- New generation of shoppers demand better payment and financing options, but retailers put off by perceived complexity
- Checkout friction remains primary cause of abandoned baskets
Abandoned shopping baskets remain a significant issue for UK retailers, with checkout cited as the primary point for consumers to fall out the shopper journey, according to data from global analyst house Ovum and leading European payments provider Klarna.
The research into the opinions of leading multi-channel retailers found that 52% of retailers believe that friction in the online checkout is the biggest driver of basket abandonment. 40% cited a lack of payment methods and 39% suggested a lack of lending or credit options was stopping consumers completing the payment process.
For retailers, increasing the range of payment and financing options is the key route to ensuring more consumers make it through the checkout process, and lower the rate of basket abandonment affecting UK retailers. 98% of merchants agree that consumers want new and easier ways to pay online and 78% of merchants say they would like to introduce consumer finance at the point of sale. But perceived barriers to increasing payment options persist – 85% of retailers think that it is too complicated and expensive to offer consumer finance at the point of sale.
However, consumer appetite for more varied payment methods is strong. With the huge growth in mobile shopping, and high levels of interest in new forms of consumer finance, the UK is likely to see the emergence of new buy now pay later options in both online and mobile channels. Klarna’s consumer research supports this – it found that that 53% of online shoppers are looking for new and easier ways to pay online, while 56% of consumers said they would buy more online if there were more varied payment options available.
The influence of online is increasing
It’s crucial that retailers offer a smooth payment process with plenty of payment choice, especially given that more and more transactions are shifting online. Respondents estimate that almost two thirds of retail sales (65%) will take place online by 2019. Sales made on mobile devices soared by 350% in two years, increasing from 1.8% in 2015 to 8.1% of total sales today amongst retailers surveyed. Retailers predict that by 2019, well over one in ten (12.8%) of all retail sales (both in store and online) will be made on mobile and in preparation, 9 out of 10 retailers today are currently investing in mobile payment capabilities to stay competitive.
The new mobile millennial
This explosion in mobile shopping is being driven by digital natives, such as Millennials and Generation Z (18-34 year olds), which now account for over half of all online retail purchases in the UK. This compares to 30% for generation X (35 – 50 year olds) and just 10% for baby boomers (50 – 70 year olds).
Merchants are waking up to the importance of catering for this new breed of consumer – 90% of merchants say that meeting the demands of millennials is driving investment in new payment technologies.
Fashion in particular is emerging as a major battleground to win millennial loyalty, with 95% of retailers upping their investment in tech to meet their expectations.
Luke Griffiths, UK General Manager, Klarna, said, “This data shows that simple things such as a tricky checkout process or lack of payment options can turn off today’s consumers. But there is much to gain for retailers who get this right – consumers will spend more if the payment process is smooth and stress free.
“The majority of retailers still perceive online consumer finance as too complicated or expensive to offer. But today, it doesn’t have to be. Retailers looking to provide the options consumers want in an easy to use format should consider Klarna’s Buy Now, Pay Later or Planned Payments for a smooth and simple way to offer modern consumer financing.”
Gilles Ubaghs, Principal Analyst with Ovum also commented, “The UK is amongst the most dynamic and competitive markets when it comes to online and mobile shopping. The fierce levels of competition, combined with an increasingly demanding customer base driven by millennials, is now leading to more experimentation in how we pay. It’s getting harder for retailers to stand out online – improving payments and offering new ways to finance purchases is undoubtedly becoming a critical component of the ecommerce landscape.”
Download the full Ovum & Klarna report: www.klarna.com/uk/business/ovum
Disney CEO says households without kids have boosted streaming success
LOS ANGELES (Reuters) – Surprisingly strong interest from adults who do not have kids at home has helped increase subscriptions to Walt Disney Co’s Disney+ streaming service beyond initial projections, Chief Executive Bob Chapek said on Monday.
Disney+ debuted in November 2019 and growth has exceeded Wall Street expectations and Disney’s forecast. While Disney is known for family entertainment, Disney+ also features movies and TV shows from Marvel, “Star Wars” studio Lucasfilm and others.
As of Jan. 2, Disney+ had signed up 94.9 million customers worldwide. Half of those live in households without children, Chapek said, a higher proportion than expected.
“What we didn’t realize was the non-family appeal that a service like Disney+ would have,” Chapek said via online video to the Morgan Stanley Technology, Media and Telecommunications Conference.
