants for innovative payment/financing solutions. In Israel, you can pay for your groceries in instalments, and in Brazil, you can pay for a nice restaurant dinner in instalments. We’re behind in North America because of the incumbency of credit cards, which were invented in the 1950′s! There are better ways now for consumers to have more certainty around their payments, tailored to their specific credit situation, and with the potential of zero interest and/or deferred interest options included. The time for this is now.
Thanks David for the insights. Look forward saying in touch. Follow David at www.paays.com