April 29, 2020

With the first quarter of the New Year about to get over, it makes sense for each one of us to consider what our priorities should be for the remainder of 2020. The value of online retailing in Australia is estimated to hit $35.2 billion by 2021. So, firstly, if you are not already involved in e-commerce, you must establish a reasonable presence in the vertical. Secondly, if you are involved in e-commerce, it is highly likely that one of your priorities should be the reduction in your ‘abandonment rate’. While there is some variance by product category, the abandonment rate is currently around 68% in the country.

To be clear, this means that some 68% of all customers, or potential customers, who put goods in the shopping cart of an e-commerce website, do not take the next step. That is, they don’t push the button to make a purchase! If after all the money spent on stocking and maintaining the warehouses and attracting customers to the site, the thing about a fairly substantial number not completing a purchase can be very disheartening for an online retailer.

Of course, some consideration might also be given to those potential purchasers who don’t even put items in the cart. Research suggests that the three primary reasons for a potential customer not even putting the product in the cart are:

  • The product they want is unavailable
  • The product available is not at the right price
  • The delivery timeframe is unacceptable 

Research also shows that Australian e-commerce sites are notorious for not having the product wanted, prices that are all too often less than competitive and slow delivery being more the rule than an exception.

These reasons are perhaps not surprising. What might be surprising, however, are the reasons why so many potential customers put an item in the cart and then fail to make a purchase. Research suggests that in Australia the primary reasons for cart abandonment are:

  • High delivery costs (56%)
  • Inconvenient terms (80%)
  • The need to establish a user account (23%)

High delivery costs are a real issue in Australia. Few retailers work hard enough to minimise the cost of delivery or offer a package that does not involve an additional delivery cost. Research by psychologist Dan Arely found that consumers resent paying for a delivery seeing no utility in it. Indeed, it would seem that they would rather pay more for the product than pay for a delivery, explaining why more and more businesses are increasingly offering free delivery either outright or above the value of a purchase.

Inconvenient delivery terms reflect the Australian retailers’ mindset of structuring arrangements to suit their needs or preferences rather than those of the customer. Consumers want fast delivery, and in most cases, five days is just too long! While Amazon might not be growing in Australia as fast as some had predicted, its growth will continue. The Seattle-headquartered online retail giant’s expansion will be aided by rapid delivery time, which is often the same day in big cities. It must be noted that same-day delivery can be a significant and powerful competitive advantage in the world of e-commerce.

Setting up an account offers the customer no obvious benefit. Again, it is all about the needs of the retailer rather than the customer. I will not open an account to make a purchase, and in most cases where opening an account is suggested, I will not even take the time to see if there is an alternative. It is just too hard. Collecting an email address and following up to suggest opening an account might be a better approach.

Other strategies for reducing cart abandonment rates include:

  • Making it as easy as possible
  • Facilitating communication
  • Enhancing trust

The easier it is to make a purchase, the more likely it is to occur. Complex check out processes will reduce sales. This certainly includes offering a clearly labelled guest check out option. An email facility, or better still, a staffed ‘chat box’ facility enabling customers to ask questions, no matter how silly they might appear at times can be very helpful.

The more a shopper trusts a site, the more likely they are to make a purchase. Factors that can enhance trust include a valid SSL certificate logo and a trusted transaction logo like PayPal. Given the investment in attracting potential purchasers to your website, it is essential to keep the abandonment rate as low as possible. It is certainly advisable to monitor traffic to your websites along with the customer journey through your site and the abandonment rate. This is arguably more important to maximise. Action must also be taken to reduce the impact of the issues discussed above. So long as they remain, you will never maximise conversion rates.

It is interesting to note that worldwide Amazon has been very effective at reducing – though not eliminating – the impact of the issues cited above. This reflects the high-quality data it collects – most of which you too can gather – and the absolute customer focus, in the application of that data.

Therefore, in 2020 prioritise the reduction of abandonment shopping cart rates.

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