By Bobby Morrison, Shopify Chief Revenue Officer
A confession: conversion rates keep me up at night.
Low conversion rates are the silent killers of commerce, at a time when we’re all laser-focused on cost reduction and the bottom line. The Baymard Institute recently estimated that over the last decade, as much as $260 billion has been lost through cart abandonment that could have been recoverable with a better shopping experience.
So what’s going wrong? Why aren’t customers buying? It’s not enough to just blame the economy or shrinking attention spans. Clearly, customers expect convenience – but what actually is convenience in today’s ecommerce?
We recently partnered with Boston Consulting Group (BCG) to unpack this. We got some surprising results and outcomes that everyone, from small businesses to the world’s biggest brands, stand to gain from—even if they don’t think about conversion in their dreams, like I do.
Six crucial conversion factors to focus on
This study of shopping behavior took in 220,000 ecommerce sites, examining more than 100 variables and more than one billion data points. The full report, Leading Online Shoppers To The Finish Line, is a deep-dive into the art of conversion. To summarize for you, there are six key areas that are non-industry dependent that merchants can control and optimize:
- Checkout experience: Streamlining the path to checkout and offering autofill for details is critical to upping conversion.
- Payments: Accelerated payment methods can boost lower funnel conversion rates dramatically.
- Traffic source: Visitors arriving from paid ads are less likely to convert than those who arrive organically.
- Basket building: Carts with more items convert more readily.
- Customization: Front-end, product-specific journeys and customizations improve conversion.
- Performance: Faster load times = better conversion.
I want to focus on those first two points, as they’re universal to all merchants–and they’re also where Shopify is making big changes today for the immediate benefit of merchants of all sizes.
Faster checkout makes commerce better for everyone
BCG’s study found that improved speed at every stage of the checkout experience correlates with a higher conversion rate. The study also confirmed that customers increasingly expect a seamless checkout experience, which is why 99% of stores surveyed enabled autofill.
This all correlates with data we’re seeing from other sources. Digital.com found that half of online shoppers expect an ecommerce page to load in three seconds or less, and will walk away if it takes longer than six. Interrupting the process further, with a sluggish payment portal or by requiring someone to manually input bank details, is akin to asking the customer to cash a traveler’s cheque or take a walk down the block to an ATM in a suspicious alley.
But it’s exactly what some merchants do–especially larger companies who feel obligated to build their own custom tech stack rather than rely on off-the-shelf solutions.
We want to change that.
Accelerated checkouts boost conversion for all
Reading the BCG study, one figure really jumped out at me. The analysis found that in North America, the use of accelerated payment methods like Meta Pay, Amazon Pay, PayPal, Shop Pay, Apple Pay, and Google Pay can increase lower funnel conversion rates dramatically.
Offering at least one of these payment methods, rather than a checkout experience that lacks any accelerated payment method, can increase lower funnel conversion rates by upward of 50%. Similarly, a buy-now-pay-later option can increase both traffic and sales, particularly for stores with higher revenues ($1M+) and average order values.
But one method in particular stands out: the mere presence of Shop Pay can increase lower funnel conversion by 5%.
That in itself is not a surprise to me; this payment method is maintained by hundreds of developers and used by more than 100 million shoppers in 23 countries. But it does speak to a missed opportunity. Those bigger companies going it alone with their own payment methods or custom tech stack are missing out on a clear conversion win here.
So we’re changing that. Starting later this year in North America, we’re making Shop Pay available to use for enterprise businesses off Shopify too. This means the world’s biggest brands can enjoy the Shop Pay conversion boost without the compromise of a platform overhaul.
Separately, we’re making Adyen (a global enterprise payments platform known for its broad range of payment options) even easier to use with Shopify. Adyen has been one of over 1,000+ payment gateways on Shopify for years, and this upgraded integration gives enterprise retailers more payment choices.
We get that for enterprise, it’s all about options. Those options should include uniform, tried-and-true technology that is proven to convert, and that starts, but doesn’t end, with a smooth checkout experience.
Payments aren’t just an after-thought to your product. They are strategic and boost profitability. We want everyone to enjoy the benefits of that. Conversion keeps me up at night, but done right, it shouldn’t keep you awake too.
Bobby is the Chief Revenue Officer at Shopify, joining the executive team in August 2022. He brings 25+ years of experience in transforming multi-billion dollar organizations.