Decoding the Consumer Wallet: Spending Trends Shaping Ecommerce Now

After rapid e-commerce growth over the past decade, capped by the online shopping surge prompted by the pandemic, e-commerce growth is slowing down. Consumer spending online has leveled off, with just 8% of consumers spending more than $400 per month online, compared to 50% in 2021.

These trends mean that more online businesses must compete harder for fewer consumer dollars overall. Increasingly, success in this competition depends on understanding what matters most to online shoppers now and meeting those expectations.

Make it easier for customers to pay the way they want

Based on data from ClearSale's most recent survey of consumer attitudes on e-commerce, fraud, and customer experience, a comparatively easy way to improve CX is to add digital wallet payment options--because they create more convenience, which 66% of consumers say is critical to keeping them shopping online, and because 70% prefer to pay with digital wallets when shopping at a new store. Digital wallet payments are especially important for businesses with a younger customer base. Among Gen Z young adults, 82% prefer to pay with digital wallets, and among the slightly older millennials, 78% prefer this payment method. More than half of these consumers would abandon a purchase from a site that didn't let them pay with a digital wallet.

In addition to giving consumers what they want, digital wallets can also help to address three of the top five reasons the survey found that customers abandon purchases: a checkout process that's too long or complicated, a site that doesn't inspire customers to trust it with their credit card, and account creation requirements. With a digital wallet, the customer's key data is instantly shared, but their payment details are protected.

Improve your shipping options

The most common reason among the top five that consumers gave for abandoning online purchases was shipping that was either too expensive or too slow. The solution here is to give your customers a choice: free shipping that may take a little longer, or faster shipping that may cost a bit more. That way customers can choose the option that fits their needs for each purchase. In the attitudes survey, Gen Z, millennial, and Gen X consumers rated shipping speed and convenience as less important than price, but baby boomer shoppers value them both equally — they want the best deals and they want them to arrive quickly.

Instill confidence in your customers

Close to half of respondents in the consumer attitude survey (47%) said they'd experience more online fraud in the past 12 months than in the year before. Not surprisingly, 88% also said they research unfamiliar online stores before they make purchases with them to try to avoid being scammed–and 83% will boycott a store if they experience fraud there.

Running a strong cybersecurity program to protect your website and customer data and screening out fraudulent orders are critical to earning and maintaining customer trust. So is communicating with your customers about how you're protecting their data. Seventy-eight percent of the consumers in the survey said they look for payment security certification notices on websites where they go to shop.

Fix your false decline problem

While fraud prevention plays a critical role in creating a great customer experience, so does avoiding false declines. Rejecting orders as fraud when they're actually legitimate is a widespread problem for online businesses. Our data, based on analysis of past declined orders with clients, indicates that about 58% of all declined orders are actually valid. That's expensive in the moment for businesses because they lose those orders, but it's more expensive over time. On average, 41% of rejected customers will never return and 32% will complain about the situation on social media.

However, those numbers vary dramatically by generation. Millennials are most likely to complain on social media about a decline (43%), followed by Gen Z (41%). These complaints can damage your brand and make it harder and more expensive to acquire new customers. At the other end of the spectrum, only 22% of baby boomers will post a social media complaint about a decline, but 56% will never shop at your store again, representing a substantial loss of customer lifetime value. By screening all flagged orders rather than automatically rejecting those that raise flags, your business can approve more good orders and boost your CX without increasing fraud rates.

Track your CX performance and adjust as needed

As you're making CX improvements, start with a benchmark so you can track the performance of your improvements to see how they really perform. Over time, you may find that some need ongoing adjustment to keep up with customer habits and preferences. For example, digital wallets are extremely popular with younger shoppers now, but there may be a shift in which digital wallets are most popular over time. Keep track of how your CX is performing, keep tabs on CX trends, and your business will be in a more competitive position even when spending in your vertical — or in the economy at large — is slow.

Original article at: https://www.retailcustomerexperience.com/blogs/decoding-the-consumer-wallet-spending-trends-shaping-e-commerce/