What is cart abandonment?

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If recent figures are anything to go by, there are between 12 and 24 million online stores in operation globally. But the question is, where does yours rank in that saturated lineup?

In the digital age, e-commerce businesses need to do everything in their power to streamline the entire customer experience — you can no longer afford to just develop the perfect range of products. The reason being is that nowadays, consumers have far too many options at their fingertips to waste time on a subpar purchasing journey.

But it’s no small feat to design a frictionless customer experience. One of the largest problems you’ll face is incentivising your shoppers to complete their purchase with you over one of your competitors — which proves especially challenging when you’re competing against global marketplaces boasting extensive and loyal user bases.

So, if there’s any cause of friction when prospective customers are using your site, they’re likely to terminate their purchase. Even if they've added goods to their basket, it’s in the critical last steps of the process that cart abandonment takes place — costing you a sale, first of all — but also running the risk of losing a lifetime of customer value.

If you’re seeing shoppers ditch their purchase in the final moments of checkout, you’ve come to the right place. Here’s everything you need to know about abandoned carts and how they could be affecting your e-commerce store.

What is cart abandonment?

Cart abandonment refers to the process of a shopper visiting an e-commerce site, adding an item to their cart, but exiting before they complete the checkout process.

Shopping cart abandonment affects all e-commerce sites and, as a result, has grown into a highly researched phenomenon which digital-first businesses are attempting to address.

The amount of cart abandonment varies a little between sectors and may be higher for example in markets like fashion retail, as shoppers tend to compare prices and shop around between sellers. Levels stay fairly consistent throughout the year, but dip a little in the approach to the holiday season.

There are many reasons that customers may abandon their carts — and chief among them is a complex checkout process. Our data shows that 3 in every 5 shoppers who abandon their carts do so due to a complicated checkout process, characterised by lengthy, time-consuming forms to fill. This is alarmingly common among e-commerce stores, many of which present convoluted checkout flows to customers that stall the buying process.

The reality is, asking customers to provide unnecessary personal details or make an account on your website can lead them to become frustrated with the time and effort required to check out — and ultimately choose to terminate the transaction. As a result, it’s paramount that businesses design a checkout process that streamlines buying rather than stalls it.

However, a complicated checkout process isn’t the only variable to consider. Other common reasons for cart abandonment include:

• Hidden or expensive shipping costs
• Distrust in payment security
• Slow delivery times
• Website performance issues
• Poor mobile optimisation
• Not enough payment options

To help you to understand more about the factors that can influence purchasing behaviour, we’ve written a full guide on why users abandon their carts.

Why is cart abandonment bad for business?

Across the vast majority of retail sectors, consumers are continuing to move their purchasing online. In the UK right now, there are an estimated 60 million e-commerce users — leaving only a small minority of the population yet to go digital.

So, whether your trade is in furniture, fashion, sporting goods or electronics, chances are that you’re trying to encourage online customers into your sales funnel. But even if you have the traffic coming in, many of your leads are indicating their purchasing intent and terminating the process before completion — and this affects your bottom line.

Let’s take a look at some of the ways that cart abandonment is eating into your profits and driving up your expenses.

Revenue loss

The main consequence of cart abandonment for businesses is the direct loss in revenue. Data shows that abandoned carts currently cost global e-commerce brands an eye-watering $18 billion per year in abandoned sales.

This is because when customers abandon their baskets at checkout, businesses lose out on the potential sales that they have invested in up until that point. Producing, marketing and distributing your wares for retail is a costly endeavour — and when customers bow out at the last moment, you lose out on any earnings that you would have secured from their purchase.

For instance, consider an operational cost such as website hosting. When a significant amount of web traffic passes through your store and adds to their cart, you may experience higher levels of demand upon your web resources. However, this is money that you won’t earn back unless a shopper completes their sale. As a result, you’re left with an outgoing payment with no corresponding revenue. This is an example of how cart abandonment directly eats into an e-commerce store’s bottom line.

