The Checkout Difference - Shopping vs. Commerce
The Anatomy of Native Checkout
This is the first of a four part series we’ll be publishing on the anatomy of native checkout. In this series, we’ll clarify and answer key questions about creating scalable native checkout in any digital experience. We’ll answer four key questions (and provide a bunch of useful frameworks and examples along the way):
What are the different checkout approaches, generally?
Why pursue native checkout in your digital experience?
If native checkout is so great, why isn’t everyone already doing it?
What is the optimal way to architect a native checkout solution?
For now, we’re going to start with the first question: What are the most common architectures and user experiences for checkout today? Before we dive into that question, it’s important to quickly address why checkout matters so much. In short, checkout is the defining characteristic of commerce.
Checkout: The difference between Shopping and Commerce
“I feel like everywhere I go I hear someone talking about checkout this, checkout that. Seamless checkout. One-click checkout. Headless checkout. Behind-the-back checkout. No-look checkout. Native checkout.” - Brandon Schulz, Violet Co-Founder & CEO
Over the last 5+ years, there has been a steady march toward increasing the surface area for “commerce” in digital experiences. The explosion of the creator economy, new platforms, and the search for new revenue streams have helped drive the expansion. But, when people talk about these new commerce experiences (e.g. social commerce) they are often speaking different languages. Terms like shopping, buying, cart, and checkout all seem simple at first glance, but they are all used to mean very different things.
Most of the time when people are talking about these new “commerce” experiences, they aren’t talking about commerce at all. Commerce is defined as the exchange of money for goods and services. That means to conduct real commerce, people need to be able to actually complete a transaction. The simple act of looking at a product, or being sent somewhere else to buy something does not mean that a given platform is actually doing commerce!
For the purposes of defining terms, we’ll identify three types of behaviors: Browsing, Shopping and Checkout. Browsing is the act of looking at and/or evaluating products. Shopping is the act of reviewing product details and making the purchase decision (adding to a cart). And Checkout is the act of actually purchasing the product.
Importantly, checkout is the only step where actual commerce happens. It’s also the step where many digital experiences fail to close the loop, instead relying on external experiences.
To illustrate this, let’s first look at the most basic type of shopping journey:
The Traditional Buying Experience (IRL)
Let’s say a shopper is going to the grocery store to buy milk. In that scenario, they:
Enter a physical store
View a product on the shelf
Place that product in their cart
Go to the register to checkout
Select a payment method and pay
Take the goods and leave the store.
If we were going to reflect that journey in an architecture diagram it would look something like the following:
This is a very straightforward experience and importantly, it relies on two primary systems to function. The first system is in store infrastructure (shelves to hold products, carts to collect them, etc). The second system is the in-store software used to facilitate the checkout process, including the register and point of sale system. In general the inventory is blatantly apparent to a shopper because products are either on the shelf or missing.
In the physical world, checkout is a line we stand in. In this line, the retailer needs to know the ID of the product the shopper wants to purchase. Each item has a unique ID, price, and could be subject to discounts, etc. Further, each time that ID is swiped and purchased, the inventory is automatically decreased by 1. This all happens at the register or self checkout kiosk.
Now let’s look at the basic buying experience in ecommerce:
The Ecommerce Buying Experience
Let’s say a shopper is going to purchase a new pair of headphones from a website. In that scenario they:
Visit the website
View the product - in ecommerce this is called a product detail page (PDP)
The shopper may select any product variation, like color or size
Add the selected product to a virtual cart by clicking “add to cart”
Once they have done this for all products they click “Checkout”
Review the contents of the cart
Enter or select a shipping address
Enter or select a billing address
Enter or select a payment method
Complete the purchase by clicking “Submit payment” or something similar
Leave the site.
In this case, the merchant’s ecommerce platform is the primary infrastructure that handles all of this transaction. A payment gateway is also involved. This gateway acts as an intermediary between the merchant and the customer's payment method, such as a credit card, debit card, or digital wallet, to process and authorize the payment.
