Why is seamless checkout important for lowering customer acquisition cost for D2C brands?

High cost to acquire customers can be significantly reduced by driving a higher number of conversions at the checkout stage – the most important leg of the shopping funnel.

Why is seamless checkout important for lowering customer acquisition cost for D2C brands?
One challenge that D2C brands continue to face is the high CAC (Customer Acquisition Cost).

– By Chirag Taneja

With a $12Bn market size in FY 2022, the Indian D2C industry is registering a CAGR of whopping 40 per cent. This is only expected to grow in the coming years, and the thriving industry is projected to touch a $60B mark by the end of FY 2027. However, the project growth brings along many challenges that will become even more intense in the coming future. 

One such challenge is the high CAC (Customer Acquisition Cost) that D2C brands continue to face. A high cost to acquire a customer causes leakage in a brand’s profitability and hinders its growth. However, this high cost to acquire customers can be significantly reduced by driving a higher number of conversions at the checkout stage – the most important leg of the shopping funnel. By providing a seamless, rewarding, and secure checkout, individuals find it easier to complete their purchase, further reducing a brand’s customer acquisition cost. 

What is seamless checkout? 

D2C or direct-to-consumer is all about offering a superior customer experience, which is paramount in the case of checkout. Seamless checkout refers to a process that’s simple, and streamlines a shopper’s buying journey in a manner that they are able to complete their purchase within minutes.  

One critical element of seamless checkout is not having to re-enter information each time an individual shops. This helps save time, improve customer satisfaction and increase convenience. Meanwhile, when shoppers don’t have to fill lengthy forms or deal with a complicated checkout process, the chances of them completing the purchase and converting into paying customers increase exponentially. 

Seamless checkout also provides shoppers with a secure environment, further building trust and ensuring they convert into repeat customers. Finally, providing shoppers with personalized payment options and auto-applying the best discounts to their carts helps further helps incentivise them, thereby boosting sales.

Why is seamless checkout important for D2C brands?

Since the D2C industry is growing rapidly, the competition is extremely high which makes customer acquisition not only tough but also costly. As a result, providing shoppers with a seamless experience can help:

Increase retention
Upscale customer lifetime value
Reduce the overall acquisition cost

1. Reduce drop-offs at various checkout stages 

Did you know over 70 per cent of shoppers drop-off at the checkout page? This happens due to the following reasons: 

Cumbersome login process with multiple details to be filled
Low internet bandwidth owing to increased load time
Multiple tabs being opened to complete one checkout process
Inability to calculate discounts applied
The friction-filled payment process

When a customer is faced with an uncomfortable shopping experience, drop-offs happen. This leads to a brand restarting the entire customer acquisition process again. This results in: 

High customer capture spends
Low conversions
Low ROAS (return on ad-spends)
Lost profitability

However, when  a shopper is exposed to a seamless shopping experience with less friction such as simple login process, faster load time, better discount offerings, payment personalization, etc. the chances of a shopper completing the purchase increase significantly. This, in turn, not only lowers customer capturing cost but increases conversion as well.

2. Build brand trust 

A customer who has a seamless checkout experience will recommend the brand to others. Word of mouth instills a greater sense of trust among prospective shoppers. This helps a brand bag more conversions and at the same time, significantly lower its customer acquisition cost. Trust in D2C brands, especially the new ones, is comparatively lower among shoppers. This, many times, is a reason behind high acquisition cost. With seamless checkout, brands can win over a shopper’s trust with a superior experience, and build the much-needed trust to convert these shoppers into brand loyalists.  

3. Reduce marketplace dependency for product discovery

In marketplaces, multiple brands with substitutable products fight for the front seat. As a result, product discovery can be challenging. This is why it is essential to drive traffic to your own website and build an identity over and above marketplaces. 

Providing a superior and seamless checkout experience can:
Lower dependency on marketplaces
Save commission cost
Drastically bring down the cost of customer acquisition

Besides brand visibility amid cut-throat competition, mapping customer behavior from a business point-of-view is also becoming difficult. And, with the world wide web moving towards a cookieless world, as per Google’s recent update, this is adding to the difficulties of the D2C brands. As a result, going direct-to-consumer with one’s own website has become all the more important today than ever from a seamless customer experience view point and to gain more insights on your customers.

Here’s how D2C brands can gather first-party data to maintain a low acquisition cost in the forthcoming cookieless world. 

Identify opportunities to gather data during the campaign
Focus on one’s own digital data assets
Foster a direct relationship with the shoppers/customers
Consider account-based targeting
Shift focus to IDs and UP addresses of the device
Create and engage web traffic with valuable content
Embrace storytelling to intrigue the audience
Invest in innovation for digital last-mile connectivity

4. Reduce cart abandonments

For D2C businesses, customer drop-off at the checkout page is the most significant problem area. The rate of cart abandonment in India is 51 per cent, as reported by India Marketers. However, some research shows that the industry’s best-in-class rate for cart abandonment in India is 70-75 per cent. Such high drop-offs mean that the conversion incidents are lower and hence, the brand has to spend high on bringing back the dropped-out shoppers to the platform. This increases customer acquiring cost and inversely reduces return on ad-spends.

How can brands offer seamless checkout experience to shoppers?

D2C brands today can leverage multiple ways to offer seamless checkout experience to the Indian shoppers. The most subtle way to achieve this is by knowing a shopper’s previous visits and gathering insights from their buying behavior. Brands can use this data to pre-fill shopper information during the checkout process, eliminating extra efforts each time a shopper makes a purchase. 

Another way to achieve seamless checkout is by enhancing accessibility. By giving shoppers an option to make last-minute additions, brands can not only witness a high order value but open doors to upselling opportunities as well. 

Lastly, one-page checkout instead of jumping across multiple pages, makes a tremendous difference in making the checkout process simple and seamless. This is where technology is leading the way and spearheading to enhance the checkout experience. Tech-driven e-commerce enablers are building solutions that leverage AI, ML, and advanced analytics to automate, personalize, optimize and track campaigns to drive conversions, sales, and ROI. 

It also offers solutions to handle everything from security to order fulfillment and a seamless checkout experience, allowing brands to focus on their core products and services. These solutions are also fully-integrated, allowing brands to manage their entire store operations with ease. 

To Conclude

A streamlined checkout process helps a brand lower its customer acquisition cost by making it easier for shoppers to complete their purchases, thus reducing the likelihood of abandoned carts. In addition, it also increases customer satisfaction and loyalty, leading to repeat business. In 2023 customer convenience will become paramount forcing brands to take the road sooner than later. The more seamless shopping experience becomes, the lesser shall be the cost of acquiring new customers and high shall be the resulting profits. 

(Chirag Taneja is the co-founder and CEO of Gokwik)

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 24-01-2023 at 12:26 IST