How can ecommerce brands reduce cart abandonment rates?

Andy Tweddle, Payments writer
4 Jan 2024
Cart abandonment

Imagine walking around a shop. You navigate the aisles, carefully select items — perhaps with the help of a sales assistant — 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 — means that it’s quite common for online shoppers to abandon their order at the slightest inconvenience. This is what is known as cart abandonment.

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

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

Cart abandonment (also known as basket abandonment) refers to when customers add items to their online shopping basket but exit your online store without finalising the purchase. By discovering the reasons for cart abandonment and remedying them, you’ll positively impact revenue — because each abandoned order is potentially 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 and customer loyalty. 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 ensure customers get their orders over the line.

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

Issues with making a payment were also a big factor. Abandonment because of a lack of payment options, because the customer didn’t trust the online store with their credit card information, or because of card declines, accounted for 36% of the total responses.

TrueLayer research also highlighted the importance of payment security. 64% of consumers in our payments experience playbook say that security is the most important factor when they’re making a payment. The study also found that online payments, in general, are a headache for customers — 87% are frustrated by online payment experiences.

Another factor in cart abandonment is problems with the checkout flow. 32% of respondents to the Baymard survey had abandoned their purchase because of problems at checkout. These issues were either because the flow was too long and complicated (18%) or because of 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 address the most common reasons for cart abandonment and help with checkout optimisation.

1. Calculate your shopping cart abandonment rate

Cart abandonment rate is one of the key ecommerce metrics. 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

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

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.

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

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 basket,' '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 clear information on what went wrong and guidance on how to resolve the issue.

3. Optimise for mobile shopping

There’s no doubt that mobile shopping 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 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 that remind customers of what's in their basket, potentially 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. Make payments seamless and secure

A lot of disruption at checkout is due to issues with card payments. Estimates vary, but card payments fail in the region of 8.4%. And card payments are currently the most common payment method in the UK.

Offering alternative payment methods not only gives customers more choice to pay how they want. It also opens the door to a smoother, more reliable checkout.

Account-to-account instant bank transfers, powered by open banking, is one method online retailers can add to their ecommerce site that reduces friction at checkout. Open banking payments reduce the need for manual data entry — saving customers time and minimising human error.

When a customer pays via open banking, the payment chain is much simpler. With an open banking payment, there are only three parties involved (the customer, the open banking provider and the merchant). Card payments, on the other hand, pass through a complicated chain of payment gateways and card networks. As a result, there are fewer points for potential failure in an open banking payment.

Open banking is also secure. Customers don’t need to type in their card details, which means that ecommerce businesses also don’t need to process or store the information — reducing the risk that fraudsters will intercept sensitive customer information. They simply select their bank from a list and authorise the payment with biometric information (like a fingerprint or face ID). Strong customer authentication is built into the transaction.

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

Instant bank payments — powered by open banking — can help you cut operational and transaction costs, offer instant refunds, and boost sales. Learn more about open banking payments for ecommerce brands.

Insights straight to your inbox
Join 10,000+ subscribers getting the latest open banking news.
4 key takeaways from Money20/20 Europe 2024
16 Jul 2024

4 key takeaways from Money20/20 Europe 2024

19 Jun 2024

What is authorised push payment fraud?

When should you consider adding open banking payments to your checkout_Header
14 Jun 2024

Open banking’s path to dominance in UK ecommerce | TrueLayer

Categories to explore