Because the shopper is purchasing the product from the website where they initially viewed it, by definition, this would be considered Native Checkout. The browsing, shopping, and purchase experience occur in the same location or within the same property.
Now let’s look at an example that is becoming more and more common today, one in which a shopper discovers the product inside of a social network.
The Social Browsing Experience (Product Pages)
Importantly, while we are using a social network as an example here, this could be any digital experience: a review site, a gifting platform, a live streaming environment, the metaverse, or anywhere else that a shopper discovers products.
Let’s say a user is scrolling through a feed in a given social network and they see a product (or even an ad with a product) that they think looks interesting. If they want to purchase that product they’ll go through the following steps:
Scroll through the feed and click on a product
View a product detail page
Click a “buy” or “checkout” button
Leave the application
Redirect to a merchant site to purchase the product.
Complete all of the checkout steps on the merchant’s site.
Add to cart
Shipping address / billing address
Payment method
Confirm purchase
Despite what others may call this, the experience outlined above is not a social commerce experience. Instead, it is a clear example of social media marketing and affiliate marketing. The social network is used to market a product or service and then sends high-purchase-intent traffic off site to complete the purchase. It’s worth mentioning here that the average clickthrough rate (CTR) for an affiliate link is 2%, so some 98% of users don’t actually even make it to the “add-to-cart” stage in this scenario.
Most importantly, though, any user who has decided to click the link and make the purchase has now left the social media experience, reducing the chance that they will see other ads inside that experience and/or click other affiliate links to purchase other products.
The Social Shopping Experience (Native Cart)
Some emerging channels (social media, publishers, gifting platforms, curation/review sites, etc) go one step further by allowing a shopper to add items to a “cart” or “basket” while on their site. This extra step is, however, somewhat trivial. The experience for a shopper is as follows:
Scroll through the feed and click on a product
View a product detail page
Click “add to cart” and continue browsing
View more product(s) and add it/them to cart
Click one link to go to one merchant
Leave the application
Redirect to a merchant site to purchase the product
Complete all of the checkout steps on the merchant’s site
Add-to-cart (again, social cart is not integrated with the merchant cart)
Select shipping address
Select billing address
Payment method
Submit payment
Return to the application. Maybe. (Only if the user decides to do so on their own accord)
Repeat steps 5-8 for each product in a “cart.”
This experience reveals one of the greatest shortcomings of affiliate links and affiliate marketing strategies in general: the inability to do multi-merchant checkout. It shifts the burden to the shopper to click multiple links and checkout multiple times for the products in a single “cart” on the social media network… This highlights the fact that these carts are not carts at all, but rather just collections of links.
Some emerging channels try to steer around this by offering a native checkout front end experience, but actually use manual labor (e.g. mechanical turk) to re-order these products via affiliate link on the back end.
There has to be a better way, right? Yes:
The Social Commerce Experience (Native Checkout)
Native checkout means that the shopper discovers the product and completes their purchase natively in the same environment. They don’t leave and go to the merchant experience. This scenario on a social media product would have the user complete all the following steps inside the app or website:
Scroll through the feed and click on a product
View a product detail page
Click “add to cart” and continue browsing
View more product(s) and add them to cart
Complete a checkout inside the app including:
Enter or select a shipping address
Enter or select a billing address
Enter or select a payment method
Complete your purchase
The user returns to the core media consumption experience inside the app.
The most important part to recognize about this experience is that there are tremendous benefits to driving native checkout for the app or site with a large audience. In this scenario, the social media product both adds utility for the user by reducing the friction associated with purchase and returns them to the core experience post purchase so that the session is not ended and they can continue to browse. They also send the merchant orders, in effect extending the merchant’s ecommerce presence into a popular content consumption channel.
Summary
For these and other reasons, native checkout is rapidly becoming the north star for audience platforms. But there are big questions when it comes to architecting this solution. While the social media product relies on its own systems to serve relevant content to its users, it must, at least to some extent, rely on external services to facilitate an accurate checkout process natively inside its experience. We’ll cover the different approaches to (and tradeoffs of) powering that checkout process in an upcoming blog.
