Online shopping cart abandonment — when shoppers put items in their online shopping carts but then leave a website or app before completing the purchase — is the bane of the e-commerce retail industry. But it's also a huge opportunity: Approximately $4 trillion worth of merchandise will be abandoned in online shopping carts this year, according to BI Intelligence estimates.
BI Intelligence compiled a June 2014 study released by UPS and comScore in the chart below highlighting why so many U.S. shoppers abandon their carts.
The Shipping Cost Dilemma
Higher-than-expected shipping costs were a top reason people abandoned their shopping cart. For retailers that can afford to lower shipping costs, this is an obvious way to convert more shoppers. It's clear that shipping costs play a significant role in the decision-making process of online shoppers.
When a shopper finds an item they desire, adds it to their cart, and then proceeds to checkout, the final price often includes shipping fees. These fees can sometimes catch customers off guard, especially if they are significantly higher than anticipated. When faced with unexpectedly high shipping costs, many shoppers opt to abandon their carts and search for alternatives, hoping to find a better deal elsewhere.
The Psychology of Shipping Costs
Shipping costs aside, the two top reasons why online shoppers abandon their carts are because they are price-comparing and want to understand what their total costs will be, or because they simply aren't ready to purchase yet. This is actually a big opportunity for retailers, because it means those shoppers are still contemplating a purchase.
Price-comparing is a common practice among savvy online shoppers. They open multiple tabs, visit different websites, and search for discounts and promotions. Shipping costs can significantly affect the overall cost of the purchase, making it a crucial factor in their decision-making process.
Moreover, shoppers often want to know the total cost of their order upfront. Unexpected fees, including high shipping costs, can disrupt their budgeting and lead to cart abandonment. Retailers who provide transparent pricing and shipping cost calculators can help alleviate this concern.
Strategies to Tackle Shipping Cost Abandonment
To address the issue of shipping cost abandonment, retailers have several strategies at their disposal:
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Offer Free Shipping: One of the most effective ways to combat shipping cost abandonment is to offer free shipping. Many shoppers are more likely to complete their purchase when they know they won't incur additional costs for shipping.
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Flat-Rate Shipping: Implementing flat-rate shipping fees can also be a solution. This way, shoppers know exactly how much they'll pay for shipping, regardless of the number of items or their location.
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Shipping Discounts: Providing shipping discounts or promotions can incentivize shoppers to complete their purchases. For example, offering free shipping on orders over a certain amount can encourage customers to buy more.
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Clear Shipping Information: Ensure that shipping costs are transparent and prominently displayed throughout the shopping experience. Don't surprise customers with unexpected fees at the checkout stage.
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Shipping Calculators: Incorporate shipping cost calculators that allow shoppers to estimate shipping fees based on their location and chosen delivery method. This helps them plan their expenses more accurately.
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Membership Programs: Consider offering loyalty or membership programs that provide free or discounted shipping to repeat customers. This can encourage brand loyalty and repeat purchases.
In conclusion, shipping costs play a significant role in online shopping cart abandonment. Retailers need to be proactive in addressing this issue by offering transparent pricing, competitive shipping options, and promotions that incentivize shoppers to complete their purchases. By tackling the shipping cost dilemma head-on, retailers can reduce cart abandonment rates and improve their overall conversion rates in the competitive world of e-commerce.