Published on August 24, 2013 How to reduce abandoned shopping carts
An abandoned cart occurs when potential customers visit your online store, add items to their cart but do not complete the checkout process. Abandoned shopping carts are a challenge for all store owners but also an opportunity to gain a competitive advantage by addressing these challenges when competitors do not.
There are many points at which a visitor may abandon the shopping process, and many potential reasons. Picking out patterns and trends and trying to understand the thought processes of your customers is a key part of addressing any potential issues with your store and lowering the abandoned cart rate. For example, a user may add items to their shopping cart, then temporarily leave your site to read reviews of the products they have in the cart. For whatever reason they may never make it back to your website to purchase the products. Alternatively, a customer may go all the way through the checkout process and decide that they don’t like the postage price or delivery time or terms of sale and actively leave.
The challenge for store owners is to identify where potential customers are leaving, whether they are actively leaving, passively leaving or were never really shopping, how many of your visitors are legitimate potential buyers, and turn lost sales opportunities into future sales. Addressing the causes of potential abandoned carts is an important part of running an online store and if you plan to do it right from the start, you have an opportunity to edge ahead of your competitors.
How often do customers abandon shopping carts?
The rate of abandoned shopping carts across all ecommerce platforms and websites remains high. This can be seen by looking at Coremetrics/IBM abandoned cart research results for the last six years:
- 2007 – 61.4%
- 2008 – 62.0%
- 2009 – 63.2%
- 2010 – 63.7%
- 2011 – 62.3%
- 2012 – 61.9%
Rates reported in the period 2006-2013 from various studies have ranged between the 55% reported by Forrester in 2010 to 80.3% reported by Rejoiner in 2012. IBM’s results are not yet available for 2013, but one of the most recent studies from SaleCycle shows abandoned cart rates averaging 75%.
Not all abandoned shopping carts are lost sales, so the challenge for a store owner is to reduce the abandonment rate as much as is possible but remaining realistic. Every cart you save is extra revenue without significant additional marketing cost.
Regardless of which figure you use as your measure of the rate of abandoned carts, as a shop owner it’s important to realise that attempting to lower the abandoned cart rate to a near zero figure is something that is highly unlikely to be achieved no matter how good you make your processes, website, brand or products.
Just like in a real shopping mall, not every person in the mall is an active buyer. Some may be new to online shopping just looking around to see what products are available online, some will be thinking about something that they might like to buy in the future, some people may be doing active comparison shopping but are not ready to buy, others will like the products but the price range is not yet right or their budget, and others might be your direct competitors checking out your prices.
What are the potential causes of abandoned carts?
Studies show that some of the main reasons for shopping cart abandonment are:
- Higher than expected shipping or handling costs
- Delivery times or inflexibility in postage policies
- Complexities in the customer registration process
- Concerns over privacy or security
- Lack of trust in the seller
- A checkout process that is too slow
- Missing information about products or brands
Free or Cost effective shipping
Unexpected shipping and handling costs is well recognised as the number one cause of abandoned shopping carts. This is partly because people don’t compare like with like when comparing buying in a bricks and mortar store with buying online. When comparing the cost of buying a product in-store and online, customers do not add in the time or money it takes them to get to and from a store in determining the total cost of the item, but do add in the postage cost of an item into the cost of something purchased online. They expect the total cost of the online product including shipping to be less than the in-store cost of that same product. Unexpected shipping costs or postage and delivery times that are longer than their expectations will result in abandoned carts.
Some things you can do about this include:
- Spread your total shipping costs across all of your products (e.g. have a flat rate shipping cost or flat rate per state so that the low cost items subsidise the expensive ones)
- Offer free shipping across all of your products and absorb the shipping costs yourself or into the price of the products
- Run shipping promotions e.g. free shipping for orders over $100. The extra amounts spent justify you absorbing the shipping cost from your order profits
- Make your shipping costs clear and transparent. Publish them on a shipping page, link to them on checkout and make sure your shopping cart tells customers the cost before they check out. No hidden handling fees, no hidden costs. Make it clear that your shipping prices reflect the cost that you actually pay to send out the items. If you’re using a common postage method like Australia Post or USPS, many buyers will have a very good idea of what the costs to you are (and in many cases Australia Post/USPS will effectively tell the end customer how much you paid by way of label or the value of the stamps on the outside of the package). Overcharging the market rate of postage will not get you return buyers.Note: There was a recent study that suggested that checkout completion rates increase by not publishing shipping costs on checkout. This might be true but if a customer completes a sale and then later discovers that the shipping cost was much greater than what they expected at buying time, then you lose their trust and they won’t come back. This creates a string of abandoned carts in the future that you will never even know about.
- Don’t set and forget your shipping prices – regularly review your shipping prices in relation to your competitors and make any adjustments if necessary. If your competitors run promotions on shipping or change the way they price shipping, then they may start winning customers that would previously have come to you.
