How to reduce ecommerce cart abandonment

Imagine walking around a shop. You navigate the aisles, carefully select items — perhaps with the help of a sales associate — and fill up your basket. Then, just before paying at the checkout, you ditch your trolley and walk out.

While you don’t often see that scenario play out in bricks and mortar shops, the ease of online shopping — we can filter products, compare prices, and add items to cart with a few taps — makes it quite easy for online shoppers to give up on their order at the slightest inconvenience. This is known as cart abandonment.

In this article, we’ll dive more into cart abandonment and give you actionable steps to solve it, improve the customer experience, and increase your conversion rate.

What is cart abandonment, and why is it a problem for merchants?

Cart abandonment is when customers add items to their online shopping basket but exit your online store without finalising the purchase. It’s a problem for merchants because it costs them potential revenue. Each abandoned order is a lost sale, or even a lost customer.

Cart abandonment may happen before or after a customer initiates the checkout process. Checkout abandonment specifically occurs when customers have started the checkout process but have not completed the transaction. Both scenarios are problematic for retailers.

If your abandonment rate is high, you’re losing a substantial portion of your potential revenue. Frequent abandonment indicates issues in the shopping or checkout process, such as complex navigation, lack of payment options, or security concerns.

Remedying the reasons for cart abandonment is also important for brand trust. 60% of UK consumers say a slow, frustrating payment experience would prevent them from shopping with a merchant again in the future.

Why does cart abandonment happen?

It makes sense that you will always have some cart abandonment. Often, customers add items to their cart to save them for later. In these cases, cart abandonment doesn’t necessarily mean you’ve lost a sale because the shoppers may come back and make the purchase at a different time. Marketing techniques like exit-intent pop-ups and retargeting campaigns can help customers get their orders over the line.

However, fixable issues on the merchant side often contribute to cart abandonment. The Baymard Institute conducted research into why people abandon their purchases. The most common reason was unexpected extra costs at checkout, such as shipping costs. 47% of people surveyed had abandoned a purchase for this reason.

Payment issues were also a big factor. More than 1 in 3 (36%) responses cited a lack of payment options, insufficient trust in an online store or card declines as key reasons for abandonment.

Card declines in particular can aggravate customers. Customers only need to make a small mistake — using an expired card, for example, or mistyping a number — to ruin a payment.

But cards are also prone to false declines and technical errors, reliant as they are on complex networks with multiple intermediaries and many potential points of failure.

Unfortunately, card infrastructure still struggles to mitigate these problems while meeting shoppers’ basic needs. Take 3D Secure, for example, a card authentication protocol that continues to result in annoying declines and hampered conversion.

The results are infuriating for shoppers and devastating for a merchant’s bottom line: false declines are six times more costly than fraud losses.

Problems with the checkout flow also result in high abandonment rates. The Baymard survey found that 1 in 3 respondents gave up on a purchase because of issues at checkout. These included the flow being too long and complicated (18%) or payment errors (14%).

5 steps to improve checkout and reduce cart abandonment

To tackle cart abandonment effectively, the first step is to investigate why it's happening in your business. Understanding the root causes is crucial for developing targeted strategies to address the issue. Below, we've outlined some steps that help with checkout optimisation and address the most common reasons for cart abandonment.

1. Calculate your shopping cart abandonment rate

Cart abandonment rate is one of the key ecommerce metrics retailers should watch. Start by establishing a baseline to understand the current state of your checkout process by calculating your abandonment rate.

For a set period (eg, a month, week, or day), divide the number of abandoned carts by the total number of transactions initiated and multiply by 100 to get a percentage:

Cart abandonment rate = (number of abandoned carts / total number of transactions initiated) *100

Let’s say in one week, 5,000 customers started a transaction by adding items to their basket, but 1,500 of them didn't complete checkout. 1500 / 5000 = 0.3, which means your cart abandonment rate for that week is 30%.

This initial measurement provides a clear picture of where you stand. As you implement improvements, regularly track this rate to monitor the impact of your changes.

2. Communicate clearly

We’ve all been there. You grab your card to finish buying something. Then you get hit with expected high shipping costs. You end up shopping elsewhere or begrudgingly paying the extra cost.

Clear communication is crucial for reducing cart abandonment. It bolsters customer confidence and minimises confusion on the checkout page.

