eCommerce growth soared in 2021, reaching a global peak of $28.5 trillion as Covid-19 forced consumers online to engage with brands in new ways.
While many companies embraced this, overzealous growth efforts also contributed to hiring efforts at scale to grow seemingly unprepared eCommerce teams on the brand side. With an acclimation to the new-normal, growth has slowed into 2022 and beyond.
This is, in part, due to consumers returning to previous buying behaviors offline, large layoffs from feverish hiring efforts, rising inflation to counter market stimulation during the pandemic, and, geo-political factors like the Ukraine war. Several technological factors, like the introduction of iOS 14.5 with Tracking Transparency, third-party cookie deprecation and increased consumer privacy from GDPR and CCPA have also played a significant role.
The result is that consumers are spending less, upping competition in the eCommerce space and pushing the Customer Acquisition Cost (CAC) further up. It has been noted that between 2017 and 2022, the CAC for a new customer has increased by up to 60%.
Brands are turning to the following strategies, and their extensions, to foster CRO in 2024 and beyond:
- Conversion Rate Optimization (CRO)
- User Experience (UX) enhancements
- Subscription-based offerings
- Reduction of CAC
- Improvement of LTV per customer
- Post-purchase Customer Engagement
In this installment of Secrets of Ecommerce Growth, we’ll focus on Conversion Rate Optimization
Conversion Rate Optimization (CRO)
From 2024 and beyond, thinking of innovative ways to improve checkout efficiency and improve conversion rates is becoming paramount. Providing quick and more seamless checkout methods is a pragmatic way of doing this.
As eCommerce conversions continue to tail off since their peak in 2020 – declining by up to 17.1% in 2021, brands are forced to adjust their customer journeys to lessen time to checkout. Brands can either opt for email only, deferring to guest checkouts which Forbes notes is still preferred by 43% of customers – or, build on previously captured customer data for autofill.
Many large brands are embracing this, with 2023 having seen increased advertising by both Google for its Chrome Password Manager, as well as Shopify’s very own Shop app now having its own shopping day: Shopify Shop Day.
These, and similar CRO-enhancing initiatives, will align with an overarching trend of reducing the amount of customer information needed for checkout – something which only really Amazon has historically excelled at. The deprecation of third-party cookies means in 2024 that brands must find newer ways of capturing purchase-dependent information with consent that can be seamlessly integrated into the purchase experience.
User Generated Content
User Generated Content (UGC), which includes text, videos, images, and reviews, has become an invaluable asset for brands. It not only offers authenticity but acts as a form of social proof, boosting trust and credibility. When applied effectively, especially in e-commerce platforms, UGC can significantly enhance conversion rates by up to 8.5%.
Mobile users, who dominate the online shopping sphere, exhibit an even higher cart abandonment rate of 85.65%. However, integrating UGC into the mobile shopping experience can act as a countermeasure, providing the reassurance shoppers need to complete their purchases.
This seismic shift is mirrored by even major players’ focus on UGC, with incumbents like Google even shifting their algorithmic focus to cater for UGC – evidenced by two trends in 2023. In August 2023, Google started experimenting with showing social media followers in SERPs to improve search results. And, in September 2023, Google appeared to favor LinkedIn, Reddit and Tik Tok in its most recent algorithm update.
Website optimization is pivotal for online success in 2024. A fast-loading site retains visitors, promoting sales and brand loyalty. Given that a large number of internet users browse via mobile devices, a responsive design ensures sites cater to their potential audience efficiently.
A responsive, fast site is more than a trend; it’s a 2024 web necessity. Shopify has reported that a 1-second site speed improvement can increase mobile conversions by up to 27%. When combined with UX, CRO and some of the other strategies mentioned above – this can be far higher.
A swift and responsive website in 2024 isn’t just a luxury—it’s an imperative. A massive $2.2 trillion came from mobile eCommerce purchases in 2023 as reported by Statista, which marks 60% of all annual eCommerce sales.
This means that mobile optimization is a CRO factor that can’t be ignored, as even a 0.85 second delay in website load speed can precipitate a 7% dip in conversions. Google has even recommended an average load speed of 2 seconds, with Portent noting that every additional second can reduce conversion rates by 0.3%.
Image Source: Crazy Egg.
This will see brand embracing a number of changes that will lessen page load speed and improve conversions using UX:
- CDN networks for distributed content caching and loading.
- eCommerce stack enhancements with migration to optimized platforms.
- Using headless CMS systems to distribute content seamlessly to all devices.
- Content changes with more modern image formats like WebP and AVIF.
- User-testing A/B testing to find ideal UI / UX category & product templates.
In 2024 and beyond, brands investing in comprehensive website optimization are not only staying ahead of the curve but are also reaping substantial conversion benefits.
The presence of behavioral science in eCommerce conversion strategies is becoming undeniable as competition increases. Brands investing in developing a nuanced understanding of consumer psychology will craft strategies that resonate with prospective clients, influencing pivotal decision-making processes and refining the online shopping experience.
Data marketing company Sailthru have found that 93% of customers consider visual appearance a core deciding factor for purchases, free shipping can increase average order value by 30% and adding testimonials can increase conversions by up to 43%.
This will see brands championing a range of consumer psychology hacks, including:
- Streamlined Choices: Providing fewer choices (3 or less), to lessen time-to-purchase and reduce decision fatigue when browsing.
- Social Proof: Using customer and client testimonials in the form of reviews, user-generated content and real-life case studies.
- Persuasion Tactics: Leveraging perceived authority by listing labels on products such as ‘Best Seller’ or ‘Editor’s Pick’ have a subconscious impact on purchase decisions.
- Harnessing FOMO: Up to 60% of millennials make impulsive purchases based on FOMO, while limited time offers can boost conversion rates by 9%.
- Value Propositions: Providing a clear perceived benefit to a brand’s product or service will let customers imagine that solution in their life.
By utilizing an understanding of human psychology and consumer behavior, brands can introduce subtle persuasion techniques into their marketing, platforms and customary journey.
Stay tuned for Part 2: User Experience Enhancements!