PART I: Online Shopping Cart Abandonment: Why It Happens and What You Can Do About It?
As consumers, we’re all guilty of digital window shopping, adding items to the cart and then changing our minds when we get to the virtual checkout. No harm done, right? But for eCommerce companies, there is nothing more frustrating than an online shopper who abandons their cart at that final, crucial stage.
Merchants come to us time and time again with two recurring questions:
- Why do consumers falter at the final hurdle?
- How can merchants increase their conversion rates?
To answer these questions, I have found that there are three main reasons why consumers abandon their online transactions, and three things merchants can do to step in and save the sale. In first part of this two-part blog post series, I’ll discuss the first two reasons and solutions. Part II will discuss the third reason, solution and how you can get started to curb shopping cart abandonment in your eCommerce business.
Reason #1: Consumer payment preferences aren’t available
Over the years, global online retailers have clearly seen a drop-off at the checkout stage if consumers’ preferred payment options aren’t available. This could mean either their preferred payment methods or their preferred currencies.
In some countries, specific credit cards brands may be preferred over others, while in other countries, direct debit or other alternative payment methods might be more popular. In reality, there are over 170 different ways to pay for items online around the world, and consumers often have very clear preferences based on the region or country where they live.
Another instance of customer drop-off occurs because an unfamiliar currency is displayed on the product or checkout page. As a consumer, if you’re trying to buy something online in a currency that is unfamiliar, you might have no idea how much that item really costs. For example, 10,000 yen might seem like an enormous amount of money to a European or American, but in reality, it’s approximately €70/ $95, which is much more palatable.
Imagine your eCommerce customers finding your products in a currency they’re not used to. Ideally, they’ll convert your prices and be happy to discover that the item is within reason or even cheaper than they originally expected. But the opposite can also occur – they might discover that the item is more expensive than they expected and will baulk at the final sum and abandon the sale.
There is another possibility in this scenario: the customer might be satisfied with the price they find on your website, but then be surprised by extra fees that show up on their credit card or bank statements because of the currency conversion. Online shoppers are all too aware of the extra fees and charges that come with converting foreign currencies into local sums, and as an online merchant, the last thing you want to do is create a situation where customers feel they overpaid for your products or were duped by hidden fees.
Solution #1: Offer multiple payment methods and in-house currency conversion
- Multiple Payment Methods: It’s imperative that merchants offer customers the payment options they prefer to reduce cart abandonment. If you’re not offering the payment methods and currencies that match the countries or regions you’re targeting, you’re cutting out entire segments of online shoppers without even realizing it. Don’t assume that credit cards will do the job. Make sure that you understand what payment method your customers want to pay with and have those available.
- Currency Conversion: Make it simple for your customers to understand your prices and make it easier for them to pay. Not only will you reach more customers and encourage them to complete their purchase, but we can even advise you on ways to leverage foreign exchange to your advantage, so that you benefit from the conversion fees, rather than giving that commission to the banks or card issuers.
Reason #2: Consumers’ credit cards may get declined
Since a major portion of online transactions still rely on credit cards, it’s important to optimize the process. Often, we find that consumers’ credit cards are declined during an online purchase, through no fault of the customer or the merchant. For example, we have worked with many companies who had unnecessarily high volumes of card rejections from their acquirers for purchases attempted with a non-locally issued credit card.
This is typically a problem with the card issuer, who might assume that the transaction is fraudulent or have other reasons to reject the payment. However, the customer, who has no idea what is happening in the background, will automatically blame the merchant for the rejected transaction and poor customer experience. They might try again with another payment method, but by the same token, they might look for a different online retailer who will accept their card, leading to sales drop-offs and lost customer loyalty.
Solution #2: Employ a back-up acquirer
A back-up acquirer is essential and can increase conversion rates by 3-6 percent. Say a customer’s transaction is declined by the merchants’ initial acquirer, a back-up acquirer – a secondary bank or financial institution who processes credit and debit card transactions – can automatically step in and validate the payment that was originally declined.
It’s all done in a matter of seconds in the background; the declined transaction is rerouted and then quickly approved, while the shopper is entirely unaware that the transaction was refused by the original acquirer. This retry is automatic and invisible, and the merchant closes a deal that would not have been otherwise accepted. The customer receives their goods and you have a happy customer. Now multiply this process over days, weeks and months and you’re going to see a substantial revenue increase.
Shopping cart abandonment is a very common issue and all online merchants across the globe face it in come capacity. In Part II of this blog post series, I will discuss the last reason why merchants face this obstacle and what they can do to curb it. Stay tuned.
Mailie Shortill is the Head of Sales Enablement at Ingenico ePayments
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