The Case for Native Checkout
Double your revenue by replacing affiliate links with integrated native checkout
In the final post of our series on the anatomy of native checkout we’ll answer a fundamental question: why should any given product or digital experience go through the process of building and offering a native checkout in the first place? Why not just stick with the trusty old affiliate link?
This brief post will clearly answer that question by outlining the technical, product, and business reasons for pursuing a native checkout solution.
The Benefits of Native Checkout
There are tremendous benefits to native checkout. Large audience platforms (social networks, messaging applications, publishers, etc) are constantly searching for ways to create new features that increase the utility of their product, and ideally that unlock new revenue streams
By offering a seamless checkout experience within the social media platform, customers are more likely to complete their purchase. This reduces the likelihood of cart abandonment, which can be a significant problem for e-commerce businesses. This is perhaps the most impactful benefit for any given channel.
Improved user experience
Native checkout provides a streamlined and easy-to-use experience for customers, which can enhance their overall experience on the social media platform. Fundamentally, it increases the utility of the app for users and this can lead to increased engagement and loyalty.
Native checkout gives social media platforms greater control over the user experience, including the ability to collect data on customer behavior and preferences. This data can be used to improve the platform and enhance the customer experience over time.
By offering a native checkout experience, social media platforms can earn revenue through transaction fees or commissions on sales. This can be a significant source of revenue for platforms that have large e-commerce offerings.
Simplified payment process
Native checkout allows customers to complete their purchase using stored payment information within the social media platform, making the payment process faster and more convenient. This can further increase the likelihood of conversion.
Lower Friction → More Revenue
Native checkout can be a more efficient and direct way to generate revenue than traditional affiliate marketing. Increased conversion and higher user retention can drive those gains.
Let’s compare a given app with 50,000 monthly active users. In this case the platform could either offer native checkout to its users, or use affiliate links. When comparing these two scenarios, the app would stand to make more than two times the revenue with native checkout. Let’s examine those assumptions:
An app offering native checkout will have higher product views as a direct outcome of keeping people inside their experience. If a user decides to buy something and is kept in the app to continue browsing afterward, they will end up spending more time in the experience, and will thus view more products.
Advantage → Native Checkout
Affiliate Click-through-rate (CTR)
The average affiliate click through rate is 2-3%. This is a huge point of friction for the user. Largely because a user knows that clicking on a link will remove them from their current experience. The native checkout flow eliminates this friction.
Advantage → Native Checkout
Add to Cart Rate
The average add-to-cart rate in ecommerce is 15%. We’ve generously doubled that add to cart rate for affiliate links, because that user has already overcome the friction of the affiliate link in the first place. And we’ve reduced it for a native checkout flow, assuming that in at least some experiences, shopping won't be the primary activity for a user.
Advantage → Affiliate Links (kind of)
Average Cart Value
Some affiliates also pay a commission on the total cart value. So in this case, a user may add more products to the cart on the merchant’s site, and the app still gets a commission on those newly added products.
Advantage → Affiliate Links
The average cart conversion rate across the internet is 30%. Because native checkout on 3rd party platforms is a reasonably new phenomenon, we’ll assume only ⅓ the conversion rate for the native checkout solution and knock it down to 10%.
We’ve seen the commission rate for apps that provide native checkout be slightly higher than the same rate for affiliate networks. This is usually due to the fact that merchants and channels have a direct relationship as opposed to being intermediated by an affiliate network
Advantage → Native Checkout.
These differences add up to a massive revenue advantage for apps and other digital platforms that pursue a native checkout strategy in place of traditional affiliate tactics. And of course, this massive advantage begs a very clear question: if Native Checkout is so great, why isn’t everyone doing it?
So Why Isn’t Native Checkout Everywhere, Already?
We’ve outlined numerous advantages for Native Checkout, including the ability to drive more utility, conversion, revenue, and retention. It all may sound too good to be true, and of course, it begs the question: “why is everyone already doing this?”.
The simple answer is that the infrastructure has not really existed to support native checkout for marketing solutions… until now. Read our blog about the challenges of building native checkout, and the way to get to native checkout quickly.