What’s ‘lost conversion opportunity’ costing you?

(Source: Brooke Cagle via Unsplash)

A recent independent study commissioned by Shopify suggests that poor checkout experience can cost retailers up to 3.6 per cent of annual GMV. 

It’s been a long road for commerce platform Shopify, in its 10-year pursuit to convert (no pun intended) non-believers of the platform’s suitability in Enterprise retail. After years of successfully onboarding global brands like Heinz and Kylie Cosmetics, and homeground powerhouses like JB Hi-Fi, Shopify’s position as a – if not ‘the’ – serious contender has been confirmed. 

Now, recent studies such as the Forrester Wave report, are further substantiating these claims, revealing a new cost evaluation metric: the ‘lost conversion opportunity’. 

‘Lost conversion opportunity’ is the fourth factor in TCO 

Determining accurate cost comparisons between e-commerce platforms has been a consistent challenge for retailers. Not only do pricing structures differ, but inclusions, add-ons and operational factors muddy the waters further. 

Earlier this year, Shopify commissioned an independent study to compare the Total Cost of Ownership (TCO) across major platforms. The study breaks cost data into four key categories: platform fees and e-commerce technology stack costs; operational, platform servicing and support costs; implementation and setup costs; and opportunity costs of lost conversions. 

The lost conversion opportunity – defined as an ‘additional cost’ because of the value that businesses would otherwise be capturing if they were on an alternative platform – was measured in the study using checkout conversion rates of Salesforce Commerce Cloud, Adobe Magento, BigCommerce, WooCommerce and Shopify Plus. 

The study found that Shopify converts 36 per cent better than Salesforce, 17 per cent better than WooCommerce, 12 per cent better than BigCommerce and 5 per cent better than Magento. 

Assuming a 10 per cent margin for a $100 million GMV brand, this translates to a TCO offset equal to:

  • 3.6 per cent, or $3.6 million annual savings using Shopify instead of Salesforce.
  • 1.7 per cent, or $1.7 million annual savings using Shopify instead of WooCommerce.
  • 1.2 per cent, or $1.2 million annual savings using Shopify instead of BigCommerce.
  • 0.5 per cent, or $500,000 annual savings using Shopify instead of Magento.

Forrester finds Shopify strongest for current offering and future strategy 

Last month, research and advisory firm, Forrester, released its Forrester Wave: Commerce Solutions for B2C for Q2 2024 naming Shopify the strongest platform in terms of current offering and future strategy. 

The study’s researchers evaluated 22 specific areas of the platform’s current offering, ranging from user tracking and improvements to security and pricing, scoring each on a scale of 0 (weak) to 5 (strong). Other areas evaluated included eight factors relating to strategy and two measuring market presence.

An excerpt from the report written by principal analyst, Emily Pfeiffer, said: “Shopify Plus is strong in practitioner UX, as well as cart and checkout. These are long-standing areas of focus for the vendor, and they remain superior.”

She continued: “Reference customers feel the vendor [Shopify] simplifies processes, brings innovation to them, and provides trust and transparency.” 

Brands can migrate successfully before peak period 

With Black Friday and Cyber Monday just over five months away, retailers still have opportunity to capitalise on Shopify’s offering prior to the peak sales period. 

Despite common misconceptions based on previous experiences with legacy platforms, Shopify’s speed to launch allows retailers to completely replatform within three to four months. 

Understanding that migration can be an appealing yet daunting prospect for many retailers, e-commerce design, development and strategy agency The Working Party has released a comprehensive guide that empowers retailers with everything they need to consider before migration – enabling them to approach migration with confidence. 

The seven step process outlines key considerations and provides actionable advice for each. The steps include: evaluate the cost of migration, determine the right time, review your tech stack, streamline legacy operating systems, create a change management plan, prepare your data for migration and elevate brand representation.