Consumers Turn to Installment Payments Amid Inflation: Salesforce
E-commerce sales growth slowed in 2021 to 16% from 57% in 2020, said Caila Schwartz, Salesforce senior manager-consumer strategy and insights, retail and consumer goods, on a Wednesday Retail TouchPoints virtual retail trends webinar. Higher prices factored into slower sales…
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growth, with inflation given as consumers’ top concern heading into the holiday season. Digital sales grew 9% year on year for November and December to $257 billion. Salesforce estimates U.S. consumers paid 25% more online year on year for goods going into the holiday season. Higher prices fed interest in installment payments: orders using buy now, pay later options grew 8% year on year in 2021; orders processed using Apple Pay increased from 2% to 4%, while credit card usage declined more aggressively in 2021. When installment payment plans were introduced, the average order value was $300 or more; average value has fallen to $130, and Salesforce expects that to continue as consumers look to installment plans as credit card alternatives, Schwartz said. Online demand didn’t have the usual spikes associated with tentpole sales event days during the holidays. The global average discount rate during Cyber Week dropped from 26% in 2020 to 24% in 2021, said Salesforce. Sales were up 16% year on year in the first two weeks of the holiday sales season; in the last two weeks, store fulfillment doubled sales for customers using buy online, pickup in store. BOPIS is driving a “fully integrated physical and digital” retail experience, said Schwartz, saying there’s room to improve BOPIS, curbside pickup and other “creative fulfillment options to keep shoppers engaged.” Though mobile is driving most online traffic, “it’s still lagging behind in orders,” Schwartz said. Reducing friction in the checkout process is key to improving growth in the e-commerce channel. Streamlining the buying process to “as few taps as possible” is a good start to improving the customer experience, she said.