Simplify and improve the checkout process
Make it easy for your customers to register to get them through the checkout process. Some options you have are:
- Use Login With Facebook. A large proportion of people world wide already have Facebook accounts, so allowing them to register in your store using that account means that they don’t have to do anything extra in order to buy from you. This lowers the barriers to them buying from you so is a big bonus. Ozcart for example has this feature as standard, so customers can sign up in your store without needing to go through a complex registration process.
- Simplify the number of fields that customers need to complete in order to register – only ask for the information you really need. Once they are already customers you can always encourage them to provide more information in return for other things like eBooks or your store newsletter
- Offer a guest checkout if you can. Registration processes are perceived as too hard by some potential buyers even if the amount of information they need to provide is minimal. Some businesses have reported significant reductions in their abandoned cart rates just by offering this option.
- Use wish lists, gift registries, and automatically saved carts to encourage customers to come back later if they’re not yet ready to buy
- For customers who have bought before, allow reordering of past orders to put the items in to the cart and allow quick check out
- Offer lay-bys which may encourage customers to complete checkout if they can’t afford the full cost of the product as yet
- Lead customers through the checkout process without having to refresh the page. A little variation of having a shopping cart with a one page, step-by-step wizard can be a very effective checkout process as opposed to a step-by-step checkout that has to load multiple pages with every step.
- Offer gift certificates, so customers can buy that if they can’t find the product that they want.
Review your payment and shipping options
You may wish to offer customers choice in the payment and shipping options that you have on checkout. For example, if you are targeting people who regularly buy or sell products on eBay, you might want to offer PayPal as an option so that eBay sellers can use the balances they have in their PayPal accounts to buy from you. If you are a relatively new seller, the buyer protection options offered by PayPal might give customers more confidence in completing your checkout process if this is offered alongside a direct credit card method or bank transfer.
With regards to shipping you might offer free standard shipping or the choice of signature on delivery as an extra option. Or you might offer standard and express shipping, or store pickup if you have a physical store so that people who need your items faster can get the items when they want. What you need to balance is flexibility of choice against the potential to have so much choice it is overwhelming for your customers.
Tell your customers about the security that you have in your site to reassure them about the quality of your business and why they should buy from you. This includes:
- Display trust seals about how customer’s privacy is protected by SSL encryption
- Display trust seals from industry memberships that you belong to
- If there are any relevant third party websites that can verify your identity (like trust-e) then display those
- Display “why you should buy” points
- Display the logos of the brands you sell
- Rotate and move around this content to test if it makes a difference (what is seen first, where on the page is it shown)
- Write easy to understand policies that are clear and prominently displayed
- Make sure your business number is shown in your footer
- Complete your contact details so people can verify that you are a legitimate business
- List your business in industry directories so that others can look you up and verify you are a fair business
- If you have a returns process or any additional guarantees show them clearly
- Ensure your site looks professional. Why should a customer believe in your business if your website looks like you were prepared to spend only 15 minutes working on it?
The 2013 SaleCycle report into abandoned carts across 200 of the world’s biggest online retailers concluded that follow up emails to customers who had entered contact details did have a positive effect on them coming back and completing sales, with the click through rates on abandoned cart emails significantly higher than traditional marketing emails. However, the rate of completion varied by industry, with abandoned cart emails more useful in travel than in home products or fashion.
An interesting conclusion can be drawn from the SaleCycle study methodology. The rate of completions and revenue figures quoted are based purely on the rate of contacting customers, not necessarily offering them anything to check out. Traditional theories on converting abandoned carts into sales are that an abandoned cart contacts need to include some kind of offer to entice customers back to complete their checkout. However if customers repeat purchase or repeat browse from a store, it won’t take long for customers to make the linkage between abandoning their cart and getting a discount. This in turn encourages customers to purposefully abandon their shopping cart in order to get an offer from you. The SaleCycle study validates the fact that you don’t need to necessarily offer customers anything to encourage them to come back. A reminder may be suffice.
Test different offers
What will work to increase conversion rates in one store might not work for another and even two competitive stores in the same industry may find different strategies that work for lowering abandoned cart rates. Actively managing your online business rather than treating it as a business that will “run itself” will be of great help to you in lowering abandoned shopping basket rates.
Try different offers – like running shipping promotions, VIP promotions, showing different trust seals on your site in different places, changing the wording on your forms and home page until you get the mix right. And when you do, make minor changes and monitor how that affects your sales and checkout rates. Monitor what your competitors are doing and have an active marketing and promotions strategy in place for your store.
Abandoned Shopping Cart Conclusions
The bigger your business grows, the more important it will be to rescue abandoned shopping carts. Every cart saved are extra dollars in your pocket with little or no additional marketing cost to acquire them.