As consumer behaviors continued to shift during the pandemic, a new survey from PayPal and BigCommerce aims to identify exactly how those habits have changed, from preferences to online shopping, social media’s role in e-commerce and increases in the use of digital wallets and flexible payment options.
The survey, which looked at responses from more than 3,000 people in the U.S., U.K. and Australia, took place in December 2020.
Overall, the survey results highlight consumer shifts in how and where they buy products, creating the need for retailers to have omnichannel strategies to support customer preferences and opportunities for retailers to use new channels, fulfillment strategies and payment options.
“For years, we’ve seen e-commerce continue to gain ground on traditional shopping,” said Greg Lisiewski, vice president of global pay later products at PayPal. “Online and digitized experiences have required retailers to quickly adapt to changing consumer shopping behaviors, and this was expedited in the pandemic. Now more than ever, consumers want to be in control of how they pay, and they have a desire for friction-free, seamless digital shopping experiences regardless of which channel they are shopping in.”
According to the survey, while a majority of consumers still prefer in-person shopping, 62.5 percent reported doing most shopping online. Meanwhile, online nearly half of respondents reported they are discovering new products through social media at least once a month and 66.7 percent said they have made a purchase directly through their mobile phone at least once in the last month.
Both online and in-store, more consumers reported increased use of digital wallets. Overall, use of digital wallets in-store experienced a global increase of 24.5 percent online and 88.7 percent for in-store purchases since March 2020 with survey respondents overwhelmingly reporting that they would prefer retailers make digital payment options more available. Prior to March 2020, digital wallets were the preferred payment option for only 28.3 percent of global online shoppers; however, the survey found that preference has jumped to 35.2 percent of global online consumers in the time since. Additionally, preference for using digital wallets in-store increased from 12.1 percent to 22.8 percent.
Buy online, pick up in-store, or BOPIS, has also seen an overwhelming increase during the pandemic with a 373 percent increase of use in the U.S alone. Notably, the authors of the report stated prior to the pandemic BOPIS had been slower to grow in the U.S. as compared to other countries.
With Australia leading the way, mid-market merchants are increasingly adopting buy now, pay later, or BNPL, solutions to grow e-commerce as well. According to PayPal and BigCommerce, 48 percent of Australian merchants, 20 percent of U.S. merchants and 11 percent of U.K. merchants currently offer BNPL options to customers.
“The data tells us that 70 percent of consumers are more likely to spend more at a retailer that offers their preferred payment method,” said Mark Rosales, vice president of business development, payments/banking/fintech at BigCommerce. “By leveraging this behavioral data, merchants have better means and ability to implement the payment options their customers prefer, ultimately enabling those brands to realize significant sales growth.”
PayPal and BigCommerce’s report shows that when it comes to using BNPL, consumers often fall into two groups: power users and slow adopters. When asked about the use of BNPL solutions in the past three months, 46 percent of respondents said they had used BNPL at least once, while 8.3 percent said it is their preferred method of payment for online shopping over digital wallets and credit or debit cards.
“Different consumers gravitate toward different payment methods, which is why it’s so important for merchants to offer several options at checkout,” said Brent Bellm, chief executive officer at BigCommerce. “For instance, merchants with a high average order value — generally $70 or more — should consider offering buy now, pay later solutions. For most retailers, the one essential payment solution to offer is PayPal as it makes many different payment methods available through a single wallet. Consumers love that level of flexibility, along with PayPal’s built-in benefits of faster checkout, financial information security and protection.”
Authors of the report state that merchants can benefit from educating consumers of the benefits of BNPL and the interest-free payment solutions they offer — especially as young consumers are accustomed to subscription-based payment models, with BNPL financing options falling into the same category. According to the companies’ survey, 74 percent of BNPL users have been prompted to use BNPL by a message early in the shopping experience.
“While we have seen robust usage of our PayPal Pay Later products across all demographics, younger customers, already accustomed to shopping online, are gravitating to pay later services now more than ever,” Lisiewski said. “Millennials and Gen Z are already used to a subscription model lifestyle. They’re used to receiving a product or service and having a specific monthly cost. Pay later financing options represent the lifestyle our customers are already living.”
In terms of where consumers are shopping now, the report found shoppers are mainly visiting large retailers or branded e-commerce stores. Of those surveyed, 58.2 percent said they shop at department stores, hypermarkets or big-box retailers while 31.9 percent said they purchase directly from the e-commerce stores of their favorite name brands.
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