With both mobile devices and social media now ubiquitous, e-retailers are tailoring their approach to cater to new, more savvy online shoppers. Click-to-buy ads are the hot new trend for increasing sales.
Are they really as great an ecommerce development as they seem?
What’s This New Technology All About?
Whether looking up a recipe, doing research for work, reading a news story, or just checking the score from last night’s game, it’s common to come across targeted ads accompanied by a ‘Buy Now’ button.
Rather than redirect shoppers to the merchant’s page to go through the tedious checkout process, consumers can make instant purchases without even leaving the page they’re on.
Why ‘Buy Now’ Ads Haven’t Taken Off…Yet
Over the 2015 holiday season, social media’s targeted ads accounted for just 1.8 percent of online sales. At the same time, only 35 percent of millennials indicate that they might use a buy button on Facebook; the figures were even lower for Twitter users. If millennials, normally the greatest proponents of seamless tech integration, are weary of these ads, then why even bother?
It’s not a matter of what consumers are doing now—it’s what they will likely be doing soon. Much like other payment technologies, such as mobile wallets, once consumers become more comfortable with this shopping experience, the popularity of ‘buy now’ ads could take a giant leap forward.
It might also be a matter of perception and attitude. For example, look to the experience of shops like Spool No. 72, which found that 84 percent of its sales generated through Pinterest were from first-time customers. In this case, shoppers didn’t set out with the intention of making a purchase. Instead, they came across an item they wanted, and social media presented them with a convenient way to easily purchase that item.
The Impulse Buy Moves to the eCommerce World
Despite early adoption hesitancy, these targeted ads facilitated by social media seem to be an advantageous arrangement for everyone. Consumers are conveniently directed to products in which they would likely be interested, while the merchant sees a big boost in sales.
One-click shopping drastically reduces friction, which is one of the primary barriers for ecommerce merchants in turning a click into a sale. Considering that shoppers abandon as many as 75 percent of all online shopping carts, targeted ‘buy now’ ads offer the opportunity to convert more of the $4 trillion in annual lost sales.
There is also a psychological element at play here.
Think about your last trip to the grocery store. In most places, shoppers are likely to find a rack full of small items, such as candy, magazines, or accessories, right near the register. These impulse items are designed to entice shoppers into adding one or two small items onto their purchase before walking out. Because they are right near the register, there is little time to decide if these items are a worthwhile purchase; merchants rely on the consumer’s sudden, unreasoned impulse.
Ads offering a one-click checkout work on much the same principle—it confronts consumers at a time when they were not planning to do any shopping and says, “Hey, check this out! Don’t let it get away!”
The lure of the impulse buy is a powerful one: a recent survey suggested that 77 percent of Americans have made an impulse purchase in the last three months, while research shows that 30-50 percent of all in-store retail purchases are on impulse.
However, a recent Javelin report suggests that not everything is quite so rosy.
Impulse Shopping Can Yield Buyer’s Remorse
What if a shopper is lured in by a series of ‘buy button’ ads, but then suddenly realizes that he doesn’t really want the five different items he just bought in less than five minutes?
In a best-case scenario, that shopper might contact the merchant for a return or to cancel the orders. Or, if he doesn’t feel like going through the ‘hassle’ of dealing with the merchant, he might simply request a chargeback instead.
However, it is not all gloom and doom for merchants who like the convenience (and increased sales) that come from buy buttons.
Sixty-three percent of regular impulse shoppers are more likely to buy from a seller who offers good customer service and simple, fair and easy-to-understand return policies—and with good reason. If you are a self-confessed, emotionally-driven impulse shopper, you probably operate knowing that you will return quite a few of the things you buy.
Therefore, while it is not necessarily bad to embrace the buy button, merchants absolutely have to counterbalance that impulse shopper lure with business best practices and a return policy that makes it easy for customers to make returns.
Merchants should be accepting of the fact that returns are a part of doing business, especially when impulse buys entice shoppers to spend without thinking it through. When those returns start coming in, merchants have to be ready to accept them—or see the business’s chargeback rates spike.
How Do the Pros and Cons Stack Up for You?
Do you think ‘buy now’ ads are a good option for your business? Have you tried them? What do you think?
Sound off in the comment section below.
Photo by Stuart Miles/FreeDigitalPhotos.net
Monica Eaton-Cardone is co-founder and COO of Chargebacks911.com.