Opening your ecommerce store is exciting. You’ve created and sourced your products, you’ve built an awesome website, and now it’s time for one of the most important steps — getting paid.
Understanding how ecommerce payment processing works is a crucial part of opening an online business. But let’s be honest, if you’re not a financial wizard or very technical, you might find the whole concept of ecommerce credit card processing complex and hard to navigate. The good news is that we’re here to break it down for you.
In this blog, you’ll learn how gateways and payment processors work together, and we’ll share some examples of payment solutions you can use when setting up your BigCommerce store.
Online Payment Methods
Before we get into how payment processing works, let’s review some of the different payments methods customers prefer for online purchases:
- Credit Cards: One of the most popular and straightforward ways to pay both offline and online.
- Direct Debit: Customers can enter their bank account details, making this the equivalent of paying in cash or by check.
- Alternative Payments Methods: This includes wallets, like PayPal, Amazon Pay, Google Pay and Apple Pay, and buy-now-pay-later solutions, like Affirm, Afterpay, Klarna and Sezzle.
- Digital Currency: A very small number of people do pay with Bitcoin or another cryptocurrency.
There are a few other options you can give your customers for paying online during the checkout process, such as ACH and invoicing. However, as you can see from the chart below, credit cards, alternative payments and direct debit are the ones most people prefer.
Three Elements of Ecommerce Payment Processing
Now that we know what types of payments you can choose to offer on your online store, it’s time to talk about payment processing. While there’s definitely more to it than this, an easy way to summarize the concept is to quickly define each of the elements:
- Payment gateways: act as the courier between your ecommerce website where the customer enters their payment information and your payment processor
- Payment processors: take the information from the gateway, verify that the customer has the funds, and deposit the money in your merchant account
- Merchant accounts: receive the funds once they are processed
Sometimes people use the words gateway and processor interchangeably even though, technically, they do different things, making it extra confusing.
Additionally, payment service providers (PSP), also called merchant service providers (MSP), can manage the complete end-to-end process, from the technical connections to depositing funds. (We’ll provide some example PSPs that BigCommerce merchants can use below.)
How Do Ecommerce Payment Processors, Gateways and Merchant Accounts Work Together?
Now that we’ve explained each element, let’s review the steps for a standard transaction to see how the payment systems work together once the customer is finished adding items to their shopping cart:
Step 1. The customer enters their credit or debit information at checkout.
Step 2. The payment gateway secures the data and sends it to the payment processor.
Step 3. The payment processor checks with the credit card network to ensure that the customer has the funds to cover the purchase.
Step 4. The customer’s credit card issuing bank either accepts or rejects the payment request.
Step 5. The payment processor then sends the results (approved or denied) through the payment gateway, so the customer can view on the merchant’s website if the transaction was approved.
Step 6. The payment processor issues the funds to either the merchant account or the merchant’s bank.
What’s sometimes most surprising is that the whole process takes place in a matter of seconds — even though a lot of things are happening.
Let’s go into more detail about how payment gateways work on your BigCommerce store to collect and secure your customer’s payment information.
Collecting Information with Ecommerce Payment Gateways
As we stated above, the main role of the payment gateway is to connect the customer’s payment information with the financial institutions that are actually processing the payment. For small business owners, there’s four main options for collecting payment details on your BigCommerce store — some more customizable than others.
1. Hosted widgets.
In this scenario, you use an HTML component to display information on your checkout page. And there are two types of hosted widgets you can use:
- Embedded iFrame components: The content displayed on your checkout page is hosted outside of BigCommerce; therefore, you can’t control the look and feel.
2. Hosted fields.
Using hosted fields is another solution to keep your customer on your checkout page while providing an extra layer of security for their credit card information.
With this option, the form fields are hosted outside of BigCommerce but displayed on the checkout page. The gateway tokenizes the shopper’s credit card information once it’s entered into the fields, and then the token is passed to the payment processor. This way BigCommerce doesn’t handle the raw credit card data.
3. Native hosted component.
For this option, the customer remains on the page and the fields are rendered by BigCommerce on checkout. Then, BigCommerce uses a server-to-server (direct) API integration to connect with the PSP. You can make this work with PSPs like Authorize.net and Cybersource.
Important Considerations for Ecommerce Payment Processors
Once you’ve collected and transferred the data, it’s time for the payment processor to actually process the payment. This is where the majority of the activities happen, from checking with the credit card company and authorizing the payment to transferring the money into your account.
Here’s some general things to know about your payment processor:
1. They should be PCI compliant.
Any company that accepts, processes, stores or transmits credit card information must be compliant with the Payment Card Industry Data Security Standard (PCI DSS). This means that you and your payment processor must comply with these requirements.
When reviewing payment processors, make sure you ask them about their approach to PCI compliance. You can learn more about how to achieve PCI compliance from Jon C. Marsella, the Founder and CEO of Jasper.
BigCommerce stores come standard with Level 1 PCI compliance, so you’re covered if you’re working with one of our Partners listed in your Control Panel.
2. They should create tokens for sensitive payment information.
We touched on this above, but it’s worth explaining how it works in more detail. Essentially, to secure your customer’s payment information — especially if you allow customers to save their payment information to use for repeat purchases or recurring billing— your payment processor should use tokenization.
How this works is that the moment the credit or debit card information is captured, the processor converts the account numbers into a token that it can use to identify the specific customer. By doing this, you’re protecting yourself and your customers from hackers that might attempt to steal sensitive payment information.
Depending on your BigCommerce plan and the payment service provider you choose, you can enable stored payment methods for your customers. To learn more about how this works for BigCommerce merchants, visit our knowledge base.
3. The payment methods they accept.
This is probably the most important feature of your payment processor — at least to your customers. Does it allow you to accept the payment methods your customers want to use?
For instance, while Visa and Mastercard are widely accepted all over the world, it’s a very different story for American Express and Discover. Additionally, if your store sells more expensive items, customers might prefer an option, like Klarna, to break up the payments or buy now, pay later. You want to give customers as many options as possible to ensure they complete their purchase.
4. How much they charge in fees.
Now, this is probably the thing you care about most. As a small business, you don’t want to get trapped into paying astronomical fees for your payment processor, but sometimes the fees can be difficult to understand.
Typically though, companies will charge a percentage, as well as a fixed fee per transaction. However, some may charge a monthly fee for a subscription instead of transaction fees. There are also extra fees you might be required to pay for things like chargebacks, disputes and international payments.
Knowing your number of transactions can help you estimate your costs and find the right type of payment processor for your ecommerce business. If you’re a BigCommerce merchant, you can take advantage of our pre-negotiated rates with PayPal powered by Braintree.
Do You Need an Ecommerce Merchant Account?
Between the heightened complexity and modernization of ecommerce, some businesses are recognizing the need for ecommerce merchant accounts to help tailor their offerings to consumers’ expectations.
If you manage payments digitally — and if you’re here, you probably do or plan to — an ecommerce merchant account can help you offer the right digital payment options for your customers.
Merchant accounts can also help you manage and reduce the fees associated with various payment gateways.
Finally, ecommerce merchant accounts are focused on making their services very secure and now use the highest grade encryption when processing payment. This helps you ensure you’re offering customers the most accurate and secure environment for them to complete their card transactions.
6 Examples of Ecommerce Payment Solutions
At this point, you should have a better understanding of payment gateways, payment processors, merchant accounts — and how they all work together. Now, we can review some examples of PSPs that offer payment processing services, as well as gateways and merchant accounts.
PayPal is built on powerful technology that lets you easily accept credit and debit cards, offer PayPal to your customers, and extend buy now, pay later options, including Pay in 4 and PayPal Credit through your online store. Through PayPal, you can also enable payment through Facebook, Pinterest and Instagram.
In addition to offering fast, easy and secure payment acceptance, Stripe works with Google Pay, Apple Pay, and Masterpass to offer your customers even more payment options on cart and checkout pages. Stripe is PCI-certified and accepts international transactions from customers worldwide, ranging from Germany to Japan.
Square enables you to sell online and in-person with two-way inventory sync and provides a robust suite of tools to help you grow your business and improve your operations, including payroll and time management, employee-specific access management, customer engagement, and online invoices.
BlueSnap is a single global platform to accept payments from anywhere and on any device, offering global payment processing and multi-currency support — supports over 100 currencies and shoppers can select from 16 different payout currencies — in just one account.With BlueSnap, merchants can accept major credit card payments, as well as regional cards like China Union Pay. You’ll also get world-class security and detailed analytics and reporting.
5. Amazon Pay.
Amazon Pay simplifies checkout for hundreds of millions of Amazon customers by enabling them to use payment and shipping information stored in their Amazon accounts. According to Amazon, some merchants who use Amazon Pay have experienced increased conversion, reduced cart abandonment and faster checkouts. Amazon Pay offers fraud detection technology and also offers Amazon’s A-to-Z Guarantee on qualified orders. And mobile checkout takes just a few taps.
With Klarna you can offer no-liability financing options at checkout, including build-in fraud protection. BigCommerce merchant PlayBetter partnered with Klarna to offer customers alternative payment solutions with high-ticket items like SkyTrak, a golf simulator unit that costs about $2,000.
“Having Klarna available at checkout and offering our customers the ability to pay over time with little or no interest has been extremely helpful in reducing cart abandonment and increasing conversion.” — Chris Regan, Director of Customer Happiness
Now that you understand the available options to accept payments through your ecommerce platform, you’re well equipped to make decisions about which one(s) you’ll select.
Whether you’re just starting out or a fully established business, payments are a core component of your success. There’s no shortage of options for you to choose from — but you need a payment processor that addresses your specific needs as well as those of your customers. The price you’ll pay as the merchant is important, but it’s not the only factor. Consider all the features you need for your business right now, as well as what you might like to have as you start to scale.
Whatever processing solution you choose, make sure it enables online transactions that are easy for both you and your customers.
At BigCommerce we provide the platform for brands to build, innovate and grow their businesses. However, when they need help with the actual building, innovating or growing in the form of development, design, marketing and more — we have an incredible ecosystem of agency and technology partners who can help.
While we appreciate all of our incredible global network of 2,000 agencies and 800 technology partners, once a year we like to honor the best of the best. The BigCommerce Partner Awards program recognizes top performing agency and technology partners for their extraordinary and forward-thinking work for BigCommerce merchants.
In 2020 — the program’s third year — the BigCommerce Partner Awards featured 17 total categories whose applicants were evaluated by a panel of BigCommerce employees and executives. For the first time ever, the 2020 BigCommerce Partner Awards recognized three winners for each award based on their accomplishments respective to the geographic region in which they operate: Americas, APAC or EMEA.
We want to share the winners of this year’s awards to highlight the stellar work they’re doing in ecommerce. In an increasingly competitive ecommerce landscape, it’s important to have help you can count on. Merchants should feel confident that the following agencies and technology solutions can provide truly exceptional work.
Without further ado, here are the winners in each category, their accomplishments and what each has to offer ecommerce businesses.
BigCommerce 2020 Agency Winners
Best B2B Solution Award
This award is given to agency partners that consistently demonstrate superiority at meeting the complex needs of BigCommerce’s B2B merchants.
Americas Winner: Guidance
This 25-year-old digital commerce company is a customer-centric provider of innovative commerce solutions for both B2C and B2B merchants offering multichannel retail strategies, mobile, customer experience, optimization, innovative design and complex system integration.
They performed a digital transformation for hybrid business Farmer Boy that included important B2B features like account level pricing, while also automating many of their manual processes.
APAC Winner: Moustache Republic
A Sydney-based team of business minds, creatives, and technology junkies, Moustache Republic delivers exceptional ecommerce solutions for businesses through website design and development, ecommerce strategy consulting and conversion optimization.
The team built elegant solutions for a hybrid apparel company, AS Colour. This included two separate journeys for B2B and B2C customers that reflect the different tax requirements, shipping methods, pricing, payment methods and even products between trade and retail shoppers.
Finalist: Matter Design & Digital
EMEA Winner: 5874 Commerce
A global commerce agency and leading solution provider in Europe, 5874 Commerce works with clients to scale their businesses and create success stories through these core services: ecommerce, digital marketing, branding and integration.
Creative Problem Solving Award
This award is given to agency partners with an exceptional talent for using innovative thinking to create powerful online shopping experiences.
Americas Winner: Americaneagle.com
This full-service, global digital agency is based in Des Plaines, Illinois and offers best-in-class web design, development, hosting, post-launch support and digital marketing services.
The agency won the award for providing an innovative logistical solution for a major appliance brand. They have supported other well-known brands like Fin Feather Fur and Face-to-Face Games that enabled them to meet their specific business challenges.
Finalist: Groove Commerce
APAC Winner: 33 Bondi
33BONDI is an innovative design, technology and marketing services company that enable businesses to scale around their brand and customer relationships instead of being bogged down by complexity and IT costs.
Their client Blooms the Chemist required an ecommerce solution to integrate with their legacy POS/ERP and loyalty program. Their custom solution, built on the BigCommerce Cornerstone theme, merged online and offline transactions and allowed for the branded implementation of click & collect, with accurate inventory level and allocation occurring on purchase — creating a seamless customer experience.
EMEA Winner: Like Digital
This London-based studio specializes in global luxury, with extensive expertise in fashion, entertainment and hospitality. Like Digital has facilitated over $100,000,000 in ecommerce transactions, delivering visually rich, engaging solutions for the global luxury customer.
