What is Online Shopping Cart Abandonment and How It Affects Small Businesses?

Even if you had the best small business idea ever, you’re not safe from this annoying phenomenon. To understand how to improve conversion on retail sites, we must first explain what it means to abandon a digital cart or a basket. Why do people do this, and how does it reflect on even the most successful small business? Let’s dive into this subject and show you how to boost customer numbers and earn more money.

What Is Online Shopping Cart Abandonment?

A shopping cart on a retailer’s site is software that conducts a purchase of a service or a product, leading it to the payment gateway. The software accepts customer’s information and works as a mediator for a purchase that happens thanks to a third-party payment processor. Digital carts are an essential part of eCommerce businesses – they don’t only lead your customer to checkout but also store countless valuable information.

Still, even if your site is perfect and everything is done to ensure a great customer experience, abandoned carts are going to happen often. Let’s be honest – we have all filled up a cart with nice things we really want to buy and gave up on the whole thing at least once. The definition of digital cart abandonment is when a potential customer starts the checkout process but doesn’t finish it. This poses a great problem for retailers because it costs them a lot – abandoned baskets are literally bleeding money from eCommerce sites.

Rates of Giving Up on a Purchase and the Factors That Affect Them

You wouldn’t believe how many people don’t finish their shopping after putting items in the digital basket. According to Baymard Institute, almost 70% of all carts end up abandoned somewhere along the way. These purchases that never happened cost eCommerce brands worldwide somewhere around 18 billion dollars. Now imagine how much you would earn if you could lower this rate even slightly! Still, it’s important to mention that a few factors play a crucial role in abandoning products before buying them, including:

• The device – 70% of users on a desktop will give up on their purchases. For mobile devices, the rate is 85%, and for tablets, it’s 80%.
• The location – Geography also plays a role in these rates. For example, 86% of Spanish baskets end up abandoned, compared to 65% in the Netherlands.
• The item – Different types of businesses have drastically different abandonment rates. The highest rates are among clothing such as lingerie, leather goods, and knitwear.
• The time of the year – People shop the most around holidays and Black Friday, so it’s safe to say that they will also be abandoning their baskets the most around these times of the year.

Covid-19 Had a Significant Effect on Abandoning Digital Carts – Here’s How

When the pandemic hit, people had no other choice but to turn to online options for purchasing. No more walking from store to store – it was the perfect time for eCommerce businesses. Indeed, online sales rose by 32% in 2020, compared to 2019. Naturally, we saw the spike in digital basket abandoning as well – these two things are tied together.

A lot of people simply browsed the websites out of boredom – too much free time during lockdown was hard on all of us. Now, the question is – will this increase in online purchasing stay as the pandemic fades away? A lot of data supports that prediction – people got used to the experience of an online purchase, and they will continue to use retail sites in high numbers.

Why Do People Abandon Their Carts at Checkout?

If you understand the reasons behind the practice of abandoning shoppers often have, you can do something about it and avoid the common mistakes retail owners make. So, it’s best to learn about the psychology behind the issue and use the information you’ve uncovered to plan the tactics to fight this. We’ve gathered the most common reasons for giving up on a purchase – here’s why people do this.

Giving Up on Online Purchases at Checkout Can Be Due to Financial Reasons

Window shopping is one of the main reasons to abandon a digital basket. Shoppers either do it out of boredom or just to visualize things they want to get in the future but can’t afford right now. Instead of bothering to dispute credit card charges later, they just skip the entire buying experience. Some browse the site to plan future purchases and will come back later. In the case of window shoppers, it’s not highly likely that these people will return to your site and buy things they previously browsed. However, there is a significant number of shoppers who are in the middle of the comparison process. They really plan to buy something, but first want to do their homework and compare a few websites with similar products and find the thing that works best for them.

Another issue tied to finances that holds shoppers back is the unexpectedly high shipping cost. Hidden costs such as taxes are also a similar reason – research shows that people tend to get irritated and annoyed when they realize there will be unplanned additional costs. It leads them to lose confidence in the website in question or regret previous purchases.

Lastly, the lack of coupon codes can impact the abandoning of the digital basket. Your customers will instead decide to wait until the code becomes available or look for a better deal elsewhere. Keep in mind this as well – if the coupon code search bar is located near your checkout, customers may feel like they’re missing out on a better deal – they will be tempted to look for similar products elsewhere.

