Online entrepreneurship is not an easy journey. While it’s relatively easy to open an online shop and sell digital goods, products, or services, there is still a wide array of challenges business owners face.
One of the most daunting and, arguably, frustrating challenges online business owners face is cart abandonment. This is when a potential customer has added items to their online shopping carts but later decided not to push through with their purchase.
When this happens, entrepreneurs are often left hanging and asking what could have possibly gone wrong for a customer to abandon their cart.
To discuss this topic further, let’s dive deeper into the prevalent ecommerce issue of customer cart abandonment. We’ll discuss the different reasons why customers don’t push through a transaction and provide some strategies to prevent this from happening.
An Overview Of Cart Abandonment In Ecommerce
Before anything else, it is essential to have a good understanding of what cart abandonment is and its status in the ecommerce industry. Cart abandonment refers to the phenomenon when quality leads have added items to their online shopping carts but later decide not to continue and finish the transaction.
These instances are specifically important in ecommerce as they can be used as a performance metric gauging the business’s sales and marketing efforts. Furthermore, neglecting this aspect of online entrepreneurship can lead to a decrease in sales and loss of revenue.
According to the latest reports, the average rate of cart abandonment in ecommerce is roughly 70%. However, this number changes significantly depending on the device used. Studies show that cart abandonment rates for desktop, tablet, and mobile phone transactions are 73%, 81%, and 86%, respectively.
The Dangers of Cart Abandonment
Based on the latest statistics, there is a significant number of online transactions that are being abandoned. But what exactly are the effects of these missed sales?
Abandoned shopping carts lead to a loss of sales and revenue. But aside from that, businesses deal with more risks and dangers when they neglect online cart abandonment. With that in mind, here are some of the common challenges and implications of abandoned shopping carts in ecommerce to give you a better idea.
Decrease in Customer Lifetime Value
The customer lifetime value is a key performance metric that measures and calculates the potential profits a business can generate from a particular customer over the course of their relationship with the business.
This helps entrepreneurs understand and gauge the effectiveness of their sales and marketing efforts and even pinpoint points for improvement. Aside from that, the customer lifetime value also tells entrepreneurs which customers to focus on higher value customers to maximize their potential as a constant source of revenue.
Considering this, an abandoned shopping cart in ecommerce leads to the loss of a potential customer and, thus, the loss of future purchases that could’ve been worth a significant amount. When multiplied by the number of abandoned shopping carts, such circumstances can really affect the flow of income and revenue of an online business.
Costly Customer Acquisition Efforts
Marketing is arguably a business’s bread and butter. It is the primary tool used to reach, find, and bring in customers. Considering this, it is highly likely that ecommerce businesses allocate a significant portion of their budgets to their marketing campaigns to boost brand awareness, increase online visibility, and retain customers.
However, there is still a gap between effective marketing and actual sales. While it is possible for people to know about your brand, products, or services, that doesn’t immediately translate to sales and revenue.
The challenge comes when a potential customer is successfully led through the marketing funnel but still does not complete their transaction. These missed opportunities mean that the business has already spent a considerable amount to target and nurture customers but still did not lead to a successful sale due to cart abandonment.
This can be harmful to a business when they see success in their marketing efforts through higher ad clicks and increased traffic but fail to recognize that these don’t end up in purchases. The tendency is that entrepreneurs will continue allocating funds to their marketing campaigns, driving up customer acquisition costs.
Inventory Challenges
One of the most common risks of online cart abandonment revolves around the shop’s ability to carry stocks and manage inventory. When online businesses are having difficulty selling, there wouldn’t be enough space to take in new products. Aside from that, some entrepreneurs struggle with inventory space, and the inability to sell can put pressure on the need for a larger storage or warehouse.
Another potential danger of cart abandonment involves product availability issues. A common process in ecommerce is that when an item is added to a cart, it is basically reserved and would not be available to other customers.
So when you have a considerable amount of customers with abandoned carts, you would also have a number of products unavailable for purchase for customers who are ready to buy from your shop.
Reasons For Cart Abandonment
Now that you have a better understanding of cart abandonment and its implications for ecommerce businesses, let’s dive into the reasons why customers abandon their carts when shopping online.
Customer Purchasing Behavior
Competition is a significant factor in customer purchasing behavior. One of the primary reasons customers abandon their shopping carts is that they are able to find a cheaper alternative.
Whether it is a price difference or a cheaper delivery fee, customers are likely to leave their carts if they are simply not ready to commit to their purchase. In line with this, a lack of urgency also allows customers to conveniently leave their shopping carts without completely checking out.