“In fact, over 50% of our global marketplace don’t have kids,” he added. “When 50% of the people in Disney+ don’t have kids, you really have the opportunity now to think much more broadly about the nature of your content.”
The service has generated buzz for current Marvel show “WandaVision” and “Star Wars” series “The Mandalorian” featuring the character known as Baby Yoda.
Chapek, who became Disney CEO a year ago, refocused Disney’s media and entertainment businesses to make streaming the priority as customers gravitate to options such as Netflix Inc.
In December, Disney raised initial projections and said it expected to attract as many as 350 million global subscribers across all of its streaming services, which include Hulu and ESPN+, by the end of fiscal 2024.
(Reporting by Lisa Richwine; Editing by Sonya Hepinstall)
Zoom shares rise on strong current-quarter forecast, upbeat results
(Reuters) – Zoom Video Communications Inc forecast current-quarter revenue above expectations, as the company expects millions of people to continue using its video-conferencing platform to work remotely and attend online classes, sending its shares up 10%.
When the COVID-19 pandemic hit, Zoom was a relative upstart founded by a former Cisco executive that had gone public on a promise to make video conferencing software easier to use.
However, businesses around the globe took to the company’s video conferencing services during the virus outbreak. Zoom has since seen a meteoric rise over the last year, with investors keen on knowing if the firm can maintain this level of growth.
Eric Yuan, founder and chief executive officer of Zoom, said the firm was “well positioned for strong growth” in the coming year.
The company forecast current-quarter revenue between $900 million and $905 million, compared with estimates of $829.2 million, according to IBES Refinitiv data.
Zoom has seen its user numbers surge in the past year, while its shares more than quadrupled during the same period. The platform said it has 1,644 customers contributing more than $100,000 in trailing 12 months revenue, more than double from a year earlier.
The company reported quarterly revenue of $882.5 million, compared with estimates of $811.8 million. On an adjusted basis, Zoom earned $1.22 per share, beating estimates of 79 cents per share.
The company’s shares, which closed up 9.6% on Monday, were trading at $452 after the bell.
(Reporting by Eva Mathews in Bengaluru; Editing by Shounak Dasgupta)
UK business interruption insurance anguish far from over
By Carolyn Cohn
LONDON (Reuters) – Insurers in Britain have begun making interim payments or settlement offers to businesses disrupted by the COVID-19 pandemic after a high-profile January court case, but concerns have been raised about low payouts, with one business offered as little as 13 pounds ($18.14).
The UK Supreme Court dismissed appeals by insurers that said business interruption insurance claims were not valid in a test case brought by Britain’s markets watchdog on behalf of policyholders.
The Financial Conduct Authority (FCA) said the case could affect 370,000 policyholders and 60 insurers, with the potential for billions of pounds in claims.
Many small businesses had policies that enabled them to claim a maximum of 50,000-100,000 pounds for disruption caused by the pandemic and subsequent lockdowns.
However, East London cafe Woolidando told Reuters by email that it had received a settlement offer totalling only 13 pounds, confirming a report in the Sunday Times.
A source from the Hiscox Action Group of policyholders said he was aware of an even lower offer being made, while other members of the group have yet to receive offers or interim payments.
“We are paying claims as quickly as possible in line with the Supreme Court judgment,” Hiscox said in an emailed statement. “In total, we expect to pay out $475 million in COVID-19 claims, including for business interruption.”
After the court ruling the FCA asked insurers to start making payments quickly.
Six insurers, including Hiscox, were directly involved in the case. Of the other five, RSA last week told Reuters it had started making payments.
QBE on Monday said that it has also made payments while MS Amlin said it had assigned a loss adjuster to all open claims and was contacting policyholders.
Argenta, meanwhile, referred to a statement on its website that it would apply the judgment in respect of all outstanding claims.
The other insurer, Arch, did not immediately respond to a request for comment.
Michael Kill, chief executive of the Night Time Industries Association, said some of the trade body’s members had received interim payouts of 25,000 pounds each or settlement offers for the maximum 100,000 pounds permitted under their policies, though their losses were even higher.
However, smaller businesses that have yet to receive offers fear they might receive low payments while insurers not among those directly involved in the court case are still contesting liability, Kill said.
The FCA has also warned insurers against blanket deductions of government support from money they owe to businesses.
Woolidando said part of the reason its settlement offer was so low was that deductions were made for government furlough payments.
“As (furlough payments) do not cover a loss incurred by the claimant, (they) should not be included in any claim,” the Association of British Insurers said.
(Reporting by Carolyn Cohn; Editing by David Goodman)
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