Your Site and Its Logistics Can Drive Customers Away – Here Are the Main Reasons

Many aspects of your website can increase or decrease the probability of giving up before buying an item. The good news is that you can change the things in the purchasing process that users dislike, thus increasing your conversion rates. Here’s what irritates people and causes them to quit purchasing in the middle of the process:

• Asking shoppers to create an account before buying items,
• Concerns about credit card fraud,
• Long or confusing checkout process,
• Lack of express shipping,
• Inability to see the end price before buying,
• Website errors,
• Taking a long time to load the page,
• Issues with the return policy,
• Lack of customer support.

Why Is Shopping Cart Abandonment a Problem for Retailers?

Obviously, this issue costs retailers a lot of money – this is the main reason why they hate when people abandon carts. However, direct loss of revenue isn’t the only problem your dropshipping business will face. Leaving digital baskets behind before typing in the information and processing credit card payments can also cause loads of negative effects that will indirectly cost you money.

Negative Effects Of Online Shopping Cart Abandonment for a Small Business

So, what happens if you have high rates of abandoned baskets? This issue will affect all spheres of your business, from website speed to inventory management. Let’s talk about the most typical negative effects of abandoning carts – here they are:

• Losing customer lifetime value – This term is coined to express one of the most important metrics that online businesses should follow. It’s basically the profit margin you can expect to earn from one customer throughout their entire relationship with your brand. So, the point is that when you lose a basket, you don’t only lose the value of that order – you’ll be losing their possible future purchases. Recovering even a single digital basket can earn you thousands in the long run.
• Inventory management issues – If people add countless items in the basket but don’t actually buy them, these products are essentially reserved – they become unavailable for real customers. This results in a massive loss of revenue for business owners.
• Skewed website data and lower speed – When it comes to website traffic, there can definitely be too much of a good thing. Bot traffic can cause significant issues, not only because abandoning carts impacts your inventory but also because it will slow down website speed. This is extremely annoying to anyone who considers buying from you – every additional second your page needs to load causes a 4.5% drop in conversion rate. Bots will also mess up everything about your analytics, leading you to create business strategies based on inaccurate data.
• Ads that target the wrong users – When a user adds something to the basket, cookies will note that, which will affect your ad targeting. Ad platforms will recognize this as engagements and then deliver ads to similar audiences – the users that won’t increase your conversions. As a result, you’ll be losing money on ads that don’t work.

How to Reduce the High Rate of Abandoned Carts If You Have a Small Ecommerce Business?

When you finally understand what drives buyers away from your website, you can do something about it. Improving conversion rates can be done with many different strategies, depending on the cause of the issue. When you form a hypothesis, you can test possible strategies with A/B testing and see if they are the solution. Meanwhile, here are some essential tips for optimizing your website that can improve conversion rates:

• Use a trustworthy eCommerce platform and a reputable credit card processing company,
• Offer alternative payment options,
• Always be transparent about your costs, shipping, or any additional transaction fees,
• Offer free shipping (or at least discounted),
• Show users your return policy somewhere during checkout,
• Improve your checkout design and flow – consider one-click checkout,
• Add live chat support option to your website,
• Include progress indicator on the checkout page,
• Reassure buyers that their data is safe – display security icons such as PCI compliant.

Start Implementing Shopping Cart Recovery Strategies

Even if you implement the best strategies and do everything by the book, you can’t make your conversion rate 100% – some users will still leave your website without buying anything. This is where recovery tactics come to the scene – you want to try and catch the user after they have left your website. How do you do this?

The most popular tactic is sending an abandonment email – if the user has entered their email during the checkout. You can send them a coupon code, for example – this is an efficient way to get the user back to your digital store. Another option is ad retargeting. This means you’ll put an ad pixel on the checkout page so that you can remarket to the user on ad platforms such as Google or Facebook. There are many other ways to get users to return to you. If you want to learn more about these strategies, check out the video below.

Every Small Business Will Benefit From Quality Merchant Services – Reach Out to Us for the Best Ones

There’s no credit card vs. cash debate when it comes to digital stores – credit card processing is unavoidable. But how do you make sure you have the best service? When you own a small online business, improvement is a continuous thing. The key elements that will make your digital store blossom are merchant services – credit card processing services are something you can hardly work without, that much is evident. If you haven’t applied for a merchant account yet, now is the right moment to do so. Reach out to Merchant Chimp for assistance – we are one of the top-rated credit card processing companies.