In the dynamic world of eCommerce, there’s been a fascinating evolution in how merchants, platforms, and product teams approach the buyer journey. Over the past decade, there has been a steady shift in focus, starting with optimizing the top of the funnel—marketing and analytics—and now moving towards the checkout, where new innovations are gaining traction.
Marketing Tools and Analytics: Optimizing for Growth
In the early days, most eCommerce innovation and investment were directed at marketing tools. Platforms offered sophisticated solutions to help businesses increase their reach and continually refine strategies to drive growth. With the proliferation of analytics tools merchants gained the ability to track and measure performance, optimizing return on investment (ROI).
These tools allowed businesses to target specific customer segments and continuously improve marketing tactics through a data-driven approach. But as customer acquisition costs (CAC) skyrocketed over recent years rising by 222% merchants were forced to become more strategic in how they acquire new customers.
Omnichannel Strategies and Retention: Expanding Reach
As CAC soared, merchants expanded their strategies beyond traditional marketing channels. The need to engage customers across multiple touchpoints led to the rise of omnichannel strategies. By integrating branded online stores, social media platforms like Instagram and TikTok, and eCommerce marketplaces like Amazon and eBay, merchants have broadened their reach while controlling acquisition costs.
Today, 73% of U.S. consumers shop across multiple channels, and those who use four or more spend 9% more than single-channel shoppers. Seamless integration across these channels not only maximizes reach but also allows businesses to manage operations from a single dashboard simplifying processes like inventory management and shipping.
Furthermore, social commerce, set to exceed $2 trillion by 2025, has gained massive traction, turning social platforms into direct shopping channels. Features like live shopping and native store pages on Instagram, TikTok, and Facebook drive seamless product discovery and purchasing, eliminating friction for consumers.
Retention: The Key to Sustainable Growth
As competition has intensified and marketing costs have risen, merchants have increasingly invested in retention as a critical component of their strategy. While approximately only 18% of merchants initially focused on retention, the shift towards customer retention has been necessary, as it costs 6 to 7x more to acquire new customers than to retain existing ones. Moreover, existing customers are 50% more likely to buy again and spend 31% more than new customers
To improve retention, merchants have been employing several proven tactics:
- Email Marketing: Welcome emails, cross-sell emails, and personalized offers have been driving repeat purchases. This low-cost approach keeps customers engaged with targeted communication that feels relevant.
- Loyalty Programs: These encourage repeat business by offering rewards for continued engagement. Customers in loyalty programs are twice as likely to make another purchase and are 9x easier to convert.
- Customer Service: Excellent customer service builds trust and encourages return visits. Implementing FAQ sections, chatbots, and personalized support helps businesses deliver great experiences with limited resources.
- Network Effects: By generating a viral loop (encouraging referrals), compulsion loop (providing regular variable rewards), and social loop (creating user-generated content), businesses create self-reinforcing mechanisms that drive continuous growth.
These strategies have helped turn one-time buyers into loyal customers, fostering sustainable growth even as acquisition costs have continued to rise.
The Overlooked Opportunity: Checkout Innovation
While much of the eCommerce focus has been on the top of the funnel, the checkout experience has long been neglected. Merchants were so fixated on bringing customers in that they overlooked the critical moment when conversions happen. Now, after squeezing the juice out of marketing and analytics, merchants are beginning to explore the checkout space, sparking a wave of innovation.
At the bottom of the funnel, the checkout experience is where critical decisions happen. With rising CAC, merchants are eager to explore this new frontier and unlock conversion rate optimization and average order value (AOV) growth. The surge in innovation in this space has been remarkable.
- Friction Removal: Payment providers are leading the charge with digital wallets and smart payment buttons like Apple Pay, Google Pay, and PayPal’s One-Touch. Facial recognition and fingerprint readers from device manufacturers have now become industry standards, further reducing friction and driving conversion.
- Platform Openness: eCommerce platforms have opened their checkout frameworks to third-party integrations, leading to a boom in innovation. Applications like ReConvert allow merchants to upsell and cross-sell directly at checkout, driving incremental revenue. Global eCommerce platforms are also unlocking cross-border selling capabilities, with platforms like Global-e simplifying international transactions for merchants.
- BNPL and Insurance Providers: Solutions like Buy Now Pay Later (BNPL), from providers like Klarna and Afterpay, have disrupted the checkout space. By allowing customers to break payments into installments, merchants have seen a rise in AOV. Similarly, offering checkout insurance for products has provided a new layer of security for consumers, combined with new rev-share opportunities for merchants.
- New Multi-Step Checkout Flows: Brands are further experimenting with checkout flows, such as multi-step checkouts—rather than a single overwhelming form—in search for higher completion rates by guiding the customer through digestible stages.
- Essential Features and Customization: Some features, like abandoned cart recovery, have been around for years, helping merchants recapture lost sales by sending reminders to customers who didn’t complete their purchase. Recently, pre-order and deposit options have become more standard, allowing merchants to offer flexibility in payment and product availability, which helps cater to varying customer needs.
Beyond these features, the latest innovations are in checkout customization. Merchants are increasingly able to modify checkout experience and functionalities by using no-code tools to add or remove fields, and make fields optional based on their specific business needs. Now, there’s a shift towards more branded checkout experiences, with eCommerce platforms gradually allowing merchants to customize the design, look, and feel of the checkout process, ensuring that even at the final step, the customer journey reflects the brand’s identity and provides a seamless, immersive experience.
As merchants strive to improve the customer experience, personalization is becoming increasingly important during checkout. Two notable innovations include pay-links and personalized discounts.
- Pay-links: These are unique payment URLs that allow merchants to simplify the checkout process. They can be sent directly to customers via email, social media, or messaging platforms, enabling quick and seamless payments. This is particularly useful for merchants selling via social media or chat-based commerce, where traditional checkouts may add unnecessary friction.
- Personalized Discounts at Checkout: Leveraging data-driven insights, merchants can offer personalized discounts based on customer behavior, purchase history, or even real-time actions. Personalized offers at checkout not only increase conversion rates but also enhance the customer experience by making them feel valued. According to studies, customers are 80% more likely to purchase when offered personalized experiences.
These tools are helping merchants cater to the growing demand for convenience and personalization, ultimately improving customer satisfaction and increasing conversion rates. Afterall, it’s one thing to get a customer to the checkout but if they don’t complete the transaction, all of the efforts leading up to the purchase is money spent without the payout.
Oren Inditzky is the VP & GM of Online Stores at Wix.
eCommerce stock image by Roman Samborskyi/Shutterstock