Hidden Fees and Additional Charges
Have you ever tried shopping online and noticed that your transaction costs a lot more than you expected? When this happens, the most common course of action is to back out and leave your shopping cart without completing the checkout process, as you are blindsided by the additional charges included in your purchase.
Unfortunately, this happens quite commonly in the ecommerce industry. Customers spend time browsing through the ecommerce website, looking for steals and discounts, but are later surprised by the high shipping costs and other processing fees. This forces them to abandon their shopping carts, knowing that they are not ready to pay significantly more for their online transactions.
Poor User Interface and User Experience Design
Shopping online is supposed to be easily accessible and convenient. But what happens when your experience turns into something so complicated and troublesome? Another reason why customers abandon their carts while shopping online is because they do not have a good and hassle-free online shopping experience.
Some ecommerce websites make the critical mistake of making their checkout processes lengthy, complicated, and tedious in the name of safety and security. They ask for numerous identification checks, require form fill-outs and the like. However, having too many steps just to purchase an item online can frustrate customers and force them to leave without completing their purchase.
Another factor involved in poor customer experience revolves around UI and UX design. Ecommerce websites that are slow and cluttered can cause customers to lose their trust and patience in the reliability and validity of the online shop. A high level of discomfort and unease can push customers away from purchasing products or services, regardless of how much they want or need them.
Proven Strategies To Prevent Cart Abandonment in Ecommerce
Neglecting cart abandonment issues can be detrimental to an ecommerce business. Not only does it cause losses in revenue, but it can also lead to poor resource management and allocation.
Considering this, it is essential for online businesses to find ways to fix and prevent cart abandonment. With that in mind, here are some of the tried and tested strategies and solutions to reduce cart abandonment rates.
Streamline checkout processes
Shopping online is supposed to be easy and convenient. Thus, it is important for ecommerce websites to have a smooth and hassle-free checkout process to keep customers and provide them with a trouble-free experience.
First, avoid any unnecessary steps during checkout. The ideal flow for ecommerce checkout starts with adding the desired item or items into the shopping cart and then asking for the customer’s billing and shipping information. Once this is settled, the next step would be to provide them with the applicable or available shipping methods based on their order and location.
Before finalizing the order and proceeding to the payment process, provide your customer with a brief and succinct order summary, which includes all fees and charges, such as the delivery fees and taxes. Encourage your customers to review their orders before moving forward to the final step of paying for their purchase.
One way to streamline this process is to minimize the customer’s effort in filling out their information. Provide an option to automatically replicate their answers, such as if the billing details are the same as their shipping information. You can also use drop-down menus and other input formats to lessen the burden of typing longer responses.
Aside from that, refrain from requiring unnecessary or unrelated information during the checkout process, such as the customer’s age, gender, date of birth, and the like. While this information can help your business’s database, asking too many questions can turn customers away.
Offer transparent pricing and fees
One of the biggest mistakes an ecommerce website can make when it comes to UI and UX design is hiding fees and surprising customers at checkout. Not only will this prevent customers from planning their purchases within their budget, but it can also turn away customers who are intent and eager to buy.
Research even supports that 48% of online shoppers intent to purchase online abandon their shopping carts because of unexpected and excessive fees added on top of their purchase. To prevent this from happening, online businesses need to be more transparent with the charges included in their supposed purchase.
Provide customers with a preview of their orders while shopping online, including possible fees and charges, without having to reach the latter end of the checkout process.
Create a sense of urgency
An effective way to encourage customers to complete their orders as soon as possible is to offer time-sensitive discounts or limited promos. Some of the strategies online businesses use include free shipping vouchers, discounts on first-time purchases, and seasonal sales. Doing this creates a sense of urgency and pushes customers to complete their purchases, afraid to miss out on a big sale.
Bottomline
The ecommerce industry is extremely competitive. Considering this, online retailers need to value all potential customers and strive to lead them to a purchase.
Abandoned shopping carts can be a frustrating event. Regardless, it is up to entrepreneurs to find ways to prevent this from happening – from providing a better user experience to creating a sense of urgency to encourage customers to check out immediately.
Want to know more strategies to boost the revenue of your ecommerce business? Sidekicks is an on-demand virtual company, and we’re eager to help visionaries and entrepreneurs like you. Get a free ebook and learn more about how we can help you by signing up for our newsletter. We also offer a free 30-minute consultation if you prefer something more personal.