Like Digital leveraged BigCommere’s open API to creatively solve for their client La Perla’s biggest challenges.
This honor is awarded to agency partners who leverage BigCommerce’s open APIs to deploy headless storefronts that power customized and engaging shopping experiences.
Americas Winner: The ZaneRay Group
The ZaneRay Group designs and creates innovative enterprise ecommerce solutions that disrupt the norm. They have significant experience in headless architecture and have built a number of headless sites.
For one of their clients, Yeti Cycles, they designed a headless build with Prismic as the CMS and BigCommerce on the backend. This enabled the brand to put storytelling first and infuse dynamic content throughout the shopping experience on the site.
APAC Winner: Arkade
This customer-focused agency works with consumer brands to uncover, prioritize and implement valuable customer experience opportunities.
With COVID-19 heavily impacting the way customers interacted with their local pharmacies, Arkade used BigCommerce to create a headless solution for an Australian pharmacy brand that could quickly and effectively deliver localized click & collect and delivery to communities Australia-wide.
Finalist: Moustache Republic
EMEA Winner: Calashock
Since 2009, Calashock has offered design, development and optimization services for merchants — producing robust and secure ecommerce stores with beautiful designs and user experience at their core.
The group built a website for their client who needed a website that could be localized for several countries. They used a headless build to ensure the website was informative, content-rich and interactive, without affecting performance or user-experience.
Excellence in Delivery Award
This award goes to agency partners that consistently demonstrate the ability to successfully launch their clients’ BigCommerce storefronts on-time and within budget, with high levels of customer satisfaction.
Americas Winner: MoJo Active
This Pennsylvania-based agency services clients in B2B, wholesale/manufacturing and fashion in everything from ecommerce and marketing strategy to SEO/SEM and web/mobile development.
They have helped a number of well-known clients including Woolrich, Jeni’s and Little League and they are known for their time-proven approach that guides clients through the strategy, execution and marketing of their online stores.
APAC Winner: RANDEM Group
Randem Group is an international ecommerce consultancy servicing clients around the globe. They have multi-language capabilities and work with organizations of all sizes looking to launch, enhance or transform their digital capability across all market sectors.
Their clients like ResMed, Siemens, Mckesson, Caffe Nero, Closet New York, Closet London and Heist know them as a core part of their teams, truly motivated by client success.
EMEA Winner: 5874 Commerce
In addition to the B2B Solution award, this global agency also won this award due to their tireless efforts to create the best outcomes for their clients including Philip Morris & Son and Yumi.
Marketing Solutions Award
This award is given to agency partners that provide outstanding marketing services for BigCommerce merchants, including omnichannel, email, SEO and more.
Americas Winner: Coalition SEO
Coalition’s team of over 120 experts has the talent every ecommerce store needs to thrive. Whether you’re looking to launch a new storefront on BigCommerce, redesign an existing one or needing custom development using the BigCommerce API, their design and development teams will deliver.
Finalist: efelle creative
APAC Winner: Overdose
Overdose provides complete end-to-end commerce services, with a wealth of experience across omni, pure-play, SMB, mid-market, and enterprise clients. Their team provides services in tech, strategy, design, UX, search, data, performance marketing and automation.
Leveraging all layers of the marketing funnel across acquisition, conversion, and retention the team at Overdose delivered a high-value set of user journeys for their client Kitchen Things. The work includes omni-channel, SEO, SEM, landing pages, remarketing, email automation and more.
EMEA Winner: DeeperThanBlue
DeeperThanBlue has expertise in managing high-transactional, high-volume ecommerce websites. Working with world-class technologies, they create highly-successful, bespoke ecommerce solutions, tailored to each merchant’s specific business requirements.
Using BigCommerce’s built-in SEO functions, the agency was able to quickly add keywords and META descriptions to products for their client Car and Van Mats, resulting in quick organic ranking on Google and increased sales.
User Experience + Design Award
This award is given to agency partners who have an exceptional talent for creating beautiful, world-class BigCommerce storefronts that enhance the shopper’s experience.
Americas Winner: Born Group
BORN provides a complete suite of market-leading services, from large-scale image production, digital marketing, custom content experiences, and innovative B2B & B2C commerce solutions.
To support the ecommerce growth of one high-tech client, BORN developed a brand-new online store on the BigCommerce platform with cutting-edge creative design and UX as well as new company logo and branding.
Finalist: Arctic Leaf
APAC Winner: Above&Beyond
This Australia-based design agency has expertise in designing BigCommerce themes. In fact, they have over fifteen years of experience building custom-designed websites and specialize in BigCommerce design.
EMEA Winner: Williams Commerce
This Ecommerce System Integrator specializes in ecommerce, marketing and technology services to a wide range of B2B and midmarket retail customers across the UK and worldwide. They have the online business knowledge, digital marketing expertise and technical depth necessary to deliver cutting edge ecommerce solutions on time and on budget.
Finalist: Xtensive Ltd.
New Frontier Award
This award is given to agency partners who are accelerating BigCommerce’s expansion into new countries through their local domain expertise and successful client storefront launches.
Americas Winner: Wagento
Wagento Commerce is a full-service digital agency and ecommerce solutions provider with a global presence. With over 30 certified developers specializing in BigCommerce, Adobe, Order Management, and HubSpot, the team drives revenue and traffic for B2B and B2C companies alike.
APAC Winner: monimedia
Based in Hong Kong, this agency creates experiences that bring people and brands together for brands in Asia. They partner with the best technology providers in the market to deliver outstanding customer and shopping experiences, that drive traffic, increase sales and strengthen customer loyalty.
EMEA Winner: Thesio Group
With over 10 years experience, Thesio creates successful projects for top companies and thriving new ventures. The Dutch agency has technology at their roots and creativity in their minds as they help with technical challenges and online growth based on the BigCommerce platform.
New Partner of the Year
This award is given to agency partners that have demonstrated excellence within their first year as a BigCommerce Partner and generated the most MRR.
Americas Winner: Mindtree Limited
Mindtree is a digital-transformation-led technology services and business consulting company. They take an ideation to execution, agile, collaborative approach to creating customized solutions across the digital value chain. Their digital commerce services offer experience-driven, frictionless, loyalty-led and disruption-ready commerce capabilities, platforms and systems to help businesses win and retain customers.
APAC Winner: Aligent Consulting
Aligent Consulting has over 10 years of proven experience in creating solutions that are fast, stable and flexible to meet business’s goals, now and into the future. They provide services including consultation and strategy, design, UI, and UX, project implementation, third-party integrations and business-as-usual support.
EMEA Winner: Tryzens
Tryzen’s goal is to accelerate client success and growth across all channels, leveraging their expertise, insights and digital-first principles, to deliver compelling experiences that delight and engage customers. They provide services in strategy and insights; customer experience; build and launch; and optimization of existing sites.
Agency Partner of the Year
This award is given to Certified BigCommerce agency partners that have brought new, high-growth merchants to BigCommerce over the last year.
Americas Winner: Mak Digital Design
For businesses that want more than an out-of-the-box template, MAK Digital can finetune every aspect of your site, following user experience best practices to create a stunning representation of your brand. They also support businesses with development, SEO and digital marketing strategy, integration support and post-launch support to power end-to-end business success and continued growth.
APAC Winner: Matter Design & Digital
Matter is a high-performing digital agency housing a combination of strategic, creative and technical skill sets. For 17 years, they have been partnering with clients to provide design and technical solutions that derive from enhanced idea generation and efficient problem-solving. Their approach is personal and pragmatic, and all of their services are provided by an in-house team of specialists. The agency’s portfolio includes major brands, such as Wittner Shoes, Tradelink & The Upside, making them a key BigCommerce partner in the APAC region.
EMEA Winner: Space 48
This UK-based customer experience and ecommerce platform specialist works with ambitious businesses to transform their commerce experience. They support ecommerce businesses across a number industries including data and insight services, strategy and consulting, commerce experience design, ecommerce technology and managed services and support.
BigCommerce 2020 Tech Awards
Best User Experience Award
This award is given to technology partners whose integration delivers a best-in-class user experience based on simplicity of app install and configuration process, ease of use and beautiful design.
Americas Winner: Atom8
Atom8 is an ecommerce automation app built to optimize a merchant’s BigCommerce store by simplifying and converting manual tasks to automated workflows, streamlining processes and feeding data to other customer-facing applications.
As ecommerce merchants start scaling, systems and business processes become more complex and highly inefficient. Atom8 works as an exclusive integration to optimize BigCommerce stores which focuses on five key areas of automation — ecommerce merchandising, customer management, content automation, store administration and email marketing integration — to solve common problems BigCommerce merchants struggle with.
Finalist: Sales & Orders
APAC Winner: Trustpilot Reviews
Trustpilot is a powerful review platform that helps businesses collect and easily manage customer reviews. Trustpilot gives people a place to share and discover reviews of businesses, while giving every business the tools to turn consumer feedback into business results.
BigCommerce merchants using Trustpilot’s app can automate review invitations after purchase, drag-and-drop review widgets on-site and collect both service and product reviews. Additional features of Trustpilot include: turning a company’s best reviews into attention-grabbing images for social media, earning Google Seller Ratings that increase clicks on Adwords and streaming new reviews in real-time onto their websites with TrustBox widgets.
EMEA Winner: DEITY Falcon PWA Storefront
The DEITY Falcon PWA for BigCommerce is a fully-packed hosted platform that gives merchants the power to create the best front-end experience for any BigCommerce shop. The Falcon Platform is a complete, hosted front-end platform to build the best mobile and desktop shopping experience, with top performance and unlimited flexibility, enabling future growth.
DEITY Falcon’s highly customizable progressive web app offers top performance and many great engaging features (including push notifications and offline modes) to every BigCommerce merchant. Falcon PWA Storefront is enabled for multi-language, multi-currency, multi-platforms and more, so it’s ready to do global business for any merchant, from mid-level to true enterprise.
Customer Growth Award
This award is given to technology partners whose outstanding solution has generated the most revenue growth for BigCommerce merchants.
Americas Winner: Sales & Orders
Sales & Orders has become the go-to integration for thousands of BigCommerce store owners looking to grow their businesses online through marketing and advertising on channels such as Google, Microsoft, Facebook, Instagram and now Affiliate Marketing and Marketplaces. Since they first launched back in late 2017, over 12,000 stores have installed the apps and over 8,700 of them have successfully connected their stores and begun showcasing their products on channels like Google Shopping.
APAC Winner: Vend
Vend provides an easy-to-use, intuitive hub from which to sell, track and manage inventory. The technology allows you to manage stores, sales channels, products, customers and users from one place, and easily add more as you grow. In the past 12 months, Vend retailers on BigCommerce have grown from less than ten integrated retailers to over 550.
EMEA Winner: Linnworks
Linnworks integrates the entire multi-channel sales process – handling everything from order management, stock control, shipping, listing, repricing and much more. Linnworks is a highly-affordable option that gives smaller and medium-sized online retailers the same powerful tools as the big corporations but at a fraction of the cost of custom systems. In the last 12 months, the number of customers using Linnworks on the BigCommerce platform has grown to 250.
Innovative Integration Award
This award is given to technology partners that have built a new integration or feature that solves a critical need for BigCommerce merchants.
Americas Winner: Bolt
The Bolt Checkout Experience Platform consists of a hosted checkout that integrates seamlessly with BigCommerce and a retailer’s backend systems to complement their existing storefront. With Bolt, BigCommerce merchants can consolidate checkout, fraud detection and payment processing under one roof to give their customers a polished, personalized, one-click buying experience. Taking it a step further, Bolt’s offerings for BigCommerce come completely modular, so merchants can create the tech stack that best suits their business needs. At scale, BigCommerce retailers using Bolt’s platform have seen higher order completion stats and improved customer satisfaction ratings.
APAC Winner: Atom8
As explained above, Atom8 is an ecommerce automation app built to optimize a merchant’s BigCommerce store by simplifying and converting manual tasks to automated workflows, streamlining processes,and feeding data to other customer-facing applications.
Officially released in early May 2020, Atom8 has helped a growing number of customers to apply automation for their businesses. Since that launch, 80+ customers have applied Atom8 to their stores to automate their business processes and their customers have applied more than 600 separate workflows to their stores.
EMEA Winner: dotdigital
dotdigital Engagement Cloud enables brands to engage subscribers and customers and drive record ROI across email, SMS, social, push notifications and even live chat. Using the app with BigCommerce helps merchants deliver timely, personalized and intelligent marketing messages to more shoppers. Combined with acquisition tools and shopper insights, the integration lets merchants trigger transactional emails based on BigCommerce store events and key customer touchpoints. The emails are mobile-first, fully-branded, easily customizable and can be enhanced with dynamic content.
Merchant’s Choice Award
This award is given to technology partners with solutions deemed a BigCommerce customer favorite, determined by both the quantity and average rating of its reviews in the BigCommerce App Marketplace.
Americas Winner: Rewind
Rewind gives BigCommerce merchants peace of mind by automatically backing up their most important store data, including: products, product details, product images, themes, customers, orders and more. After installing Rewind, you can quickly undo unwanted changes with just a few clicks without dealing with a time-consuming and complicated CSV export again.
