2Checkout – formerly Avangate- released its Q1 2018 benchmark report on Digital Commerce Trends in Software & Online Services Sales, and it is good news for the subscription-based model.
The report shows that subscription-based purchases maintain a strong upward trend. Similar to previous years, consumers and businesses continue to prioritise security product purchases.
The company’s Digital Commerce Benchmark follows trends in the global consumption of software and digital services, as reflected by purchases via 2Checkout’s Avangate digital monetisation platform, highlighting fast-growing regions and categories as well as uncovering the most popular payment methods worldwide.
The “overwhelming” shift to subscription commerce is even more evident when comparing data over time. In 2012, only about half (49 percent) of software sales were for subscription-based products and services, while a substantial 76 percent of sales in Q1 2018 have been for recurring-based purchases. The share of subscription-based products has been increasing steadily over the years, with 2017 witnessing a 75 percent level.
The global average order value (AOV) for software, SaaS and online services in the first quarter of 2018 is $50, a slight increase from $48 the previous year.
Visa and MasterCard continue to dominate regarding payment methods, accounting for 68 percent of global online sales, followed by PayPal at 19 percent and American Express at seven percent. This split emerges almost unchanged from the previous years, at a global level and mirrored closely by the United States, the largest software market.
Other countries show stronger preferences for local payment methods such as iDEAL in the Netherlands (43 percent), Alipay in China (42 percent), local credit cards in Brazil (28 percent) and Turkey (17 percent), Carte Bancaire in France (at 12 percent) and JCB and Konbini in Japan (with 19.5 and five percent, respectively).
Security and privacy products are the leading category in software products sold online, accounting for 38 percent of online sales. This represents a four-percentage-point increase compared to 2017 data. Multimedia and design software (including audio-visual tools) follows at 21 percent, and online services, including business and finance, follow at 20 percent. Other categories tracked in the report include utilities, marketing tools, web tools, office tools and development tools.
The United States continues to lead in global sales of software, SaaS and online services, accounting for half of the sales worldwide, followed distantly by the UK and France. Germany claims the fourth spot, closely followed by Canada, similar to the 2017 ranking. Non-English-speaking countries account for a bit over 20 percent of global software sales, on par with 2017 data.
Continuing to show strength as an additional sales and marketing channel for the software industry, affiliate-generated sales account for 24 percent of revenue for companies connected to 2Checkout’s Avangate affiliate network and actively using it, with promotions touching 33 percent of revenues, cross-selling 5.5 percent and upselling seven percent. Compared to 2017, promotions are used more intensively, showing this classic marketing tool still yields results.
Erich Litch, 2Checkout’s Chief Revenue Officer, said this company had been tracking these digital commerce benchmarks for years now and it’s interesting to notice clear trends – such as the proliferation of subscriptions, the continued preference for local payments in many parts of the world, and the most sought-after software products and online services.
“As companies continue to expand into international markets, they need to be prepared to sell in the ways their end-customers want to buy, support a broad range of payment methods and business models, and sell through multiple channels and touchpoints to deliver exceptional user experiences. Understanding trends and buyer preferences is an important step in this direction”, he said.
