The festive season has always been an important period for both online and in-store retailers.
And over the past couple of years, Black Friday has grown in importance to businesses in the UK. According to data from Barclaycard, UK sales during the week of Black Friday rose 16.5 percent in value and 7.2 per cent in volume last year, and this is indicative of a long-term trend. The UK high street also saw an increase in footfall during the same week for the first time since 2014.
Due to all non-essential shops being shut due to COVID-19 restrictions, 2020 had the first digital-only Black Friday weekend. But even with high street stores having re-opened now, many consumers are still choosing to continue to shop online due to health concerns and the social distancing measures which are still in place.
Capitalising on these festive season campaigns is imperative for online businesses and this year the spike in online traffic and sales should be even more pronounced. This may well generate a turning point for businesses with an online presence, by forcing them to assess their checkout experience and evaluate whether they are catering to the changing demands and expectations of consumers.
The increase in online shopping
In April we commissioned consumer research for our Lost in Transaction report series, and of the 1,000 consumers that were surveyed in the UK, 43 per cent said they were shopping online more frequently now due to COVID-19 restrictions. Additionally, 21 per cent told us that they had shopped online for the first time since the outbreak of the pandemic. This is not only growing the potential market size for online retailers, it is also reshaping the demographic of their potential customers. Looking further ahead, 36 per cent of UK consumers have already committed to shopping online more even when COVID-19 is no longer a factor and a further 24 per cent are undecided.
Changes in consumer habits at the checkout
In September we commissioned a global report of over 1,100 online businesses to gauge how they had already been impacted by COVID-19, and the plans they were putting in place to survive and thrive beyond the COVID-19 era.
Online businesses told us that they have already begun updating their checkout options following the onset of the pandemic. Over three quarters of UK businesses with an online presence (78 per cent) told us that they had offered consumers new ways to pay, including accepting contactless payments upon delivery. Over a third (37 per cent) had integrated at least one new payment method in their online checkout.
And they are doing so because they have recognised that habits are changing. Three quarters of UK online retailers (75 per cent) said that they have noticed a change in the way consumers are paying since the outbreak of COVID-19. The most significant difference (identified by 37 per cent of businesses) has been the increased use of digital wallets. This is reflected in our consumer survey; 54 per cent of UK consumers told us they had used a new payment method for the first time during COVID-19 and 12 per cent told us that they had used a digital wallet for the first time since the outbreak of the pandemic.
With an increase in eCommerce, it is understandable that consumers are more concerned about sharing their financial data. Sixty per cent of online businesses believe that consumers are more concerned with being a victim of fraud now than pre-COVID-19 and this mirrors their own fears; 55 per cent say an increase in fraudulent transactions has been one of their greatest concerns during COVID-19. More than a third (36 per cent) also believe that consumers are turning to alternative payment methods, and in particular those that do not require sensitive financial data to be shared online.
On top of the concerns around fraud, another common issue faced by online businesses is abandoned transactions, which they feel has been exacerbated by the pandemic. Over half (54 per cent) of UK online businesses said they have noticed an increase in cart abandonment rates during COVID-19 and not being able to pay with their preferred payment method is one of the most identified reasons for doing so.
Online retailers that haven’t expanded their checkout options already are more like to come up against these challenges throughout the rest of the festive shopping season and beyond.
Diversifying the checkout is a priority for businesses to keep customers and 60 per cent agree offering more payment methods is now more important than ever. Sixty-one per cent of online businesses say this is a greater priority than 12 months ago.
In order to keep consumers coming back, businesses need to offer a variety of payment methods for each demographic and type of consumer. As the pandemic continues, and both new and old online shoppers continue turning to eCommerce instead of the high street, businesses need to cater to all their needs. For businesses that were slow to react to these shifts, not maximising the opportunity of the festive season will be a wake up call to implement change.