Rewind is the #1 most-reviewed app in the BigCommerce marketplace with a 5-star average and the #2 most-reviewed app overall. Not only has Rewind Backups for BigCommerce seen rapid growth, they have protected the growth of thousands of BigCommerce customers by safeguarding the data driving their businesses.
Finalist: Yotpo Reviews
APAC Winner: Codisto
Codisto Channel Cloud functions as a marketplace listing tool and a fully-featured multichannel solution with real-time inventory and pricing sync directly from BigCommerce. Their average customer review rating is currently 4+ and customer retention is extremely high.
EMEA Winner: Yotpo Reviews
Yotpo helps BigCommerce businesses generate product and site reviews, photos, videos, Q&A and other user-generated content. Merchants can then leverage these assets to drive qualified traffic, increase conversion rates and boost sales.
Yotpo has a growing list of BigCommerce customers across the globe and receives great reviews among SMB and MM/ENT merchants alike.
New Frontier Award
This award is given to technology partners whose solutions have enabled BigCommerce merchants to expand their business into new countries.
Americas Winner: Adyen
Adyen’s solution has a unique approach that enables shoppers to pay with their desired payment methods no matter where they are in the world through a single integration. Together BigCommerce and Adyen make it easy for merchants to offer the best payment experience for shoppers. This includes accepting international credit cards, local cash-based methods and internet banking methods.
Adyen helps businesses to improve conversion rates by allowing customers a quick, easy, secure way to pay, regardless of where they’re located.
APAC Winner: Adyen
Adyen (see above) also won this award for their work supporting BigCommerce merchants in APAC countries.
EMEA Winner: JMango
To meet the demands of today’s mobile-first shoppers, progressive web apps like JMango can deliver the experience customers want through shorter loading times, app-like features (add to homescreen, push notifications etc.) without the need for downloading the app in an app store.
JMango is easily integrated with the BigCommerce backend, provides app success assistance and can help customers go live within a few weeks.
New Tech Partner of the Year
This award is given to new technology partners whose solutions feature a superior user experience, outstanding customer reviews and high install volume.
Americas Winner: Spocket
Sprocket helps merchants enable dropshipping with ease with features like faster shipping, wholesale pricing, auto-updated inventory, one-click ordering, real-time order tracking and more. Businesses don’t have to sacrifice a brand presence and can use branded invoicing to include their company’s personalized logo and messaging as part of the customer experience.
APAC Winner: Klarna
The built-in Klarna integration with BigCommerce makes it easy to seamlessly offer Klarna credit solutions at checkout. Klarna makes things easy for both merchants and their customers by providing easy access to credit for shoppers, payments for merchants and built-in fraud protection for both.
EMEA Winner: Pimberly
Pimberly is a SaaS PIM platform that helps ecommerce and product marketing professionals accelerate online sales. The app’s powerful data management and automation enables businesses to reduce time to market and reach new channels and locales. For merchants, improving the quality of your product information leads to higher conversion rates, improved SEO and fewer returns.
Think Big Award
This award is given to technology partners for their collaborative efforts in driving high-quality referrals that produce the highest average revenue for BigCommerce.
Americas Winner: PayPal
Merchants can increase conversion rates by offering customers more ways to pay with the help of PayPal’s powerful payments technology. BigCommerce has a built-in integration with PayPal that lets you easily and securely accept credit and debit cards, local payment methods, offer PayPal, and even extend buy now, pay later options – including Pay in 4 and PayPal Credit – to customers through your online store. Ultimately, PayPal provides an all-in-one solution for accepting payments online from over 330 million consumers around the world.
APAC Winner: dotdigital
In addition to winning the Innovative Integration Award for EMEA, dotdigital was also recognized with the APAC Think Big Award for their important collaborative efforts in partnership with BigCommerce.
EMEA Winner: Vend
In addition to winning the Customer Growth Award for APAC, Vend was also recognized with the EMEA Think Big Award for their important collaborative efforts in partnership with BigCommerce.
Tech Partner of the Year
This award is given to technology partners whose integration features a superior user experience demonstrated by a high volume of installation and positive user reviews over the last year.
Americas Winner: Shogun
Shogun is a powerful drag-and-drop page builder and visual content management system that is seamlessly integrated with the BigCommerce platform. Its features include: Page Builder + AB testing; landing, blog and product pages; analytics and marketing features; and enterprise grade support. Shogun has an easy-to-use editor and page templates to make it easy to get up and running quickly.
APAC Winner: Comestri
Comestri is a complete and unified commerce solution that allows merchants to optimize retail operations to sell and move their products through sales channels, order fulfillment and delivery. The platform can boost productivity by automating processes, increase conversions and optimize fulfillment.
EMEA Winner: Klarna
In addition to winning the New Tech Partner of the Year Award for APAC, in their first year Klarna was also recognized as the Tech Partner of the Year for EMEA.
The ecommerce industry has been continually growing and changing over the last few decades, and those changes accelerated with the events of 2020.
In fact, estimated US ecommerce retail sales in Q3 increased by 36.7% from the same time in 2019. As the results of the global pandemic and subsequent changes to customer shopping behavior have unfolded, ecommerce has also gained in total retail market share at a rapid pace.
These changes have invited newcomers to online selling and also changed the game for established businesses. They’re facing a competitive landscape with increasing customer expectations. Successful businesses need the right technology to support their online presence.
If you are new to ecommerce or looking for a new strategy for powering your online shopping cart, you may be considering the different options for platforms. You need it to not only power a slick looking storefront with a seamless customer experience, but also connect to any existing systems you have. You may have other more specific needs as well. For example, if you have a CMS (content management system) already in use on the frontend, you might want your shopping cart software to be able to connect with it as well. Or you may need to make sure it can sell on social media if that’s where your audience is. And you will likely want it to be SEO friendly to help reach a new audience.
As you search for the technology that can meet these needs and any other you might have, you will find the options are vast. To help you narrow the field, one of the first decisions to make is: do you want an open source ecommerce platform or SaaS platform.
In this article, we’re helping you make that decision by diving into SaaS vs open source ecommerce solutions. We’ll cover what the two options mean, what the pros and cons are to each and some of the best open source ecommerce platforms and SaaS ecommerce platforms you might want to consider.
Main Differences Between Open Source and SaaS
When you read about the difference between open source and SaaS, you will often see it framed as: do you want to own or rent? Let’s dig into this metaphor and what the practical differences are between these two types of platforms.
1. What is Open Source ecommerce?
Open source software means that the user has complete access to the source code. This means that anyone can adapt and customize the platform to meet their business needs. Although by “anyone,” we really mean anyone with developer resources. Open source platforms are powerful and customizable, but also very complex. Changes are best handled by certified developers. Open source software is often developed in a collaborative way, and there are often communities built around development related to individual platforms. A user might choose an open source platform because they require extreme customization; with open source if a feature doesn’t exist, it can be built by altering the code. To use our metaphor above, open source is like owning a house. You can download it and knock out the walls and add in a finished basement if you want, so long as you have the money to spend on contractors.
2. What is SaaS ecommerce?
SaaS (or Software-as-a-Service) is a different delivery model in which the software is licensed on a subscription basis. Like renting a house, you pay a fee (often monthly) for as long you want to use the platform. SaaS platforms aren’t bought or downloaded by the user, but are instead hosted by the SaaS provider. The provider then does the work of securing, maintaining, and hosting the platform on their own servers, much as a landlord would handle a rental property’s upkeep. With a SaaS platform, the customer doesn’t have access to and can’t alter the source code, just as you can’t decide to add a second floor to your rented bungalow. SaaS platforms are a good option for ecommerce store owners that don’t want to devote time, energy and resources to maintenance.
Total Cost of Ownership: Open Sources vs SaaS
The cost to build and operate your business is always going to be a big factor in the choices you make around your platform. You need a platform that can both support the site you need it to and do it for the price that works with your budget.
1. Open source ecommerce software.
The ethos of open source ecommerce software is that it be open to anyone to modify the source code. Many open source platforms have a free version. Thus, open source software is sometimes free to download and use. However, actually using the software to create a viable ecommerce website does have some costs associated with it.
- Licensing fees: Not all open source software is free. For example, Magento has both an open source version and a licensed Magento Commerce version that requires the user to pay licensing fees. Pricing for Magento Commerce (on prem) starts at $22,000, while Magento Commerce Cloud (which includes hosting) starts around $40,000. Not all open source platforms have a free and paid version, though.
- Hosting provider fees: The cost difference between the on premise and cloud versions of Magento above draw attention to another cost of open source software: hosting. If you download the software yourself, you need to find a way to host it. That can be done by paying a third-party provider, hosting on your own servers or paying the platform provider to handle hosting. Usage and traffic spikes can impact pricing. When choosing a third-party provider to handle hosting, make sure to find that one meets your needs for traffic volume and potential spikes. The cheapest option may lead to more costs in lost business if your site experiences outages at key times.
- Web developer or agency fees: Your site is not going to build and design itself. Open source can be great for achieving the exact customization you need, but it’s also very complex. You will need developer and design resources — whether those resources are internal or from external agencies — to help you achieve the site you’re looking for. These costs can be steep, depending on your needs. For example, building an enterprise-level store on Magento Commerce can easily cost six figures with costs that scale with the complexity of the build, design, extensions and additional integrations required.
- Additional costs to fix bugs and install patches and software updatesAfter you’ve built your store, you will still need developer resources to help you maintain it. You will need to install security patches and updates to make sure you have a secure platform. This is true even if the platform includes hosting. By using open source software, the onus is on the merchant to install updates and security patches.
- Security and PCI compliance costs: Open source platforms will by and large not come with PCI compliance. You can still be PCI compliant on an open source platform, but the responsibility falls on the merchant. PCI Compliance standards must be met to accept payments or you risk being charged fines, termination of ability to accept payments, loss of customer confidence and other fraud-related financial consequences. Magento Open Source does not have PCI compliance, although Magento Commerce does, so long as no changes are made.Customers are responsible for ensuring that their WooCommerce stores are PCI-compliant.
- Apps or extensions: Your platform will likely be the foundation of your tech stack, but not the sole part. You will likely use other software and apps to get the full functionality and features you need. Consider the cost of your total tech stack, not just your open source platform.
- Integration into other systems: You will need to integrate your platform with the extensions mentioned above (or be custom built), which will take additional development resources. You will need to make sure systems like your OMS or ERP can share data with your ecommerce platform.
2. SaaS ecommerce.
Unlike open source, with SaaS, there is a subscription fee attached to using the software. This fee includes the use of the software, hosting, automatic updates that give you immediate access to new features and no-hassle security patching. SaaS platforms like BigCommerce tend to have a lower total cost of ownership than open source platforms like Magento. Additionally, you may be better able to estimate your total operating costs because so many of them are included in the regular monthly fee. However, keep in mind you will still have the following costs to consider.
- Agency fees, if used: Much like with an open source website, you may choose design and development resources to get the look, feel and functionality you’re going for. This can be achieved through internal teams or external agencies.
- Apps or extensions: To get all of the features you need, you will likely need to extend the platform. This is where the choice of which SaaS platform can make a big difference. Make sure to choose one that has many of the built-in features you need to avoid too many add-on costs. For example, the out-of-the-box functionality of BigCommerce can save merchants roughly $5,800 – $30,000+ per year in app subscription costs, compared to Shopify.
- Any integrations into other systems: As with open source software, you will need to consider how you will integrate the platform with your other systems.
Pros and Cons of Open Source and SaaS Ecommerce
There is no one ecommerce platform that is right for every business. The choice between open source and SaaS — and from there the choice between the myriad of options that fall into these two categories — will depend on your budget and specific business needs and challenges. Consider the advantages and disadvantages of each before deciding which might be the best fit for your business.
Open Source Ecommerce Advantages and Disadvantages
Open source solutions have some big selling points. Who wouldn’t want the ultimate power of customization? But it also has some major drawbacks that might make the price of admission too steep.
1. Advantages of open source.
Here are the two biggest pros that open source software can offer:
The biggest pro to open source software is the flexibility it provides. You have control over the source code. If you’re looking to make big changes and have very niche needs, open source might be the way to get what you need. You’re limited only by your imagination and the abilities of your team of developers.
Widespread community support
Open source platforms are built and monitored by the community that forms around them. Developers that specialize in the platform contribute ideas and additions that you can take advantage of. You can visit blogs, community forums related to the platform and Github to plug into the knowledge base around your platform. It’s important to note that how much community support you get will probably vary depending on if you have paid or free licensing.
2. Disadvantages to open source ecommerce.
With great power, comes great responsibility. Here are the downsides of open source:
The more you modify the source code, the more complex you make your system. This can mean it’s more expensive and difficult to make updates. You may find the software itself has a bit of a learning curve.
Not only are open source platforms costly and complex to set up, but they also require a lot of maintenance to keep them up and running correctly. You will need a developer, an in-house IT team and/or an agency to manage this maintenance. This can make it harder to make quick changes to the site to stay current because your marketing team will need developer support to make updates.
We talked about the costs of open source ecommerce above, so we won’t belabor the point too much here, but suffice is to say open source platforms come with a laundry list of costs to consider. Do the math to determine if both the initial build costs and operating costs will work out in your favor long term.