Begin with precise product descriptions and product images to preempt questions and alleviate buyer uncertainty. Display all costs, including taxes, shipping options, and delivery fees upfront to avoid last-minute surprises. Remember, unexpected costs are the biggest single reason for cart abandonment.

But clear communication shouldn’t just be left for your checkout page. Articulate your returns policy on product pages and during checkout, emphasising the return timeframe and conditions to build trust and reduce purchase hesitation. A detailed FAQ or support chatbot can effectively address common queries about products, shipping, returns, and payment methods. Ensure that call-to-action buttons such as 'Add to Cart,' 'Continue Shopping,' and 'Proceed to Checkout' are clear and prominent.

When something goes wrong, like a payment failure, customers want to know why. Create clear error messages that provide accessible information on what went wrong and guidance on how to resolve the issue.

3. Optimise for mobile shopping

There’s no doubt that mobile is now the default online shopping method. In fact, 38% of Britons say they participate in mobile shopping every day. If you don't optimise your checkout for mobile, you’re missing out on potential revenue.

While you’ll likely be aware of the need for a smooth mobile offering, there are still common pitfalls — including the payment experience — that let your overall customer journey down.

Ensure your checkout is responsive, adapting to different screen sizes and orientations. To facilitate ease of navigation on smaller screens, consider simplifying the checkout design: use a clean layout with large buttons and readable text. Streamline checkout by reducing the number of steps and required fields.

Make life easier for customers by incorporating features like auto-fill and the option to save shipping and payment information for faster future transactions. Offer a guest checkout option, allowing users to complete purchases without the need to create an account, another common bugbear for online shoppers.

4. Retarget lost customers

Retargeting lost customers is a powerful strategy to reduce cart abandonment. Cart recovery aims to re-engage customers with personalised encouragement to complete their previously initiated purchases.

Use analytics tools — like Amplitude, Mixpanel, or Google Analytics — to track when customers add items but leave your site without finishing the purchase. Then, group segments of your audience based on their browsing behaviour, purchase history, and cart value to tailor your retargeting efforts effectively.

Craft personalised cart abandonment emails or text messages for each group to remind customers of their abandoned cart. Consider including images of the items or similar products. If the purchase was abandoned due to a failed payment, a dunning email strategy may also be useful.

Incentivise customers by including special offers or discount codes in your retargeting campaigns to nudge them toward completing their purchases. Expand your retargeting efforts across platforms by using retargeting ads on Google or social media platforms to reach these customers outside of your owned channels.

5. Offer alternative payments

A lot of disruption at checkout is due to issues with card payments. Estimates vary, but card payments fail between 10-14% of the time. And card payments are currently the most common payment method in the UK.

Offering alternative payment methods gives customers more choice to pay how they want. It also opens the door to a smoother, more reliable checkout.

Pay by Bank, powered by open banking, is notable for significantly reducing friction at checkout. It reduces the need for manual data entry, saving customers time and minimising human error that leads to frustrating payment declines.

When a customer uses Pay by Bank, the payment is transferred directly from their account to the merchant’s account. It doesn’t pass through a complicated chain of payment gateways and card networks, so there are fewer points for potential failure.

Open banking is also secure. Customers don’t need to type in their card details, which means ecommerce businesses also don’t need to process or store the information. This reduces the risk that fraudsters will intercept sensitive customer information. SCA is also built into the transaction; customers complete their payment by simply providing a fingerprint or face ID.

How Pay by Bank can recover lost sales

While cards still represent the primary payment method for many merchants, Pay by Bank can help mitigate failed payments and lost revenue associated with 3D Secure.

In the event of a card failure, Pay by Bank can serve as a fallback method, recovering sales that may have previously ended in cart abandonment.

Simply offer customers the opportunity to retry their purchase with Pay by Bank. Since this method features no manual data entry, customers can complete their payment in a couple of taps.

This approach can help you reduce cart abandonment while significantly recouping lost revenue. Even a 0.5% payment failure rate can result in massive losses if a retailer processes more than £1,000,000 in payments per month. Providing Pay by Bank as a secondary option will reduce those losses, providing an immediate return on investment.

It’s time to upgrade your checkout experience with open banking

Pay by Bank doesn’t just combat cart abandonment and recoup lost revenue from card failures. From cutting operational costs to facilitating instant refunds, it offers a host of benefits that help retailers grow their businesses.

Learn more about how Pay by Bank can help you make the most out of every payment.