Key Performance Indicators (KPIs) are the metrics used to measure the performance of a business. Similarly, ecommerce metrics are the KPIs that can help online businesses evaluate their performance, set benchmarks, and take corrective measures to steer the business in the right direction.

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In this ecommerce metric refresher, you will learn what is shopping cart abandonment rate, how to calculate shopping cart abandonment rate, why should businesses calculate shopping cart abandonment rate, benefits of reducing shopping cart abandonment rate, and the strategies to reduce shopping cart abandonment rate.

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What is shopping cart abandonment rate?

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Shopping cart abandonment rate is an ecommerce metric which denotes how many online shoppers add items to their shopping carts but abandon them before completing the purchase. It is represented as a percentage.

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The following illustration shows the shopping cart abandonment rate formula:

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Let's see how to calculate shopping cart abandonment rate with an example,

1. Let's assume 100 shopping carts were created in the month of July
2. Out of which, 55 purchases were completed
3. Therefore, your shopping cart abandonment rate = 1 - (55 / 100) x 100 = 45%

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Why should businesses calculate the shopping cart abandonment rate?

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Businesses need to monitor their shopping cart abandonment rate to analyse the potential blockage in converting online visitors to customers. Some of the major reasons for businesses to calculate the shopping cart abandonment rate are:

• To understand the shopping behaviour of your website visitors and customers
• To analyse how intuitive and trustworthy your checkout process is
• To examine the reasons why customers don't convert

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Reasons for shopping cart abandonment

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According to the Baymard Institute, the following are the top reasons why customers leave your online store without completing a purchase:
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• Extra costs too high (shipping, tax, fees): Customers often abandon shopping carts after seeing how much their order costs with extra charges like shipping fee, taxes, and more.
• Compulsory account creation: ‍Forcing online shoppers to create an account or register to make a purchase is always a bad idea as it adds an unnecessary step in the checkout process.
• Too long or complicated checkout process: A long, complex checkout process makes customers abandon their carts as every added step and form field slows them from completing the payment.
• Inability to calculate total costs upfront: Pricing is a significant factor for online shoppers. Without full pricing details, customers just add items to their carts to determine the cost and abandon them if they are high.
• Slow delivery: Delivery is the central component of the ecommerce experience. Customers tend to abandon their carts if they find slow order delivery.
• Security concerns: Customers require proof that their credit card details and other financial information will be secure on an online store; else they abandon their carts.
• Website slow or crashed: Severe issues with a website such as crashes and errors are most likely to scare customers off and result in cart abandonment.
• Unsatisfactory returns policy: If an online store doesn't offer easy returns and refunds, customers seek a better place to buy the product.
• Lack of payment methods: Online shoppers want the convenience of using their preferred payment method. The fewer options you offer, the more likely they are to abandon.
• Credit card declined: Customers are forced to abandon their shopping cart when their credit card is declined while making a payment.

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Benefits of reducing shopping cart abandonment rate

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On average, 67.91% of all shopping carts are abandoned worldwide in a year, i.e. $4.6 trillion worth of merchandise. This makes shopping cart abandonment one of the biggest problems ecommerce merchants face, which results in a lot of missed opportunities and lost revenue. Shopping cart abandonment is inversely proportional to revenue. That means, by reducing shopping cart abandonment, you can convert those missed opportunities into conversions and ultimately, increase your revenue.

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How to reduce shopping cart abandonment rate?

There are various ways to help reduce your shopping cart abandonment rate, but it is essentially done in one of the two stages:

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1. Before cart abandonment

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• Ensure a fast checkout process

Customers are more likely to abandon their carts if the checkout process is complicated and time-consuming. While designing your checkout process, make sure it consists of 3-5 steps—the shorter, the better. And try not to include too many fields in a single step. You can also include a progress indicator to eliminate customers' potential worry and assure them that they’re almost done. It will make the process clearer and easier for customers to understand.

