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Are cart abandonments derailing the growth of eCommerce?
More consumers are shopping online during the pandemic, and many say they are planning to do so permanently. But cart abandonments are also on the rise, and this is become a problem for merchants. So could cart abandonments derail the growth of eCommerce in the post COVID-19 era?
The shift from traditional retail to eCommerce has been one of the most identifiable consumer trends that has been accelerated by the COVID-19 pandemic. In April this year we asked 8,000 consumers based in the UK, US, Canada, Germany, Italy, Austria, and Bulgaria about how COVID-19 had affected them and four-in-ten (42%) told us that they were shopping online much more frequently. A significant percentage of consumers (18%) actually shopped online for the first time during the early stages of the COVID-19 outbreak.
This growth was mirrored when we asked businesses about the impact of COVID-19 on them. In September we commissioned a survey of 1,100 online businesses, and almost half (47%) told us that their volume of business had increased since the outbreak of the pandemic. Four-in-ten businesses also told us that their customer base had increased during COVID-19.
Long term growth concerns
And this accelerated shift doesn’t appear to be temporary. Many consumers (38%) told us that they planned to shop online much more regularly even when COVID-19 is no longer a factor in their lives.
But at the same time online businesses still don’t feel confident on their future. Nearly two thirds (62%) of businesses that say COVID-19 has affected them currently say the impact has been negative, and more businesses (40%) are pessimistic about their future than those (36%) that are positive.
The impact of cart abandonments
Q: Are cart abandonments an issue for your business?
On reason for this may be that the growth of cart abandonments might prevent online businesses converting increased traffic into long-term growth.
When we asked online businesses about their cart abandonment rates, more than half (51%) said that they had noticed an increase since the outbreak of COVID-19. This grew to two thirds (66%) of businesses in the US, and is percentage is also higher in the UK (54%), Germany (54%) and Italy (54%).
Q: Have you seen an increase in cart abandonments during COVID-19?
This may be linked to length of time taken for payment approval; in the US a quarter (24%) of businesses say payment approval taking too long is a factor in cart abandonment, compared to 16% of businesses globally. But more importantly, being able to pay with their preferred payment method is the second most popular reason consumers abandon transactions according to merchants (20%), only behind the fact that consumers were only ever browsing (30%).
Why do you think people are abandonning tranasactions? (Select a maximum of three)
Diversifying the checkout is critical
What is clear is with new shoppers spending money online, and trends shifting including consumers being more wary of being victims of fraud, businesses need to think about their checkout differently.
For businesses that are concerned about consumers abandoning transactions, offering more payment methods in the checkout is imperative. Over a third (36%) of businesses believe that consumers are paying with alternative methods because they are shopping more with businesses that they are unfamiliar with and so do not want to share their financial details, and 34% say there are customers that are new to online shopping either do not want to, or cannot make card payments online. Alternative payments are critical to converting these groups of consumers into customers.
Conceptually, adding an alternate payment method is like adding a “door to your store” that will result in better conversion rates and new customer acquisitions. That is, more traffic, improved conversions, and higher sales.
Aside from expressly wanting to pay with a preferred payment method, an equal percentage of businesses (16%) have also recognised that consumers are abandoning transactions because they do not find the checkout secure, and because there is too much information to enter at the checkout. This may be one reason why 58% of businesses say that it is hard to find a balance between improving security processes and making the online customer journey as quick and easy as possible. Again, alternative payments methods may be the key to driving down abandoned transactions here.
This article was originally published in A1 Retail.
