As early as February 2021, industry analysts predicted the year’s holiday ecommerce sales would climb to $206.88 billion, accounting for a record 18.9% of all holiday retail revenue and representing an 11.3% increase over last year’s ecommerce earnings. These numbers fall right in line with the overall surge in ecommerce spending we’ve witnessed over the last 18 months. This past August, McKinsey reported the ecommerce industry has seen more than 40% growth during the past year, while brick-and-mortar spending has stayed relatively consistent.
The exponential growth happening across the ecommerce landscape translates to major gains for online retail brands. To remain competitive — and capture as many online dollars as possible — retailers are prioritizing the customer experience and refining the purchasing journey, improving mobile and app capabilities, adding BOPIS (buy online, pick up in-store) and curbside delivery options, enhancing product page listings and more.
But the one move that could significantly improve online sales, while simultaneously delivering a more seamless user experience, is rarely considered by ecommerce brands: Eliminating the traditional password experience.
Traditional Passwords are Ruining the Customer Experience
We’ve all been there, trying to log in to a retail website to purchase that last-minute gift or buy a concert ticket only to forget our password, or find out we’ve entered the wrong one. Traditional password systems deliver a grueling customer experience that often ends in frustration. Not only do consumers have to remember multiple logins for every ecommerce website they use, a nearly impossible task when you consider consumers shop on multiple websites every week — they must undergo an utterly maddening series of steps when a password has been forgotten, either answering knowledge-based questions or entering one-time codes sent via text messages and emails.
It’s a lose-lose scenario: Customers are left completely frustrated by the process and brands put their reputations on the line every time a customer leaves their website because of a poor user experience. Transmit Security’s own research found that 55% of consumers have left a website because the login process was too complicated. Even worse, more than 87% of customers confirm they have been locked out of an online account due to too many failed login attempts.
The reality is that traditional passwords are creating insurmountable obstacles that diminish the customer experience and damage brand reputation. Industry studies report nearly 90% of consumers are less likely to return to a website after a poor user experience. Verizon’s 2020 Data Breach Investigations Report revealed that 80% of hacking-related website breaches were linked to passwords.
Customers want a streamlined purchasing process that moves them from product discovery to clicking the buy button as efficiently as possible. Ecommerce teams want the same thing for their customers, but are failing to realize the impact their website’s password system has on the overall customer experience.
The Real Cost of Passwords
Not only are passwords leaving customers frustrated, they are having a major impact on business outcomes, costing retailers millions of dollars in online sales: 50% of the consumers surveyed by Transmit Security said they have abandoned an online purchase because they could not remember their password. Of the 1,000 consumers surveyed by FIDO (the Fast Identity Online Alliance), 58% said they had abandoned an online purchase due to the difficulty of managing passwords.
According to FIDO Executive Director Andrew Shikiar, outdated login processes are introducing friction into a customer experience that consumers expect to be as smooth as possible.
“While historically there has been little that merchants can do other than to be frustrated at password-related losses, that is no longer the case — and retailers need to look for new solutions to removing needless friction from online transactions, or run the risk of losing customers to the competition,” said Shikiar in a release announcing the organization’s research.
Passwords are costing businesses more than just lost sales. Data from Gartner shows that up to 40% of service desk call volume is to resolve password reset requests. These findings are staggering when you consider the amount of revenue currently moving through the ecommerce landscape. What’s even more chilling is that many online retailers are losing sales — and having to spend time and effort on customer support calls concerning password issues — without ever realizing the extent of damage being caused by poor password experiences.
The Solution: On-Device Authentication
Customers want a world without passwords. Ecommerce brands need to ensure safe purchasing processes that protect both the consumer and their systems. The answer: on-device authentication. By leveraging secure authentication hardware embedded in endpoint devices such as fingerprint or face readers as well as strong device identification, ecommerce brands can deliver a seamless, passwordless user experience equipped with elevated levels of security. This experience should start by registering to the service without a password and then authenticating from any device at any time with just a click or a glance.
A world without passwords may feel like a faraway future, but the technology is ready and a growing number of ecommerce brands are in the process of removing passwords altogether from the customer experience. A 2020 report published by MasterCard found that biometric authentication transactions will account for $2 trillion in mobile shopping and banking services by 2023, up from the $124 billion worth of transactions that happened in 2018.
Best of all, consumers are more ready than ever to adopt on-device authentication methods. According to FIDO’s research, 68% of consumers would prefer to use fingerprint or face recognition rather than traditional two-factor authentication methods, and 60% of consumers said they believe retailers implementing on-device authentication methods cared more about the customer experience.
Eventually, consumer demand will drive all websites to adopt more user-friendly login processes. The ecommerce brands that are able to embrace on-device authentication security systems will be ahead of the game, providing a vastly improved user experience and more secured platforms. These are the brands that will most likely win the lion’s share of the $208 billion dollars we’re expected to see this holiday season, as well as future online sales revenue in the years to come.
Mickey Boodaei is the CEO and Co-Founder of Transmit Security. As a pioneer and serial entrepreneur with over 25 years of experience he has co-founded leading cyber companies such as Imperva (IMPV) and Trusteer (acquired by IBM in 2013).