The source code for open source software is open to anyone to download and modify. That’s both a plus for the community of developers who work to make it better…and also a minus when it comes to the bad actors who look for vulnerabilities to exploit. Ecommerce sites are treasure troves of financial data, so hackers are always looking for a way in, making security breaches a real concern. Your open source platform may provide patches for known issues, but it is on your team to be proactive about installing them.
3. When to use open source ecommerce?
So do the pros outweigh the cons? That depends on your business. If your business has a big budget to handle the associated tech debt from setting up and maintaining the open source infrastructure and your business needs are extremely complex, open source may be the best option for you.
Open Source Ecommerce Platforms
If you’re leaning towards open source, you still have a lot of choices to make. Here are some of the major open source players in the market today.
You can’t write about open source ecommerce platforms without talking about Magento. This open source platform is written in PHP and currently powers over 200,000 live websites. Now owned by Adobe, Magento has three distinct versions: Magento Open Source (formerly Magento Community Edition), Magento Commerce (formerly Magento Enterprise Edition) and Magento Commerce Cloud which is like Magento Commerce but with cloud-hosting included. Magento Open Source is free to download but doesn’t offer the same advanced features and ticket-based support of Magento Commerce or Magento Commerce Cloud.
WooCommerce is a free, open-source plugin that can be added to a WordPress site to give it backend ecommerce functionality. Also written in PHP, and over 4.4 million sites use WooCommerce. WooCommerce may be a good choice if you’re looking to quickly monetize an existing WordPress site; however, it may be difficult to scale as adding additional payment, catalog management, and marketing features becomes costly and time consuming on WooCommerce.
PrestaShop is another open-source platform that is free, but you can pay for add-ons and plug-ins to make it work for your business. PrestaShop is written in the PHP programming language with support for the MySQL database management system. PrestaShop currently supports 300,000 merchants globally.
Shopware is an open-source platform under the MIT license. It is written in the PHP programming language. ShopWare powers 80,000 websites, focusing on many brands in Europe.
OpenCart is another PHP-based, open source online store management system. It uses a MySQL database and HTML components and is freely available under the GNU General Public License. There are approximately 400,000 live websites using OpenCart. OpenCart is free to download and use but you can pay for additional themes, plug-ins and dedicated support.
These are just a few of the plethora of open source ecommerce platforms available. Other options you may want to consider for your online business include: Drupal Commerce (a digital experience platform with commerce functionality); Joomla (a content management system and website builder that can achieve ecommerce through an add-on); OsCommerce; Zen Cart; Virtuemart and Spree Commerce.
Advantages and Disadvantages to SaaS: Software-as-a-Service
If, as suggested in the introduction, we think of SaaS as like renting a house, then the pros and cons are fairly similar. You trade the freedom of knocking out walls and doing a complete overhaul. And in turn you get the more reliable monthly outlay and can rest secure in the knowledge that if the plumbing breaks, it’s not your problem.
If, as suggested in the introduction, we think of SaaS as like renting a house, then the pros and cons are fairly similar. You trade the freedom of knocking out walls and doing a complete overhaul. And in turn you get the more reliable monthly outlay and can rest secure in the knowledge that if the plumbing breaks, it’s not your problem.
1. Advantages of SaaS.
Here are some of the reasons SaaS solutions might be the right choice.
SaaS platforms can help brands get to market quickly. However, some SaaS platforms have more included functionality than others, so if speed of launch is a priority, make sure to choose the platform that can manage that. They also typically have user-friendly interfaces and pre-built themes that can get you up and running at speed.
Not only are SaaS platforms often easier to implement, they are also user friendly and simple to maintain. You don’t have to make your own software updates or deal with hosting challenges yourself.
Maintaining security is incredibly important for ecommerce sites to keep the credit card and personal data of customers safe. SaaS platforms not only provide security patches to solve vulnerabilities, but they also apply them for you, so it’s one less thing to worry about. Most SaaS platforms will also provide PCI compliance, so it’s a lot easier for the merchant to manage.
There are many pros to modern SaaS that extend far beyond our housing analogy above. A rental house (or any house) is a finite thing, but your SaaS platform can grow and scale with your business growth. Functionality can be added with new apps; SaaS platforms generally include unlimited bandwidth; and you can add new sales channels (like selling on Instagram or Amazon) when you need them.
While open source ecommerce platforms have a strong community, many SaaS platforms do too. But for those who want more direct, dedicated support you need to spring for either the managed version of the open source platform or go with SaaS. SaaS platforms generally include support as part of the package. For example, BigCommerce offers 24/7, US-based support and most merchants are connected to a live support specialist in under two minutes.
2. Disadvantages to SaaS.
The main difference between SaaS and open source is that with SaaS you won’t have complete control. Not all SaaS platforms are created equal, so to avoid these disadvantages, you need to pick the right one.
Although you can’t alter the source code of a SaaS platform, some SaaS platforms still provide openness through APIs that can give you much of the customization potential of open source. Other SaaS platforms do not. If flexibility and creating an innovative customer experience is important to your business, make sure the platform you choose — whether that’s open source of SaaS — can get you where you need to go.
Some SaaS platforms can lock you into using certain apps or features and make it hard for you to choose the ecommerce solutions that work best for your business. For example, Shopify has a proprietary payment provider. They charge additional transaction fees up to 2% of each sale for using other payment gateways and you lose access to certain features like multi-currency. If having freedom of choice is important to your ecommerce business, you will need to choose a SaaS platform that is open to and integrates easily with the solutions you want.
3. When to use SaaS?
SaaS is a good choice for businesses of all sizes who want to focus their resources on building their businesses and not on infrastructure, maintenance and security. SaaS can support B2C, B2B and hybrid businesses across industries, even those with specific business needs requiring some customization.
SaaS Ecommerce Platforms
Does SaaS sound like the right fit for your business? If so, read on to learn about some of the major SaaS platforms in the business.
BigCommerce is one of the leading Open SaaS ecommerce platforms for mid-market and enterprise brands. It has all the benefits associated with multi-tenant SaaS — ease of use, high-performance, and continuous updates — coupled with platform-wide APIs that enable businesses to customize their sites and integrate with external applications and services. The platform’s drag-and-drop PageBuilder makes it user friendly to edit without coding. Tens of thousands of B2B and B2C companies across 150 countries and numerous industries use BigCommerce to create beautiful, engaging online stores.
Shopify is another popular choice, especially for small businesses and those new to ecommerce. The platform offers a number of themes and can make it easy to get a simple store off the ground quickly. There are over one million merchants using the platform. Those with large catalogs may want to avoid it, as Shopify and Shopify Plus (the Enterprise version) both have a strict option and variant caps per product. By comparison, BigCommerce is built for big catalogs. You can add up to 600 SKUs per product compared to the 100 SKUs per product cap of Shopify and Shopify Plus.
3. Salesforce Commerce Cloud.
Salesforce Commerce Cloud, formerly Demandware, is a highly-scalable SaaS option used by big brands with big budgets. An implementation can easily cost $250K+ on Salesforce Commerce Cloud. Salesforce Commerce Cloud provides a suite of related services that can complement the ecommerce offering. However, merchants face additional obstacles and costs if they choose a third-party over Salesforce’s add-on services.
Making the Final Decision: Open Source Ecommerce or SaaS Ecommerce?
Deciding between open source or SaaS ecommerce is a big decision. You want to choose the right all-in-one platform now — and one that will grow with you — so you don’t have to make a risky migration later. Comparing the two options, side-by-side only works when you consider your individual business needs, budget and resources.
SaaS may well be able to provide the customization you need without requiring open source, but as we’ve said, not all SaaS is created equal. Learn more about Open SaaS and what it can do in this ebook.
The ecommerce space has evolved over the years, but the coronavirus pandemic accelerated our predictions. In BigCommerce’s Day 2 of the 2020 Make it Big conference GGV Capital Managing Partner, Jeff Richards, delivered an engaging session, offering insights into what makes a successful online brand.
Jeff’s Key Takeaways
Jeff Richards, also a BigCommerce investor, has a long history of investing in ecommerce brands. In our conversation, Jeff shared a detailed approach on how to create a winning ecommerce company.
1. The concept of direct-to-consumer (DTC) reshaped the ecommerce landscape
“The concept of DTC really rose up over the last 5 to 6 years as people realized they could sell products directly over the internet, and predominantly through social commerce. If you go back 10 years ago, selling products over email wasn’t a very effective strategy, there was no real way to reach consumers other than display advertising on the internet — which wasn’t terribly effective either. As social propped up with tools like Facebook, Instagram, and other channels, you saw the rise of the DTC brand — like Warby Parker and Allbirds — that really pioneered the space. The advantage for merchants is that you really capture all the margin. The first phase happened 5 to 6 years ago, we’re now really moving into a second phase that is more focused on profitably acquiring customers, how to retain them, and how to create innovative relationships with them over time.”
2. Brands must focus on being profitable from the beginning
“With respect to funding for DTC brands and online businesses, the market as shifted a little bit. We’ve seen a lot of funding come into the space in the last 5 to 6 years. A lot of that capital was willing to fund highly unprofitable companies. It was common to see new brands and companies acquiring users with a CAC:LTV that wasn’t effective. I think the market has since matured to where investors have learned what works and what doesn’t. In turn, they are much more keen on finding merchants who have figured out how to acquire customers, build a long-term, repeat relationships with them, and actually make money with their business. It’s a shift in the market we’ve seen and the good news is that the channels in which you can reach those customers have gotten much cheaper.”
3. Building communities gains importance in the industry
“If you look at the fastest growing and most successful ecommerce companies, they have created really passionate communities around their products and services. We think there is an enormous amount of opportunity there. Pick a demographic, pick a category, build a social following, and integrate that community aspect. It’s one of the things that Poshmark has done incredibly well, and gotten to several billions of dollars of sales on, is building an incredibly passionate community of buyers and sellers. We think we’re going to see a lot more of that as people figure out how to integrate the social experience with the commerce experience.”
In our Day 2 Make it Big session we dove into the following topics:
- Managing customer acquisition costs
- Creating engaging content marketing
- Finding an authentic community
- Building a profitable online brand
This material does not constitute legal advice and is only for general informational purposes. Readers should consult a qualified attorney in the relevant jurisdiction to obtain advice for any particular legal matter.
The United Kingdom has a population of 66.76 million people (as of 2019) and a growing online retail market. Data from Statista shows that the online share of total retail shares in the UK grew to over 26% in 2020. In fact, according to Business Wire, the UK is the third largest online retail market and the largest in Europe.
After four years of uncertainty and confusion, a lot of back and forth and a year-long transition period, Brexit finally occurred on January 1, 2021. The United Kingdom completed its departure from the European Union and is no longer one of the EU states.
What does this mean for your ecommerce store? If you sell goods to customers in the United Kingdom (England, Scotland, Wales and Northern Ireland) from another country (including EU countries), it means quite a bit actually.
Coinciding with Brexit, on January 1, 2021, the government of the United Kingdom implemented changes to the Value-Add Tax (VAT) for goods being shipped into the UK.
If you sell goods to customers in the UK, you may have already taken the necessary steps to adhere to the new VAT rules. However, if you haven’t started, time is of the essence. Read on to learn what changes are happening, what you need to do and how BigCommerce is supporting merchants.
What Is the Value-Add Tax?
A value-add tax is a consumption tax that is added to a product at every stage in its supply chain where value is added.
For example, let’s say you sell a table. The wood is taxed when the raw materials are sold to the factory. When the factory sells the finished table to a wholesaler, it is again taxed. And when the wholesaler sells it to the end customer, it is taxed again.
VAT is usually a percentage of the total cost paid by the consumer of the product. If your store buys wood for $10 and the VAT is 10%, you would pay $11 for the wood. The seller of the wood would then keep the $10 and remit $1 to the government. If you then used the wood to build a table valued at $100, you would charge the customer $110 for the table so that you could pay the $10 VAT to the government.
The United States does not have a VAT, but many countries do have VAT with different rates, including many of the European Union countries. In the UK, the standard rate of VAT (with exceptions for certain goods) has been 20% since 2011.
What Changes Are Occuring with the UK VAT?
With the end of the Brexit transition period finally upon us, many ecommerce merchants are scrambling to make sure they can still serve customers in the UK. Here are the high-level details of the new VAT scheme that the UK government put into effect on January 1, 2021.
For goods imported into the UK in consignments not exceeding £135 in value, VAT is now charged at the point-of-sale (i.e. during checkout) instead of at the point of importation. For the purposes of this policy, a consignment is a group of goods delivered to a person, in this case your customer.
Additionally, the Low-Value Consignment Relief went away. This rule previously exempted goods valued at £15 or less.
The seller may pay the import VAT (and duties) on clearance and reclaim if they have a UK VAT number. Alternatively, the seller may opt to have their customer pay at customs. Only the owner of goods at the time of the import can reclaim the VAT.
To comply with these changes and sell your goods into the UK:
1. You will need a UK VAT Number.
Both B2B and B2C businesses selling goods to the UK will be required to register for a VAT number with Her Majesty’s Revenue and Customs (HMRC). For B2B businesses, this obligation is not required if the UK shopper provides their VAT registration number.
2. VAT will be collected on ALL low-value orders shipped to the UK.
All businesses must collect the 20% VAT at point of sale for orders less than £135 in value. The £135 threshold is based on the intrinsic value of the goods, which excludes transport, insurance or other import taxes, if separately itemized.
