By Eric Christensen, chief payments officer, Digital River
The COVID-19 pandemic has disrupted traditional sales channels for many brands around the world. As a result, more companies are choosing to go direct for the first time with a new direct-to-consumer e-commerce channel.
While there’s a lot that you need to know to successfully execute a DTC strategy, one critical component is payment solutions. Unfortunately, it’s a lot more complicated than just deciding whether to accept Visa or Mastercard. To optimize your payment strategy for maximum conversions, you need to prioritize the customer experience while accounting for the economics of online transactions and avoiding risks.
When it comes to e-commerce payment solutions, the first thing you need to consider is the customer experience. Online shoppers are quick to abandon a purchase if they don’t find their preferred payment method available.
So, you need to conduct thorough market analysis and voice of the consumer research to identify exactly how your target customers want to pay, and then provide those options for them. You also need to make sure that your checkout experience as a whole is as seamless as possible, providing single-click purchase options and other methods to help drive conversions.
Along with conducting local customer analysis, you need to be aware that if you’re launching an e-commerce site, you’re going to be global whether you like it or not. People from around the world will inevitably visit your online store, which raises two main questions:
- Are you going to cater to those international customers by including foreign currency options and payment methods that are common outside the US?
- How are you going to handle the regulatory issues (like GDPR) that come with international site visitors?
The answer to the first question will depend on your brand’s strategic goals and long-term vision. As complex as launching a domestic e-commerce site can be, going global only magnifies that complexity. So, while global e-commerce represents a tremendous opportunity and needs to be considered in your long-term planning, it’s best to start local before expanding into new markets.
As for compliance concerns both domestic and abroad, these issues can be largely mitigated by partnering with the right e-commerce provider that has broad compliance expertise and can also handle other back-office processes like tax remittance, fraud prevention, financial reconciliation, and payments. However, before you make your first online sale, you need to consider the economic impacts of e-commerce payments.
Simply put, taking credit card payments online is more expensive than card-present transactions in a brick-and-mortar environment. Card-not-present transactions also put the liability of chargebacks on the merchant instead of the card-issuing bank. That means increased risk for your brand.
These issues become even more complicated when you expand your payment options beyond credit card transactions to include new forms of digital payments. So, it’s important to involve your accounting team early in your DTC strategy development so they can build financial models and processes to account for these complexities and mitigate risks.
The economic impacts of online payments may be complex, but they shouldn’t scare you off. By bringing your accounting personnel to the table early, you can adjust your overall channel strategy accordingly and capture the unique opportunities offered by DTC e-commerce.
Globally, e-commerce sales are expected to reach $4.5 trillion in 2021. That’s a huge market that you need to be a part of. But more than the economic opportunity, developing a robust DTC channel strategy allows you to build relationships with customers in a way that is simply impossible through other channels. By owning the experience and delivering on your brand promise in a way that connects with customers on a personal level, you can build loyalty and not only drive conversions but attract lifelong customers.
Gaining market share in the e-commerce space is possible, even for brands just launching a DTC channel. But it requires you to provide a superior customer experience, including everything from your site’s UX design and messaging, all the way down to payment solutions.
Traditional sales channels like retail will always have their place in a fully formed omnichannel sales strategy. But by embracing the opportunity of DTC e-commerce and taking proactive steps to account for the risks and challenges that come with it, you can rise above market disruptions and position your brand for sustained financial success.
For more expert insights on how to optimize payments and create a successful go-to-market e-commerce strategy, joinDigital Riverand our sponsors as we host a live virtual event on July 15 titledOptimize Payments for Maximum Conversions.
Register here to learn more about how to optimize payments.
This post was created by Digital River with Insider Studios.