When you consider that so many customers terminate their sale due to something as easily tweaked as a poorly formatted checkout form, this figure represents a massive loss that could be recovered.

Reduced Return on Advertising Spend

Shopping cart abandonment can also take a significant toll on Return on Advertising Spend (ROAS). There are many entry channels by which visitors will come into your e-commerce store, such as social media or email marketing campaigns. These marketing methods will inevitably incur significant advertising costs, but that spend goes wasted if the guests that you attract to your site navigate away without converting.

This is especially true of paid media campaigns, such as pay-per-click (PPC) advertising. Following the PPC model, businesses are charged based on the total number of click-throughs that their site receives from adverts on social media or within search engines. Once they’ve clicked on an ad, it’s vital that a user performs the desired action on the business’ website — or in the case of e-commerce stores, becomes a paying customer. When customers abandon their carts, however, the business has effectively paid for a click that yields no revenue for the store, wasting the upfront investment made in the ad.

Cart abandonment particularly drives up the spending that a business invests in attracting new leads. Studies put the cost of acquiring new customers at five to seven times higher than holding on to your existing customers, but if new guests entering the site abandon their carts at high rates, businesses have fewer patrons on their books to procure repeat custom from.

Over time, these losses build — and each abandoned cart could represent a lifetime of sales from a customer that you’ve heavily invested in to get to the checkout page.

What is a shopping cart abandonment rate?

Shopping cart abandonment rate is the percentage of online shoppers who add items to their cart but fail to complete their purchase.

It is calculated by dividing the number of completed purchases within a certain window by the number of carts created, subtracting the result from one, and then multiplying by 100.

For example, if you had 500 carts created and 100 completed sales during a week of selling, your shopping cart abandonment rate for that period would be 80% — (100 ÷ 500) x 100 = 80%.

What is a healthy cart abandonment rate?

Studies place the global cart abandonment rate at around 70% across all sectors. This might seem high, and that’s because it is — with the extent of choice, product availability, and ease of access ingrained in e-commerce, abandoned carts are hugely common.

Chances are, you’ll never achieve 0% cart abandonment — there’s no way to ensure that every single user browsing your site will complete the checkout process — but you should certainly aspire to minimise it wherever possible.

What constitutes a healthy cart abandonment rate will depend on your industry, reach, and target customer base. If you go purely by statistics, anything below the average of ~70% could be considered a ‘good’ rate. However, erring closer to the 30% mark would be considered exceptional, as a threshold that few sectors are able to achieve.

How can you reduce your cart abandonment rate?

Shopping cart abandonment is a complex problem, but there are a number of catch-all methods that we recommend to help trim your abandonment rate. These include:

• Streamlining the checkout process
• Providing free shipping
• Promoting your returns policy
• Designing a trustworthy website
• Optimising site performance
• Offering several payment options

Reduce cart abandonment with Simpler

A complicated checkout process is one of the single largest reasons that customers abandon their cart at checkout. If the process to complete the purchase is too long or requires excessive forms to be filled by the customer, they’re more likely to become frustrated, delay, or look elsewhere to make their purchase.

As a result, each additional step that a prospective customer is required to take increases the likelihood that they will abandon their cart. Our data shows that the average checkout requires an astonishing 22 distinct steps to be completed by the customer.

Simpler solves this problem. Using our dedicated platform, shoppers can checkout their carts in seconds — streamlining the purchasing process and making it all the more enticing to shop with your business. We do this by providing a one-click checkout form for your shoppers, supporting all major payment options and bringing together their preferred shopping methods and stored addresses.

With our platform, supported merchants see fewer instances of cart abandonment and an average of 35% more conversions, turning casual browsers into loyal customers.

This way, the customer journey is a straightforward one — leading straight to purchase. To find out more about how we could boost your e-commerce sales, get to know Simpler today.

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