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• Make editing the cart easy

You don’t want your online shoppers to get stuck in your checkout page. If they added something in their carts by mistake or need to edit it, make sure it’s easy for them to do so. You can give multiple options to edit their carts such as delete, add or subtract to change the quantity of an item, adjusting shipping options, and more. You can also ensure the navigation between the cart and store is effortless to create an easy-to-buy process for your customers.

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• Be crystal clear about all costs

The reason for 50% of all cart abandonment is extra costs. For customers, there's nothing as frustrating as reaching the checkout only to discover hidden costs attached to their purchase. As an ecommerce merchant, you can be transparent about all the charges by displaying them upfront.

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• Provide free and fast shipping

Free shipping is becoming a standard service which customers expect from online businesses. And customers expect it fast! By offering free shipping and 2-day or same-day shipping, your customers will quickly load up their carts and complete the checkout process.

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• Offer easy returns and refunds

By offering hassle-free returns and refunds, you can make customers feel confident about buying from you. Frame a returns policy that builds customer trust. And, provide multiple refund options like source account or in-store credits. Moreover, don't make customers dig hard to find the returns policy. Display it somewhere in your checkout process to offset potential hesitation.

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• Offer multiple payment methods

You don't want to create an obstacle between your prospects and your sales by offering a single or a few payment options. It would be best if you considered offering multiple payment methods like debit cards, credit cards, UPI, digital wallets, and more depending on the demographics you're targeting.

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• Build trust and credibility in transaction forms

Customers fill out a transaction form while making the payment. Here, you’re essentially asking them to trust you with their card details. But some customers might be hesitant in taking a step further. You can use this step to build and establish trust by including security logos.

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• Provide world-class support

To give online shoppers confidence about their purchase, you can provide a toll-free telephone number or chatbox on the checkout page. It's better to solve their problems or ease their concerns right away rather than giving them the reason to abandon their cart.

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• Avoid sign ups and give guest checkout option

Forcing customers to sign up and create an account is sufficient to make them abandon their cart. By giving a guest checkout option, you can offer a frictionless experience to your customers. Plus, these happy customers may also create accounts in the near future to take advantage of your loyalty programs and other incentives.

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• Add testimonials

If you are a new entrant in the ecommerce landscape, building credibility could be a bit challenging for you. To bring down any concerns your potential customers may have, you can display customer testimonials and reviews by existing customers on your online store.

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• Optimise page load times

The ecommerce shopping cart conversion rates drop by 7% for every one-second delay in your page loading. It means you need to optimise your checkout page to be as fast as possible. To maintain the balance of quality and speed, you can optimise your images. Additionally, you can limit the use of social plugins, poorly implemented tags, and ad network trackers in order to increase your page load times.

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• Give the freedom of a “save for later” option

Many online shoppers use their carts as wishlists to save the items they want, not now but in the near future. And, they simply abandon them. Instead of just giving them the option to add to cart, you can provide them with a wishlist to save items for future purchases.

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2. After cart abandonment

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• Use exit-intent popups

The moment your potential customers are planning to abandon their carts, you can capture their attention using an exit-intent popup. It is displayed when a customer is actively leaving the checkout page.

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• Re-engage with incentives

After your potential customers have abandoned their carts, you can incentivise them with a coupon code or promotional discount. You can send such offers within a few hours of cart abandonment to motivate hesitant customers to complete their purchase.

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• Send recovery emails

There's another way to get shoppers back to your store to complete their purchase, i.e. email recovery campaigns. You can set up personalised emails including images of the item they selected, reviews or customer testimonials, free shipping or easy refund policy, and a strong call to action.

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• Use ad retargeting

2% of online shoppers convert on the first visit, and retargeting brings back the other 98%. Retargeting keeps track of the people who visit your online store and displays retargeted ads when they visit other online stores. You can use the services by Google Ads, AdRoll, or Retargeter to create a retargeting campaign.

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Bottom line

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Many online businesses are losing out on revenue each day due to cart abandonment. By implementing the right strategies, you can get more online shoppers to complete the checkout process the first time. Even if they decide to abandon their carts, as some always will, you are well equipped to get them back to complete their purchase. In no time, you will be recapturing the might have lost.

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