For orders over £135 (or consignments of multiple goods with a combined value greater than £135), VAT will still be paid at the time of import with duty.
3. Merchants must remit VAT to the UK.
All VAT collected by merchants under their registered VAT number must be remitted to the HMRC on a quarterly basis. You will submit a VAT return indicating the amount you collected during this three month accounting period.
Am I Impacted by These Changes?
Chances are you are reading this not simply because you are an aficionado of foreign tax law, but because you want answers to the all important question: does this affect my business?
If you are selling low-value (£135 or lower) orders into the UK, including through online marketplaces and B2B sales, you will indeed be responsible for collection of and remitting the VAT.
There are some exceptions for B2B merchants. If you sell goods to a UK business customer, you may not need to collect VAT if your VAT invoice includes the shopper’s VAT number and notes “reverse charge: customer to account for VAT to HMRC.”
To fully understand how these changes may apply to you, you will want to consult HMRC’s guidance or a local tax professional.
What Do I Need to Do as a Merchant?
If you determine these VAT changes do apply to you, there are several things you need to do. And you need to do them very quickly. Keep in mind that not all of these may apply to your specific situation, and we urge you to consult a tax professional for evaluating your specific needs.
Here’s your UK VAT prep checklist:
1. Register for a VAT number
Most businesses will be able to register online by visiting HMRC website. By registering for a VAT number, you’ll create a VAT online account (sometimes known as a ‘Government Gateway account’). According to the HMRC, you should receive your registration certificate within 30 business days, although it can take longer.
2. Re-evaluate your tax settings
Check your tax settings to understand if any changes are required in how you calculate and collect taxes for your UK customers. We recommend consulting with a local tax professional. For more information, check out our Knowledge Base article on Tax Settings and Avalara.
3. Update your shipping invoices
You will also want to update your invoices to include your VAT number, so you can avoid issues at customs and get your goods to your customers on time.
4. Apply for an Economic Registration and Identification (EORI) number
If you do not already have an EORI, you will need this code to identify your business in customs documents. You can apply for one here.
5. Update the ISO Country Code (for Northern Ireland Only)
This one only applies if you are selling into Northern Ireland from outside the UK. As a means to protect the Ireland/Northern Ireland Protocol, Northern Ireland will take on dual status and fall within both the UK and EU VAT guidelines. In addition to the steps above, you will also need to update the ISO country code to “XI.” For more information, visit the HMRC policy paper for Northern Ireland.
If the above are not done and you continue to ship goods to UK customers anyway, the customer receiving the shipment will have to pay to cover the VAT charges that should have been covered by the merchant in addition to the VAT charges they are already charged as a customer. (Remember VAT applies through every stage in which value is added).
Because they are effectively being charged VAT twice, this could result in customers requesting the merchant refund some of the tax they paid. And it’s generally a poor customer experience. Additionally, if the customer refuses to pay the VAT charges, then the product will be shipped back to the merchant with return shipping charges and additional fees levied on the package.
How Is BigCommerce Supporting This Change?
BigCommerce will be making the VAT invoice that was previously exclusively available for merchants in the UK, now available for merchants outside the UK who are selling to customers within the UK. An invoice that displays the merchant’s VAT number will be automatically generated when the merchant’s shipping address is outside the UK and the customer’s address is inside the UK.
While BigCommerce partners with multiple tax services, not all tax services will support the UK VAT changes. If you are interested in a solution that will support these changes, consider Avalara AvaTax. For more information, visit the Avalara AvaTax VAT information page or contact Avalara’s support team. Additionally, if you’re not using AvaTax currently and you decide to do so, see our article on configuring Avalara AvaTax within BigCommerce in the Help Center.
Our approach may evolve and change over time. As we continue to learn more about how these and future changes impact our ecommerce merchants, we will share what we learn.
Brexit may have been a long time coming, but the time to take the necessary steps to be in compliance with these changes is quickly running out. Even if you apply today, it can take 30 business days (or longer) to receive your VAT registration. Compliance with the law was expected starting on January 1, 2021.
While the ideal time to prepare for the VAT updates was several months ago, the second best time to prepare is right now. We hope this article has helped you understand the VAT changes and given you a better understanding of what you need to do.
We also recommend checking out the following resources for more information:
This material does not constitute legal advice and is only for general informational purposes. Readers should consult a qualified attorney in the relevant jurisdiction to obtain advice for any particular legal matter.
Thanksgiving, Christmas, New Year’s Eve are the trifecta of most profitable holidays for retailers.
2020, however, is bringing in a mixed bag of excitement, anxiety, and high hopes for the holiday season.
Despite consumers’ reduced appetite for shopping across an array of product categories (footwear, jewelry, formalwear) and newly found affinity towards others (online groceries, PJs, and electronics), in Q2-Q3, the global retail sales volumes are finally climbing as we roll into the holiday season. Between November 2020 and January 2021, retail sales are projected to increase by 1% to 1.5% (compared to the same period last year) and reach $1.15 billion, according to Deloitte.
During the 2020-2021 holiday season, ecommerce sales are expected to grow by 25% to 35%.
That’s the good and the bad news.
With more small businesses online and eager to recuperate their offset profits, this year’s competition for online shoppers will be as tough as it gets.
How the 2020 Holiday Sales Season Will Be Different
Despite the unsavory year (or perhaps because of it), 51% of consumers still plan to treat themselves and others to some indulgences.
1. Gifting will be different.
Most customers will prioritize physical gifts over experience-driven ones, unlike the previous year. Virtual gifts (subscriptions, gift certificates, store cards, digital products) are also among trending gift ideas.
2. Holiday budgets are down.
The majority (59%) of US shoppers plan to spend $300 or less on gifts this year. Only 19% plan to drop more than $500. For comparison, last year 25% of consumers spent $500 or above on gifts.
The overall attitude toward shopping remains conscious:
3. Corporate responsibility is under scrutiny.
Most expect brands to acknowledge what’s still happening around the world and become more transparent around their workplace practices, employee safety, and contributions towards the communities where they operate. According to Accenture:
- 57% of consumers would be inspired to shop with companies that supported their staff and customers during the pandemic.
- 41% of consumers plan to boycott retailers who recently laid off their staff or reduced benefits.
Balancing all these major shifts in consumer behaviors with increased online competition won’t be easy. But still doable with the right holiday marketing strategy in place.
4 Quick and Effective Promotional Strategies to Increase Holiday Sales
One in five small retailers is dependent on this holiday season to recuperate the cash losses due to mandatory shutdowns. Selling out for them is a strategic priority. Bigger online stores are in somewhat better financial positions, but still highly dependent on returning and new buyers.
To kickstart your holiday campaign planning, consider the next four promotional strategies. All of them offer a good mix of investment versus revenue generation for both the small and bigger folks.
1. Run a giveaway
The holiday season is all about sharing the joy. Giveaways play along nicely with that feeling of generosity. This year, however, you may want to put a different twist on your promo strategies — the socially-conscious one.
“The pandemic has reinforced the call for social consciousness and transparency that we’ve been witnessing over the past few years” – Accenture Holiday Shopping Survey 2020
In the light of recent happenings (major retail worker lay-offs, substandard health measures for remaining employees, etc), consumers are getting more selective with where they leave their dollars. Show that your ecommerce brand stands by the right values — transparency, community support, sustainability, and ethical employee treatment — by hosting a creative contest around a good cause. For example:
- Offer to donate a % from each sale to a local charity.
- Match each customer entry with a $1 donated to a good cause.
- Host a choose-what-you-pay contest, allowing customers to select a price tier for promo products.
- Encourage giveaway shares by matching referral entries with an extra donation.
Natori, for example, has a year-round donation program set on their website. Customers can choose to donate 1% from every purchased item to a charity of their choice:
You can set up a similar seasonal campaign using ShoppingGives — a donation service that seamlessly integrates with BigCommerce.
2. Provide loyal customers with unique discounts
Promos and discounts are among the top factors influencing holiday purchases. Considering that most consumers are still in the ‘save, rather than splurge’ state of mind, most will hunt for good deals.
Play in line with that mood and treat your loyal customers with personalized coupon codes. In fact, 49% already expect brands to always send personalized promotions in line with their preferences, per Deloitte.
Try some of the following ecommerce discount code ideas this holiday season:
- Send discounts for recently browsed, saved, or placed in the cart products.
- Personalize discounts based on loyalty status.
- Use location data to provide hyper-personalized local deals.
- Offer tiered discounts for each repeat purchase.
- Pitch a free personalized gift for different spending caps.
Jeni’s ice cream, for example, treated all holiday shoppers last year with an extra $20 gift card for every $100 spent on gift cards with them.
3. Create a sense of urgency with discount countdowns
Countdown timers trigger FOMO feelings among consumers. Also, they build up a sense of scarcity, forcing our brain to want the fleeing thing before it’s gone. German researchers found that a feeling of scarcity makes us auto-rate in-demand products as more attractive. And we rate luxury products more favorably if they are scarce due to limited supply.
Here’s how you can put that bit of knowledge into action:
- Use countdown timers in email marketing to promote short-term discounts for high-value, signature products. Keeping these sales semi-private helps prevent brand dilution. At the same time, you can still get a boost in online sales.
- Feature countdown banners on your website for the most in-demand products (or ones you wish to position as such). Placing a timer next to every product reminds shoppers that the time is running up soon so that they are more likely to proceed with the checkout (instead of hoarding products in the cart). Note: if a timer next to each product makes your website look messy, add a sticky header banner atop of your website.
4. Give first-time buyers a reason to return
With supply chains still disrupted, a lot of consumers are keen to discover new brands. If your company came on their radar during holidays, direct some extra effort at entertaining and retaining them. After all, a 5% increase in customer retention can drive up profits by 25% to 95%.
So how can you entice new customers to return? Try this:
- Get them on your loyalty program: Loyalty programs help move customers up the buying ladder, increase repeat business, and foster deeper emotional connections. Prompt subscription during check-out and sweeten the deal for first-time shoppers with a quick discount for second purchase.
- Pitch a subscription offer: Subscription boxes offer a recurring revenue stream — a nice-to-have option in times of uncertainty. Perhaps this is why 75% of DTC brands plan to have a subscription-based offering by 2023. Compound this with the fact that one in five consumers tried a new subscription box during the pandemic and the conclusion is rather clear: starting a subscription is good for ecommerce businesses and for their customers too.
- Excell the product delivery: Salesforce estimates that some 700 million gifts may not arrive on time this year due to congested last-mile delivery. At the same time, 56% of consumers say that they will not have repeat business with a retailer after a bad delivery experience. So test your shipping strategy before the holiday season to ensure that you can be there on time. Timely and positive delivery experience instills greater confidence in your brand and encourages repeat purchases.
On-page Optimization Strategies to Increase Conversion Rates
With most holiday shopping happening online this year, your ecommerce website must be up to it’s best. By using the next strategies, you’ll ensure that you are delivering the best holiday shopping experience to every visitor.
1. Optimize for mobile
Consumers spent over $50 billion via mobile devices during the 2019 holiday season, according to Adobe Digital Holiday Recap 2019. $2.9 billion of mobile commerce sales were made during Black Friday and $3 billion on Cyber Monday. Apparel, footwear, jewelry, and cosmetics were among the most-shopped mobile categories.
The mobile shopping trend will remain strong this year too. So make sure that you deliver the best experience for on-the-go shoppers:
- Run a Google Mobile-Friendly test and make the suggested optimizations.
- Personalize shipping estimates/product availability based on the customer’s location.
- Use above the fold area to highlight the sweetest deals.
- Enable dynamic page serving to improve website speed.
- Remove pop-ups and sidebars for mobile users as they add friction.
- Pre-fill customer details during check-out to avoid mistakes.
- Offer guest users to email their shopping list to finish shopping on the desktop.
- Add support for Apple Pay/Google Pay, PayPal One Touch to speed up the checkout.
Learn more about designing a delightful mobile shopping experience from our previous post.
2. Display security icons at checkout
Card-not-present fraud is rampant with a surged adoption of online shopping. Show that shopping with you is safe by placing security icons and trust badges at the check-out forms.
One eye-tracking study found ecommerce shoppers pay a lot of attention and recall security badges during checkout. Also, the participants confirmed that seeing trust badges increased their sense of security during check-out — prompting them to finish their purchase.
3. Optimize pop-ups, forms, and website messaging
Website micro-copy — button names, call-to-actions, forms, and pop-ups — often get overlooked during seasonal content re-optimization. Shamefully so as it’s the small details that add an extra feeling of delight and prompt conversions.
Most ecommerce business owners can’t run multiple A/B tests during the holiday campaigns to optimize every crevice of their website. So choose your priorities:
On-site pop-ups and banners: Give your regular pop-ups a seasonal flair. Change the colors, messaging, and value proposition to better match the seasonal promotion. However, don’t get all too giddy and bury your standard brand voice under the seasonal promo madness. Or you risk putting away some consumers.
Keep your seasonal messaging and offers aligned with your regular brand personality. Last year, Skullcandy maintained their sleek brand look during holiday sales but opted for a clever on-brand promo copy for their homepage banner to draw attention to current discounts.
Billing & shipping forms: These two forms are the most error-prone, and oftentimes confusing for the customer. Make the job easier for everyone by:
- Pre-filling the details for repeat customers.
- Auto-checking shipping address for validity.
- Providing a drop-down list of street addresses based on zip code.
