US retailers could potentially improve their bottom line by up to $1.2 trillion by eliminating negative retail experiences, and through offering further positive ones.
These are the findings of a recent report commissioned by global payments provider Adyen, which notes negative experiences like out of stock events and long lines cost the industry $887 billion, while offering customers exactly what they want could add a further $296 billion to the coffers.
Here’s an insight into the negative experiences costing retailers billions…
Eight areas for improvement
Whether it’s queues that take too long, items that aren’t in stock or the inability to offer the right payment option, small but negative experiences soon add up in the customer experience, costing retailers loyalty and revenue.
And in an age where the next purchase is just a Google search away, reducing friction in the customer journey is considered a key to success.
In their report for Adyen, 451 Research interviewed 1506 consumers aged 18 and above across North America in addition to 451 retailers.
Here’s where they found retailers could improve their offering…
Out of stocks – $172 billion lost
In the six months prior, the report notes nine out of 10 North American shoppers chose to leave a store without making a purchase because an item was out of stock, resulting in a $172 billion loss to US retailers annually.
Long lines in-store – $134 billion lost
In an age of instant gratification, lengthy queues have serious implications for retail. The report found 6 in 10 customers abandoned a purchase and left the store as a result of long lines.
What’s more, of those who left, only 40 per cent resolved to still purchase from the same retailer afterwards.
Friction at online checkout – $124 billion lost
Online shopping should be simple, and the checkout is key to offering a frictionless experience. 451 Research found seven in 10 consumers abandoned their shopping cart due to problems at the online checkout.
Overly complex payment forms were the prime source of customer discontent.
Lack of preferred payment options online – $99 billion lost
With more and more payment options available, consumers are seeking choice when it comes to how they pay online.
Forty per cent of shoppers reported they had abandoned at least one online purchase due to the unavailability of their preferred payment method.
Lack of contextual commerce experience – $98 billion lost
With social media showcasing all the latest trends, consumers are looking for simple ways to get their hands on the products they see, and if they can’t buy now or locate the product easily, they’re walking away from the search.
451 Research says: “…49 per cent of surveyed shoppers reported having encountered an advertised product or service (such as on social media) that they were interested in, but then not made the purchase because too many steps were required to find the product/service.”
Lack of cross-channel buying options – $96 billion lost
Whether it’s buy online and pick up in-store, or home delivery, customers seek convenience and different ways to attain their products through cross-channel buying.
The research indicated 40 per cent of consumers abandoned a shopping experience due to lack of cross-channel buying.
Lack of preferred payment options in-store – $87 billion lost
Consumers expect to pay for items with the method that suits them, whether that’s cash, credit card, or contactless.
“In the past six months, nearly two in five (37 per cent) North American shoppers have been unable to use their preferred payment method with a retailer in-store, prompting them to abandon their purchase entirely, resulting in $87bn in abandoned sales on an annual basis,” the report claims.
False positives – $76 billion lost
Fraud might be increasing issue for many retailers, but the impacts of overzealous fraud prevention can also be detrimental to the retail bottom line.
Over a third (34 per cent) of consumers abandoned a purchase because their credit or debit card was falsely declined due to suspicion of fraud during a legitimate transaction.
More opportunity available
In addition to identifying eight areas where sales are being directly lost, 451 Research found three areas which were under-optimized, totaling $296 billion in untapped potential.
- Cross channel buying (worth $111 billion), where research indicates shoppers will buy more or purchase something they hadn’t intended to if a retailer offers additional ways for the product to reach them, like “click and collect” or next day delivery.
- Cross selling (worth $66 billion) – where the retailer suggests accompanying products for a purchase
- Personalized offers (worth $118 billion)