February 28, 2014, 4:43 PM

The forgotten problem in mobile shopping carts: payments

Conversion rates fell on mobile devices, while increasing on desktops during the last holiday season. That shows retailers need to make it easier to pay on smartphones and tablets if they’re to win the business of increasingly mobile shoppers, says BlueSnap’s CEO.

The reports on the rise of mobile commerce in the last few months have been all but breathless: “Mobile E-commerce Exploded This Holiday Season.” “Holiday Mobile Orders Shot Up 50% in 2013.” Or (my personal favorite) “Mobile is Eating the World.”

Indeed, according to a study by e-commerce marketing solution provider Custora, the proportion of e-commerce site visits from smartphones and tablets surged from 25% in the 2012 holiday season to 40% in the same period in 2013. The same study found that the proportion of transactions completed from mobile devices jumped from 20% to 30% year over year from November 1 to December 29.

The numbers from Amazon alone were even more impressive. The company reported that half of 2013 holiday shoppers used smartphones or tablets to browse or buy—including ordering more than five toys each second from mobile devices from Thanksgiving to Cyber Monday.

Nevertheless—to paraphrase the old baseball poem—it’s not all joy in Mobileville. In many ways, shopping on mobile devices remains an exercise in frustration. That is causing high mobile shopping cart abandonment rates, suggesting that we have a long way to go before m-commerce is the online purchase method of choice.

A 2013 Forrester study, for example, found that the average mobile site conversion rate is only 1% compared to 2-3% on a PC. In fact, according to Forrester, only 13% of U.S. online adults with a mobile phone and 30% with a tablet have used their devices to purchase a product.

Even more telling is this little-noticed nugget from the Custora study showing that mobile devices are actually losing ground when it comes to converting shoppers into buyers.

“Even as visits have exploded, the conversion rate for mobile and tablet actually slipped between holiday 2012 and holiday 2013, by roughly 5% for mobile and roughly 10% for tablets. During the same time the conversion rate for desktop actually increased. Desktop conversion is now about 25% higher than tablet and almost 90% higher than mobile.”

Explanations for mobile shopping cart abandonment range from hard-to-navigate mobile carts and mobile sites that aren’t optimized to fit the smaller mobile form factor, to a tendency to use mobile devices for “window shopping” behaviors, such as reading customer reviews as a means of researching products prior to making a purchase.

One factor that many merchants and analysts miss, however, is the role of the mobile payment system itself. Most mobile payment platforms still require too many steps to checkout, lack flexible payment models, have limited ability to offer promotional features like couponing, and completely ignore the realities of selling in a global economy.

With the continuing shift to smartphones and tablets as the computing devices of choice, merchants are bound to lose billions in mobile shopping dollars until these gaps can be closed. Many of the missing pieces are routinely included in online payment systems but are MIA in mobile editions. Among the deficiencies are:

1 – One-click checkout

One-click purchasing may be standard operating procedure for returning shoppers making purchases on their desktops or laptops, but it’s still the exception to the rule in the m-commerce world—despite the fact that repeatedly entering credit card information and other personal data on small screens can be an even bigger turnoff to shoppers than having to do it on a full-size keyboard. Late last year, Facebook announced that it was testing one-click checkout for partners’ mobile apps. While Facebook has said that partners will still be able to work with the payment processors of their choice, the announcement demonstrates the priority that key industry players are placing on simplifying mobile checkout.

2 – Flexible subscription management

From Netflix and newspapers to pet food, shoe and children’s product companies, e-merchants are embracing online subscription models, yet m-commerce sites can process only the most basic subscriptions, if at all. Mobile payment systems should be able to offer multiple plan types (for example, pay per use, trial with standard subscription, initial charge followed by subscription), any payment cycle (daily, weekly, monthly and other permutations) and custom options (upgrades, grace periods, maximum charge limits). Systems should also be able to support any payment method as a subscription option, including wire and bank transfers, purchase orders and e-checks.

3 – Integrated promotions

Online offers are an essential part of an e-marketer’s bag of tricks, but most mobile sites are handicapped when it comes to dynamically generating deals to drive sales, increase order value and/or reduce customer churn. Mobile payment systems need the ability to serve up coupons, upsells, cross-sells, free trials, product bundles, subscription update reminders and other marketing offers on the fly, based on whatever the shopper has placed in his or her shopping cart. These kinds of incentives can help prevent shoppers from exiting mobile carts before hitting the checkout button.

4 – Global shopping support

We all know the world is flat, but most mobile shopping carts still haven’t gotten the message. More than half of the 56 payment gateways tracked by Spreedly’s Gateway Index (gatewayindex.spreedly.com) support only one country, and even the most “global” in the group can accept payments in only 40 countries. Mobile payment systems need to display localized content, currencies and payment methods based on the shopper’s location—from multi-country methods like WebMoney, CashU and Skrill to Alipay in China, Giropay in Germany and Boleto Bancario in Brazil. Otherwise, potential purchasers will jump ship.

The lesson is this: optimizing web sites for mobile viewing and navigation is not enough. For mobile conversion rates to meet or surpass non-mobile benchmarks, the mobile checkout and payment process needs to be frictionless, intuitive, marketing-savvy and global-aware. With IDC estimating that only 13% of the smart connected device market worldwide will be composed of desktops and laptops by 2017, online retailers who ignore these needs will see their traffic and sales plummet. Mobile will eat the world. Step up to the table to be sure you get your share.   

BlueSnap is a payment gateway that supports mobile and non-mobile shoppers in 180 countries.


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