- Displaying service messages about shipping times and possible delays.
- Adding tooltips to form fields that may steer confusion.
- Placing extra microcopy to explain what data you need (e.g. shipping address must match credit card address).
On-page CTAs: Call-to-actions are the trickiest to optimize. Try testing new variations several weeks before the campaign launch. To do that:
- Add a heatmap tool to your homepage and several product pages to analyze which website elements trigger visitors’ attention.
- Create several call-to-action variations for those elements. Write more explanatory button texts e.g. “request pricing” instead of “request quote” or “Pay later” instead of “Pay with Klarna”. Try changing product descriptions too. Add more product features, infuse more personality into your writing, test several new ecommerce copywriting formulas.
- Run a series of A/B tests to benchmark the performance of new elements versus the old ones. Scale what works. Ditch what doesn’t.
Treat Customers to the Best Holiday Commerce Experience
Holiday shopping can be whimsically wonderful or miserably gruesome (especially when done last moment). It’s in your power to decide which experience your customers will get this year. Help them get the best out of their shopping spree(s) by testing the next 6 strategies.
1. Create holiday gift guides.
The holiday season can be mentally taxing for some shoppers, struggling to find the right gift for an array of people on their list. Reduce their feeling of overwhelm by curating a series of holiday guides, featuring your products.
Get creative and think beyond the standard “For Him/For Her” categories. Pinterest found that last year holiday shoppers were increasingly looking for:
- Personalized gift ideas
- Sustainable gift ideas
- Self-care package gifts
- Snail-mail gifts
- Teacher Christmas gift ideas
- Colleague Christmas gift ideas
Use last year’s shopping customer data to determine which gift categories will work best for your customers. Then set up dedicated holiday landing pages for them and optimize them around relevant search queries. Take a page from Molton Brown that let’s shoppers discover gift suggestions for all sorts of occasions and within their budget:
SEO-optimized holiday guides and product landing pages can drive extra search traffic to your website, plus street the returning customers in the right direction.
2. Offer free shipping or special deliveries.
Despite store re-openings, 77% of shoppers still want their online purchases delivered to their homes. Salesforce also suggests that home-deliveries will be in the highest demand, but so do store pickups. Retailers offering curbside, inside, and drive-through pick-ups will see a 90% increase in digital sales compared to last season.
Given that last-mile delivery providers will be likely overwhelmed, offering both options is the best way to ensure that all your customers get their orders on time. Di Bruno Bros, for example, is already testing both:
3. Provide the best customer service.
Proactive solving of your customers’ issues during the holiday season is key to winning them for the long-term.
A Deloitte survey found that three out of five consumers will ditch their favorite brand (one they’ve been with for 3+ years) after a bad customer service interaction.
Also, two out of three won’t buy again from the company if they never received a solution to their complaint.
However, maintaining high service levels during the hectic holiday season is challenging. Between ensuring product stock, timely shipping, and normal website operations, it’s easy to miss some urgent customer queries.
So plan ahead and scale your customer service before the hottest part of the sales season kicks in. Here’s how:
- Create or update self-help pages, offering a quick resolution to the most frequent customer issues.
- Add a chatbot to act as a first-line of help, guiding users towards the right answers, and providing basic help.
- Hire extra people for your CS team to take over online support — live chat, email queries, social media questions.
If you have extra budgets, consider adopting an AI-driven conversational platform to assist with online support. New-gen platforms can pre-write answers to the common customer questions, auto-serve relevant data to agents, and otherwise augment the speed and accuracy of their replies. Intercom, Cognity AI, Twyla, and Bold360 offer intelligent automation solutions for customer support.
4. Run a holiday social media campaign.
Social media has become an independent shopping avenue with the rise of the shoppable posts. Consumers are hooked, especially the younger ones. Per Salesforce, ,many Gen Zs made a purchase on social media during the pandemic.
So how do you bridge the gap between inspiration and purchase on social media without dropping too much cash on ads?
Start building your social media audience lists 1-2 months before the holiday season.
This way when the holiday season kicks in, you won’t be burning cash on generic ads marketing to disinterested consumers or people who are not familiar with your brand. Or rub elbows with a ton of other brands pitching similar deals. Experiment with different types of social media posts and ad formats to determine engaged users and perhaps convert some to your email list. Direct most of your efforts to fill your sales funnel with brand-aware and interested prospects.
When November kicks in, get more hands-on, and convert those shoppers with:
- Offer ads on Facebook.
- Remarketing ads to visitors/past customers.
- Shoppable Instagram posts.
- Time-sensitive promo codes shared in Instagram stories.
5. Work with micro-influencers.
Influencer marketing can help increase brand awareness during the pre-holiday season. Similar to social ads, you are likely to get the best returns if you:
- Invest early in early promos for the top of the funnel customers.
- Carefully select your pool of partnerships.
- Focus on increasing brand awareness/recall, rather than sales alone.
Last year 90% of marketers said that ROI from influencer marketing was comparable to or better than other marketing channels. The wrinkle, however, is that attributing the exact dollar value to influencer-generated sales isn’t always easy.
Perhaps that’s why a lot of smaller ecommerce brands remain wary of this promo strategy. If you are on the cautious, but curious side in 2020, here’s a good option for you — run a micro-influencer holiday campaign.
Micro-influencers (people with 1,000 to 10,000 followers on social media) usually have highly-engaged audiences around a certain interest group (e.g. skincare, home design, healthy eating, etc). According to a 2019 Holiday Micro-Influencer Marketing Report, negotiating a campaign with the smaller folks can bring in a bevy of benefits:
- 73% of micro-influencer content outperformed macro-influencer content.
- 68% of them do not increase prices during the holiday season.
Want to give it a try? Hop on social media and look for conversation-starters in your industry or around your consumer interests. Pay attention to the number of comments and video views above the average number of likes per post to find truly active accounts.
You can also sign up for an influencer marketing platform to get matched with pre-vetted influencers, suggested based on your criteria. Some of the popular ones are Post for Rent, Stellar, and Neoreach.
6. Send creative cart abandonment emails.
Over 88% of shopping carts get abandoned across all sales categories. During the holiday season, e-tailers can expect this number to go even higher as consumers hunt for deals, shop around, or altogether forget about their earlier intention to shop with your brand.
Get back on their shopping radar by sending a quick email reminder to complete their purchase. And since it’s the holiday season, sprinkle it with some extra topping.
- Use humor to prompt shopper to complete their purchase
- Add a small discount for products left in the card
- Promise a coupon code for the second order with you
Read more about creating attention-grabbing ecommerce cart abandonment emails.
Pitch or Ditch? How to Know Which Tactic Can Actually Increase Your Sales
Given that 2020 was a tough year for most companies, you need to be extra careful with your promo spending. After all, many marketing tricks don’t bring the advertised clicks. To line up the strongest marketing strategies for this year’s campaign, evaluate each one by asking the next questions.
1. Does it make sense for your target audience?
Throwing in extra cash in TikTok marketing (that’s oh-so-hot right now) won’t make sense if your primary buyers are older Millennials and Gen X types. Use your historical data to drive your decision for this year’s campaign. Specifically, try to gauge:
- How price-sensitive and discount-driven is your primary audience?
- How well do they respond to various campaign types?
- What type of brand experience do they prioritize — faster shipping, free shipping, personalized offers, etc?
A quick email survey can help you collect these nuggets before you go into active marketing mode.
2. Have you tried it in the past?
Analyze the results of last year’s campaign. Which channels brought it the highest ROI? Did you experience any particular types of complaints e.g. ineffective shipping? Identify several strategies that got you great results and pepper them up with 1-2 new tricks.
3. Do you have the tools to implement it?
Determine if new tech investments will pay-off. For instance, if your total influencer marketing budget is $1,500, paying a $250 fee to access an influencer marketplace may not be the best choice. However, if you are running a larger campaign with 10-15 participants, a comprehensive platform can save you a lot of time on managing campaigns, plus help ensure that you are partnering with the right peeps for your brand.
4. Does the tactic cost you money?
While there’s no such thing as absolutely free publicity, some marketing tactics cost you less to execute since you already have the tools, tech, and people to run them. Still, they won’t be completely free if you are reallocating your time from other tasks.
Assess each tactic from the perspective of upfront investment vs possible ROI vs ease of execution. Aim for:
- High ROI and very easy to do.
- Low upfront investment plus high ROI.
You now have a working set of ecommerce marketing strategies to increase your holiday sales. So it’s time to get to work!
Start with the lowest hanging fruits — marketing strategies you’ve already tested and that are still relevant in the current shopping landscape. Add them to your marketing plan for 2020.
Then move on to pre-holiday planning. Determine the discount strategy for different holidays, channels, and customer groups. Review your website and identify which areas need improvements — product descriptions, banners, CTAs, or any other assets. Also, start working on your seasonal content.
Next, decide on your social media strategy for the holidays. Set your budgets, distribute them among different campaign types (ads, influencer marketing, organic content creation). Start running pre-holiday promos to get some new leads to the top of your funnel.
Also, ensure that your CS team is properly staffed and in hot-response mode. Reach out to your shipping partner to ask about the potential delays and organize back-up/alternative logistics.
Lastly, don’t postpone your planning any further. Take one of the strategies from this guide and start acting on it now!
In 1858, a package traveling from St. Louis to San Francisco would take a lightning-fast 25 days. Back then, this delivery time was considered an immensely impressive turnaround.
Today, ecommerce sellers deliver packages to the other side of the country within days, if not hours. And shoppers expect it.
Since selling its first product in 1994, Amazon has changed the game for quick fulfillment. Amazon Prime’s 2-day deliveries are now the ecommerce standard, 33% of customers who opt for fast shipping are willing to wait 3 or more days for online orders.
In fact, fast shipping is so crucial today that 27% shoppers will choose one retailer over another because they have better delivery options.
If you can perform the balancing act of delivering online orders quickly enough without significantly increasing your operational overheads, you’re well into an ecommerce goldmine. But are 2-day deliveries easier said than done?
Customer Shipping Expectations
We all know that change is the only constant in life, and this holds true with shipping time expectations.
In the early days of ecommerce, shopping online was a novelty that meant shipping speeds weren’t that important, and standard shipping was the norm. Ordering something from your sofa and getting home delivery was a feat, and impressive enough in itself.
Fast forward forty years, and 2-day delivery is beyond important to customers. It determines where they shop, how much they spend, and the reviews they leave.
On average, online shoppers now deem 3 days an acceptable amount of time to wait for an online order.
Speed isn’t the only expectation that’s changing, either.
Your customers’ orders must be fast, trackable, and free for best results. It sounds great for buyers, and daunting for sellers.
What is 2-Day Delivery?
2-day delivery means shoppers receive their orders within two days or purchase, providing they meet a cut-off order time. That means a 2-day time period between order placement and delivery date.
Depending on a seller’s internal processes and the shipping carrier used, this could be two full days or two business days, counted from the time of checkout or the order cutoff time.
For example, Walmart TwoDay Delivery ships orders received before 2 p.m. within two business days in the contingent US. So, if a customer orders a product on Monday morning, it’s delivered the following Wednesday.
If someone orders an eligible item at 5 p.m. on Friday, they can expect to receive it the following Wednesday, since it’s after the 2 p.m. cutoff and excludes the weekend.
2-Day Delivery: Behind the Scenes
2-day delivery might be as simple as a click for customers, but there’s a lot of work behind the scenes to ensure they receive orders on time – especially if they live across the country from your warehouse.
All deliveries must be coordinated between two main shipping options: Ground and Air shipping.
1. Ground shipping.
Ground shipping is the use of trucks, vans, and cars to transport orders from your warehouse to a customer’s front porch.
Depending on your fulfillment set-up, you might use your own or an external shipping carrier’s ground transport.
Ground shipping is the cheapest delivery method, allowing you to keep costs low and offer free two-day delivery without breaking the bank.
However, distance restricts ground shipping. If customers live too far away from your warehouse, you must consider alternative transportation methods or invest in a distributed network of warehouses to reach customers in time.
2. Air shipping.
Air shipping uses planes to transport orders to customers.
Air shipping is typically used to deliver products stored overseas or ship products to customers living too far away for 2-day ground shipping.
Air shipping is much more expensive than ground shipping, especially if you’re not shipping in bulk. Having to use air shipping to achieve 2-day delivery makes it difficult to offer free shipping to customers.
3. Combine ground and air for cost-effective reliability.
The most efficient and cost-effective method for achieving 2-day deliveries is using a combination of ground and air shipping.
For example, Deliverr has a distributed network of warehouses all across the country. We use machine learning to store SKUs as close as possible to buyers, based on the location of historic demand. That way, we can select the most cost-effective shipping to get items to buyers within 2 days or fewer.
Use Deliverr to fulfill your BigCommerce orders: Sign Up for Free
Why You Need to Offer 2-Day Delivery on Your Store
According to eMarketer, ecommerce is expected to drive more than $4.2 trillion in 2020 and increase to over $6.5 trillion by 2023 worldwide. More people are shopping and selling online than ever before.
For ecommerce merchants, that means one thing: Competition.
It’s becoming increasingly difficult to attract, convert, and retain customers using traditional ecommerce tactics such as low prices, niche products, or being first to market.
Fast delivery options are different. They stand out, meet expectations, and exceed them by providing customers with extra value. Here’s why you must offer 2-day delivery, if you aren’t already, as soon as possible.
1. Reduce cart abandonment.
18% of cart abandonment is because of slow delivery speeds. Some customers can’t wait longer than 2 days for an urgent item, a last-minute present, or an eagerly anticipated treat.
2-day delivery overcomes some speed-related purchase blockers which in turn can reduce cart abandonment and increase conversions. According to Deliverr’s data, one merchant saw a 300% increase in conversion after implementing 2-day delivery.
2. Boost customer satisfaction and loyalty.
More than a third of customers won’t return to a retailer following a bad delivery experience.
Today, the online shopping experience encompasses everything from order to unboxing, and a huge part of that is how long it takes to go between those two steps. 2-day deliveries boost customer satisfaction by adding the finishing touches to an outstanding customer experience.
Delivering quickly shows you can fulfill as promised, you’re dependable, and you care about premium customer experiences, which are necessary ingredients for increasing customer loyalty.
3. Expand your marketing influence.
Fast shipping speeds give you something exciting, attention-grabbing, and useful to share across your marketing materials.
You can add fast shipping banners, tags, and wording to your emails, social media posts, and website. This works for ads as well, when you can highlight your delivery speeds in a way that hooks customers and entices them to click through to your store.
Based on Deliverr data, some Deliverr merchants have seen a 50% increase in Facebook CPA by adding next-day and 2-day delivery badges to their Facebook posts.
Tip: Get 2-day delivery across the United States (continental US) when you fulfill with Deliverr. Your orders will show next-day shipping for buyers in eligible zip codes at no extra charge.
How to Keep 2-Day Delivery Costs Low
According to the Baymard Institute, shipping costs are one of the top reasons for cart abandonment. If you can’t get your delivery costs low enough, you could deter customers or end up footing the bill yourself and losing your profit margins.
For 2-day deliveries to be attractive to customers and sustainable for your business, you need to know how to keep your 2-day delivery costs low.
1. Only offer 2-day delivery with a minimum order value.
A minimum purchase value for free 2-day shipping means customers must spend a certain order amount before qualifying for 2-day delivery. This increases basket sizes to ensure you’re making enough profit margin to absorb delivery costs.
And it’s not uncommon. For example, non-Prime members must spend a minimum of $25 on Amazon to qualify for free 2-day shipping.
2. Provide 2-day delivery for specific zip codes.
Providing 2-day delivery for only specific zip codes near your warehouses reduces the distance orders must travel, keeping your carrier costs to a minimum.
When you limit eligibility for free two-day shipping, it gives you more time to fulfill orders and, depending on how close your customers live, allows for next-day deliveries at no extra cost.
Tip: Deliverr provides free NextDay Delivery for shoppers in eligible zip codes, at no extra cost to merchants (they’ll still pay the flat 2-day delivery fulfillment fee). Learn more about this here.
3. Work with an outsourced fulfillment partner to get discounted shipping rates.
3PLs have economies of scale to access discounted shipping rates, keeping your delivery costs low.
However, it’s important to work with one tailored to offer ecommerce fulfillment services that integrate with all of your sales channels, with no unexpected fees or administrative costs.
4. Use ground shipping and ship from urban fulfillment centers.
Ground shipping is the cheapest method of delivering orders in 2-days. Therefore, if you distribute your inventory across a network of urban fulfillment centers, you increase your SKUs coverage across the contingent US. This will reduce the distance your items have to travel to reach your buyers, allowing you to use ground shipping for 2-day deliveries.
3 Ways to Offer 2-Day Shipping
The best option for offering 2-day shipping is the method that best balances capacity and costs. You must deliver orders on time throughout the year in a way that keeps your business profitable.
This could mean in-house fulfillment, outsourcing parts of your fulfillment process, or using Deliverr for an end-to-end fulfillment partner.
1. In-house fulfillment.
In-house fulfillment involves using your own resources, space, and staff to ship orders within 2-days. This includes:
- Receiving and storing stock.
- Tracking and analyzing inventory.
- Picking and packing orders.
- Shipping deliveries with a reliable shipping carrier.
The benefits of in-house fulfillment are control and cost. You have complete control over how you meet 2-day delivery speeds, and you have a tighter rein over where you spend and save money.
The considerations of in-house fulfillment are capacity and scale. Delivering orders within 2-days requires highly efficient fulfillment processes, which are difficult to maintain during peak periods such as the holidays or when growing your ecommerce business.
For these reasons, many sellers choose to switch from in-house to outsourced fulfillment.
2. Outsourced fulfillment.
Outsourced fulfillment involves using an outsourced fulfillment center to achieve 2-day delivery speeds for you. This includes:
- Receiving inbound stock.
- Storing and tracking inventory.
- Receiving orders.
- Picking, packing, and shipping.
The benefits of outsourced fulfillment are expertise and capacity. Outsourced fulfillment centers excel at the fast shipping speeds of ecommerce and have scalable space and resources to meet 2-day deliveries, regardless of how busy or big your business becomes.
The considerations of using outsourced fulfillment are cost and sales channels.
While outsourced fulfillment centers have economies of scale that reduces storage, packaging, and carrier costs, some 3PLs sting you with hidden charges. For example, traditional 3PL models charge administrative, inbound shipment, and account management fees that quickly add up.
Another consideration of using outsourced fulfillment is multiple sales channel integration. Not all 3PLs integrate with all sales channels, and those that do may charge extra. For example, Multi-channel FBA fulfills non-Amazon orders but charges a premium fee for doing so.
Deliverr is an outsourced fulfillment service designed to facilitate fast delivery speeds of 2-days and fewer across sales channels. This includes:
- Disbursing in-bound stock across a network of warehouses in the US.
- Storing inventory close to customers to enable quicker shipping.
- Integrating with sales channels to download orders immediately.
- Picking and packing orders.
- Shipping using the most efficient and cost-effective carriers.
The major benefits of using Deliverr are speed and cost. Deliverr uses a network of warehouses and shipping carriers to deliver orders as quickly and cost-effectively as possible — providing 2-day shipping speeds that qualify for fast shipping programs across marketplaces and your own website.
Deliverr also offers a transparent and all-inclusive pricing structure, so you know precisely how much your fulfillment fee will be, with no hidden fees or surprise charges.
Calculate your fulfillment costs with Deliverr on their cost calculator.
The considerations of using Deliverr are branded packaging and control.
Deliverr doesn’t accommodate branding packaging because it slows down the fulfillment process, making 2-day deliveries challenging. But, since 67% of shoppers say convenience is the most important factor when buying online, it’s a little price to pay for many.
Outsourcing fulfillment to Deliverr requires relinquishing a little control over storage and fulfillment. But, with live inventory management tools tracking your stock, and fast shipping experts handling your fulfillment, many sellers don’t mind handing over this part of their business.
Tip: Check out common Deliverr FAQs here.
By picking the best fulfillment option, you’re not just offering fast shipping; You’re providing fast, reliable, and affordable 2-day delivery for both your customers and your business.
Whether you’re new to ecommerce or an established brand, your bottom line can benefit immensely from 2-day shipping when you do it right.
It’s that time of year again where retailers and shoppers rejoice. The clock is ticking and the countdown to Black…
When people think about the first SaaS startup, typically Salesforce comes to mind. But while Salesforce began as a SaaS, other early SaaS software started on the floppy disks and CD-ROMs of the pre-internet time.
Look at business travel and expense software Concur. After the 2001 market crash, Concur moved away from physical software to become a pure SaaS business. It then grew so fast that, in 2014, SAP bought Concur in what was then the largest ever SaaS acquisition.
The last twenty years have seen a lot of SaaS growth, taking the software development model from its infancy into where it is today — powering a significant amount of the business processes at even large enterprises.
What is SaaS?
SaaS platforms make software available to users over the internet, usually for a monthly subscription fee.
With SaaS, you don’t need to install and run software applications on your computer. Everything is available over the internet via your web browser when you log into your account online. You can usually access the software from any device, anytime (as long as there is an internet connection).
The same goes for anyone else using the software. All your staff will have personalized logins, suitable to their access level.
You no longer need to engage an IT specialist to download the software onto multiple computers throughout your office or worry about keeping the software on every computer up-to-date. It’s all taken care of in the cloud.
Another key difference is the business model. For pricing, most SaaS providers operate a tiered subscription model with fixed, inclusive monthly account fees.
Most subscriptions include maintenance, compliance, and security services, which can be time-consuming and costly.
SaaS vendors also offer out-of-the-box solutions that are simple to set up (if you need a basic package), with more complex solutions for larger organizations. You could have the basic software up and running within a matter of hours – and you’ll have access to customer service and support along the way.
SaaS vs PaaS vs IaaS
Software-as-a-service, platform-as-a-service, and infrastructure-as-a-service are three different models for running your business from the cloud.
- IaaS: cloud-based services, pay-as-you-go for services such as storage, networking, and virtualization. If your business engages data centers, that falls under IaaS.
- PaaS: hardware and software tools available over the internet.
- SaaS: software that’s available via a third-party over the internet.
- On-premise: software that’s installed in the same building as your business.
The History of SaaS
The emergence of cloud computing enabled software to be installed on off-premise remote servers which, in some cases, were maintained by third parties. This reduced the amount of necessary maintenance and better enabled an increasingly global workforce, because software “in the cloud” was accessible from anywhere.
Over time, improvements to the internet decreased the cost of hosting, leading to platforms lifting many of the early bandwidth limitations, and made online business processes faster and more reliable.
Cost-efficiency, ease of use, and improvements to core functionality all led to exponential growth in SaaS. Today, it’s a practical option even for enterprise-level businesses.
1. SaaS in the beginning.
In the 1960s, computer hardware technology was progressing rapidly. However, computing still took a lot of time — and the cost of a mainframe was prohibitive to many organizations. That’s where time-sharing comes in. That’s where time-sharing comes in. A Compatible Time-Sharing System (CTSS) was developed at MIT and demonstrated effective first in 1961.
2. Pre-SaaS computing.
Over the next 20–30 years, hardware and computing became less expensive and more portable. That’s when businesses shifted toward individual “ownership”: personal computers and on-premise software installed on that machine as part of a purchased license.
But on-premise software proved to be inefficient at scale — for both the IT staff managing it and the software companies selling it.
IT found themselves bogged down in software installations, updates, security patching, and hardware and infrastructure maintenance of personal business computers. Software businesses had lower margins because of cost of goods sold (COGS) — the costs of software distribution on disks within product packaging.
3. Rise of dot com.
In August of 1994, the internet took a big step forward.
Daniel Kohn conducted the first secure credit card transaction for a physical good — a Sting CD. In an article published in the New York Times the very day after the transaction, the reporter wrote:
“While Commercenet [a government and industry organization] and other organizations have been working to develop a standard for the automated data encryption of commercial transactions, the small band of recent college graduates who formed the Net Market Company in New Hampshire appear to be the first to implement such technology successfully.”
Thereafter, everything that made ecommerce as we know it today started happening really quickly.
Netscape Navigator, in October 1994, introduced the Secure Sockets Layer (SSL) protocol, enabling encrypted transmission of data over the internet so people could shop online without fear of losing their data.
The very next year saw the launch of Jeff Bezos’ Amazon and Pierre Omidyar’s AuctionWeb, which we know today as eBay, the first peer-to-peer auction marketplace.
By the end of 2000, though it began as an ecommerce platform for books, Amazon had already branched out into other product categories and begun allowing third-party sellers to use the platform.
One of the benefits of the rise of the internet was the emergence of cloud computing. That allowed software to be installed on remote servers which, in some cases, were maintained by third parties.
This helped reduce the amount of necessary maintenance and better enabled an increasingly global workforce, because software “in the cloud” was accessible from anywhere.
Those functionality improvements began a move toward best-of-breed software providers who focused on doing one core function really well — allowing organizations to plug and play the software for each function that worked best for their business.
4. Creation of application service providers.
With an Application Service Provider (ASP), the main idea is essentially the same as that of SaaS — it provides computer-based services over a network. But, whereas SaaS is self-service, with the ASP model the vendor had to manually create each login and environment.
5. SaaS officially is here.
In 1999, Salesforce launched their customer relationship management (CRM) platform as the first SaaS solution built from scratch to achieve record growth. It proved to be a good investment, because the dot-com bust in 2001 — followed less than a decade later by the Great Recession — landed a significant hit to on-premise software.
In its infancy, the SaaS model was thought to be only for startups and small businesses, just a fad, too closed, too slow or unstable. But over the next several years, improvements to the internet that meant little to the traditional software industry, did much for SaaS.
In the earliest days of the SaaS industry, it was assumed that subscription-based software would not be viable for enterprise business. And, in fact, in those days the enterprise typically chose end-to-end software suites to manage their complex organizations.
6. SaaS reaches ubiquity.
Today, exponential growth of SaaS and continued improvements to functionality make it a valid option even for enterprise-level businesses. It’s also much cheaper and easier to use. SaaS customers frequently cite cost savings as one of its primary benefits.
You can find SaaS products for almost any business applications you can think of.
7. Future of SaaS.
The popularity of SaaS is evident in all the software industry giants moving toward using it, including Microsoft, SAP, Oracle and IBM. As SaaS industry adoption continues to grow, here are some of the things we may see happen in the software industry.
New roles of IT and the CIO: As SaaS apps are more often marketed to line-of-business users instead of technology decision-makers, IT must evolve into a proactive business partner that can help make sure purchase decisions are prudent in the context of broader organizational and IT goals.
Greater focus on automation: SaaS is making it easier for businesses to incorporate AI technology into their tech stacks. One example is using chatbots with artificial intelligence for quicker, more efficient customer service.
More open integrations: APIs will continue to grow in importance as SaaS products provide avenues for integration. Greater integration will make it easier even for smaller businesses to use business intelligence to improve their operations.
Openness will lead to flexibility: SaaS has come a long way from its initial form. Now, it’s much more flexible, and added emphasis on APIs will continue to make it more open and customizable for all businesses. That flexibility will lead to the kind of integrated systems the business of the future will need — like seamless connections between your ecommerce platform and other solutions like IMS/OMS, PIM, and ERPs.
SaaS Adoption Is Growing
“Years ago, SaaS limited your flexibility. You couldn’t make it your own. You had to go down a path of a custom platform,” said Chief Product Officer Jimmy Duvall. “That dynamic has shifted.”
The valuation of the market for SaaS products continues to grow. Despite a pause in growth between 2019 and 2020, likely due to a predicted holding pattern while the world reckons with the unprecedented impact of the pandemic, Gartner predicts the growth returns in 2021.
You can also see that organizations plan to reduce the use of commercially licensed software over the next 18 months, increasing free open source slightly, with a more significant increase in SaaS products.
As much as 67% of enterprise infrastructure will be cloud-based by the end of 2020.
Revolutionizing Businesses With SaaS (Advantages)
The SaaS market originally emerged to enable small businesses or individuals who couldn’t afford large enterprise software suites. Compared to on-premise software, though, end users were very limited in what they could do with SaaS — particularly because in early days bandwidth and file sizes were capped. Most mainstream players found SaaS to be too closed, slow or unstable to support any meaningful business activities.
Over time, improvements to the internet including more reliable broadband decreased costs, leading to platforms lifting many of the early bandwidth limitations and making scalability more possible, and made online business processes faster and more reliable.
Cost-efficiency, ease of use, and improvements to core functionality all led to exponential growth in SaaS. Today, it’s a practical option even for enterprise-level businesses.
1. Platform independent.
Since SaaS solutions are typically accessed on the web, they can be run on any operating system or device. That means it can be used by anyone, regardless of Windows versus Mac, iPhone versus Android, or even a Linux system.
2. Quick updates.
With SaaS, your software will be updated automatically when new features are released. No more having to wait for your IT team to have time after an update is issued. Keeping up with the security patches AND version updates necessary to have the latest secure version of an open source solution is time-consuming and labor intensive.
3. Relatively low cost.
SaaS also reduces users’ total cost of ownership when compared to open source. Because all of your hosting and maintenance is included, using a SaaS solution can not only give you a lower total cost of ownership, but it can also make it easier to calculate your operating costs with fewer surprises. Most SaaS platforms include all the bandwidth your store might need.
4. Secure data.
According to a study by KPMG, about 30 percent of customers would stop purchasing from a company temporarily after a data breach. Security is one less thing on your plate if you choose a SaaS option. Most SaaS ecommerce providers are PCI compliant and some include even stricter data security. For example, BigCommerce is ISO/IEC 27001:2013 certified, which is an internationally-recognized standard for information security.
5. Easy to use.
You no longer have to worry about software installation, updates, maintenance, or configuring your servers. All of this is handled for you by the platform provider, making SaaS options easier to set up and and to use. SaaS platforms also provide customer support to help with any challenges you do run into. This is support that goes beyond just phone calls for a major issue. You can call and get guidance on setting up a new feature or if you get stuck figuring out an integration.
Ecommerce SaaS Companies
SaaS ecommerce platforms provided an alternative to open source with less complexity and reduced barrier to entry.
BigCommerce is one of the leading open SaaS ecommerce platforms for mid-market and enterprise brands.
Shopify, like BigCommerce, is feature-rich, easy to use, and helps businesses get up and running quickly. Businesses that are totally new to ecommerce may choose to start with Shopify stores. The disadvantage of Shopify is that it can be difficult to scale. Shopify Plus requires a 3rd party app to achieve the 600 product variants that can be done on BigCommerce natively. With a built-in 3 option limit per product, merchants can’t scale on Shopify Plus.
3. Salesforce Commerce Cloud.
Salesforce Cloud Commerce, formerly Demandware, is a SaaS ecommerce platform provider preferred often by high-profile fashion retailers. The disadvantages of Salesforce Cloud Commerce are the high cost and the dependence on developers. The platform has a higher annual cost with a 3-5 year contract, and an implementation can easily cost upwards of $250K. Merchants face additional obstacles and costs if they choose a third-party over Salesforce’s add-on services.
3dcart is another SaaS ecommerce platform, though typically considered more of a minor player. Its advantages include multilingual support and advanced shipping solutions – no API required. Disadvantages include a lack of a CDN, resulting in poor site uptime during high traffic volumes for stores and difficult to reach customer service. They also lack modern responsive themes.
SaaS has come a long way since its first simple applications 20 years ago. Today, its increasing flexibility and openness lends itself to businesses building best-of-breed tech stacks instead of dropping into a software suite of already connected solutions.
This is giving businesses more freedom to run their back offices the way they want to — and the way that’s most effective for them.
When it comes to ecommerce, more and more merchants are realizing the benefits that come from a SaaS platform versus open source: lower total cost of ownership, regular software updates, ease of use, and platform security.
After much anticipation, Cyber Week 2020 has come and gone and one question remains: how does the pandemic year stand up to holiday seasons of the past?
Before we dive into the results, remember that Cyber Week consists of five key holiday shopping dates:
- U.S. Thanksgiving Day (November 26, 2020)
- Black Friday (November 27, 2020)
- Small Business Saturday (November 28, 2020)
- Super Sunday (November 29, 2020)
- Cyber Monday (November 30, 2020)
Heading into Cyber Week 2020, we knew we were in for a holiday shopping season unlike any before. Statista Research Group projects overall 2020 ecommerce holiday sales to reach $190.47 billion USD, and eMarketer recently increased their 2020 ecommerce retail sales forecast to 30% YoY growth.
This year, BigCommerce saw 100% performance uptime, marking the seventh consecutive year of zero reported site downtime during the peak holiday period. BigCommerce CEO, Brent Bellm, shares his thoughts on our Cyber Week 2020 results:
“This year, brands and retailers needed to grow spectacularly online to make up for unprecedented challenges offline. The success that BigCommerce merchants saw during Cyber Week reflects the quality of their ecommerce websites and the ever-expanding willingness of consumers to shift their spending online. 2020 will be the biggest year of ecommerce growth in history, by far. We are proud that BigCommerce plays an essential part in helping businesses provide engaging, reliable and secure digital sales experiences.”
BigCommerce’s Cyber Week data is based on a comparison of total platform sales that occurred between November 28-December 2, 2019 and November 26-30, 2020. It represents information from thousands of small, mid-sized and enterprise global retailers selling on the BigCommerce platform.
Without further ado, here’s our key data and insights from Cyber Week 2020.
1. Ecommerce sales soared YoY.
The predictions for increased ecommerce growth rang true this year with a 74% increase in GMV year-over-year (YoY), recorded by BigCommerce. While we’ve continued to see YoY Cyber Week growth over the years, the coronavirus pandemic had a significant impact on this year’s shopping.
In a report from SYKES, nearly 44% of consumers stated they won’t feel comfortable shopping in person until they feel the pandemic is under control in the country or their area. Plus, another 25% say they won’t be shopping in person until a vaccine is available. Ecommerce quickly became essential for many consumers around the world.
Despite the fiscal challenges consumers faced with the pandemic, average order value also jumped significantly, averaging $144 across the five key shopping dates — a 17% increase to the year prior.
Average order value (AOV) peaked at $164 on Cyber Monday and overall Cyber Week orders increased by 48% YoY.
2. Cyber Monday leads in GMV and AOV, while Black Friday continues to lead in orders.
The fifth and final day of Cyber Week takes the crown in total GMV (+64% YoY) and average order value — coming in at a whopping $164 USD this year, compared to $136 in 2019 — and Black Friday holds order share (+45% YoY), but that alone doesn’t convey the entire story. Many of the changing consumer behaviors we saw leading up to the holiday shopping week played into the results.
With global lockdowns in place due to the coronavirus pandemic, holiday gatherings and in-store shopping were limited, and consumers were prepared to tackle Cyber Week 2020 digitally. This means that they also had more time to scout out deals across the five-day shopping period. As a result, less popular shopping days like Super Sunday (+86%) and Thanksgiving (+84%) experienced the most YoY growth in GMV.
In addition, consumers were looking for more than great deals this year. There was increased interest in diversifying their shopping habits by shopping small. Ahead of Cyber Week, Klarna conducted a holiday survey that found 85% of consumers wanted to shop to support the economy. In turn, Small Business Saturday captured the second most YoY growth in orders placed.
1. Sporting Goods take the largest category share of Cyber Week 2020.
A big question leading up to Cyber Week 2020 was how the coronavirus pandemic would impact purchasing decisions. This year Sporting Goods purchases lead the pack and benefitted from 136% GMV growth YoY — and for good reason. With many consumers faced with lockdown measures, there are two options for exercise: engage in outdoor sports or purchase at-home gym equipment.
Other category leaders included Apparel and Accessories (+37% in GMV YoY), Automotive (+51% in GMV YoY), and Health & Beauty (+43% in GMV YoY).
2. Global pandemic continues to impact category performance.
Similar to what we saw this year with the Sporting Goods category, the global pandemic has had a ripple effect across many categories. Most importantly, this year’s Cyber Week purchases not only provide a current snapshot of consumer sentiment around the pandemic, but also how they foresee the near future. Here are two examples of this:
- Despite being down on four of the five shopping days, the Travel category managed to pull through with the most YoY growth on Black Friday (569%), resulting in 49% YoY growth overall — a telling sign consumers are looking forward to traveling again in 2021.
- Both Furniture and Office Supplies categories have significantly grown GMV YoY, following months of stay-at-home orders around the globe.
- More time at home means more time with and caring for pets. The Animal and Pet Supplies category grew immensely this year on Super Sunday by 42%.
While some categories have grown during the pandemic, previously popular Cyber Week categories took a hit, like CBD which was down 28% YoY despite still growing 82% on Small Business Saturday.
Devices and Channels
1. Smartphones continue to grow in overall device share.
For the past few years, we’ve continued to see an increase in mobile commerce and this year is no exception. While desktop still holds a majority share of orders at 49%, smartphones accounted for 43%. Desktop also holds the highest AOV of all devices at $159, compared to smartphones at $121.
Notably, we also see a year-over-year decrease in tablet orders (-18.8%) and sales (-10.25%) despite average order value increasing by 10.5%, reaching $125. This is the second consecutive year of the same trends, after tablets peaked in performance during Cyber Week 2018.
With mobile commerce on the rise, we decided to take a closer look at how smartphone purchases divvy up. This year, our data shows there’s a correlation between mobile devices and overall spend — specifically, mobile shopping on iPhones account for 106% more orders than Android. Plus, orders placed on iPhones showed a stronger AOV of $124, compared to Android at $114.
2. Amazon leads omnichannel purchases; social commerce is on the rise.
Across omnichannel purchases, Amazon remains a leading Cyber Week shopping destination for consumers. According to our data, Facebook saw a 123% increase in GMV and 98% increase in orders YoY, a sign of strength for social commerce in the future ecommerce landscape.
This comes after Facebook launched more social commerce tools like Shops and Checkout on Instagram preceding the holiday shopping season. These results are a positive signal that social commerce is just beginning its rise and serves as an innovative way for consumers of all demographics to shop online.
Based on this year’s results, we also found that Apparel & Accessories and Home & Garden categories performed better on Facebook, whereas Auto, Food & Beverage, Health & Beauty, Sports & Outdoors, and Toys & Games performed better on Amazon.
1. The U.S. remains the leading country for Cyber Week sales.
As an American coined holiday shopping weekend, it’s no surprise that the United States takes the cake for Cyber Week 2020. In fact, it was another record-setting year of Cyber Week with 67% growth in YoY GMV.
The beauty of ecommerce is that consumers can shop with brands outside of their local town. To end the year on a happy note, every state in America grew Cyber Week sales. Here are the states that had the most Cyber Week success*:
- New York
- New Jersey
*This represents Cyber Week sales of businesses based in these states, not where orders originated from.
2. Cyber Week continues to grow globally with Black Friday taking the lead.
Cyber Week success crossed the pond this year as the U.K. grew sales by a smashing 146% year over year — generating more sales than any other country outside of the United States. When looking at Cyber Week trends outside of the United States, we found Black Friday to be the key shopping holiday date.
With an increase in ecommerce sales during the global pandemic, we saw a boost of many countries joining the Cyber Weekend tradition. Here are the top ten countries by GMV:
- United States
- United Kingdom
- New Zealand
- Hong Kong
With Cyber Week 2020 complete, the results are clear: even during a global pandemic, holiday ecommerce sales continue to grow.
But the season isn’t over just yet, and we’re here to support our merchants through the remainder of the holidays and beyond. For last-minute holiday tips and tactics, be sure to check out the BigCommerce 2020 Guide to Holiday Planning.