It wasn’t long ago when an online store was considered a differentiator for a bricks and mortar retailer, a luxury of sorts. No longer are online stores dismissed as merely a novel companion to a physical shop. Advancements in online consumer technology have allowed the eCommerce industry to grow faster than ever. And maybe, in time, it will allow the online marketplace to become the only marketplace.
In its infancy, eCommerce made up a mere one or two percent of all retail sales in the US. However, the share of online sales is climbing rapidly and is expected to account for 1 out of every 8 retail sales by 2020. As we identified previously, consumers are continually prioritising convenience in their spending choices, and online stores are benefiting from this change in expectations. However, key inhibitors to success remain for many online retailers.
A problem for online retailers is the significant drop-out rate of consumers who fill their carts and then do not go on to complete their purchase. According to Vouchercloud, in 2014, 67% of all shopping carts online were abandoned. However, only 16% of those who dropped out were window shoppers without actual buying intentions. That leaves a vast majority who do not buy for other reasons, and that is what online merchants should be worrying about.
Consumers cited two major reasons for abandoning their goods at checkout. The first, which accounts for 41% of drop-outs, is hidden costs. We’ve all been there; you get to the checkout and all of a sudden there is an ‘online processing’ fee or an excessive postage charge sitting at the bottom of the cart. Not only do hidden fees come as an unfortunate surprise, but they also cause over a quarter of customers to press the red ‘X’ on a business’ web page.
However, legitimate the costs may be, companies should aim to recoup these processing charges elsewhere, instead of getting rid of them altogether. One thing we know about online consumers is that they are willing to shop around. Vouchercloud also noted, 85% of consumers research different vendors before making their purchasing decision, meaning they not only know what they want, but they know how they can get it. Thus, by decreasing or removing extra fees that may deter customers, businesses can ensure that they lower their cart abandonment rates. Without these fees, consumers will have less reason to opt out of sales and over time this provides higher revenue streams that may negate the need to charge the fees at all.
The next biggest reason cited by consumers for abandoning their carts was the requirement for account registration. This accounted for 21% of all shopping cart abandonments. One of the biggest mistakes is making the checkout process unnecessarily cumbersome, and account registration is a large part of that. 42% of online shoppers do not want retailers to track their purchasing history, and 37% do not want retailers to know anything about them at all!
So, What Now?
Businesses should embrace the natural scepticism consumers hold toward retailers rather than shy away from it. A customer doesn’t want you to know them? Provide them with a simple guest checkout and let them stay as anonymous as possible. For consumers that are wary even of the security provided by established, payment methods (VISA, MasterCard, PayPal), provide alternative payment methods such as cash vouchers (Flexepin, store gift cards), which provide consumers with the security of a traditional shopping experience.
Keep it Simple
Of course, there are several sectors within retail where customer verification is necessary to meet regulatory requirements. However, even in these cases, information should be collected as efficiently as possible. As many as 50% of eCommerce sites ask for the same information more than once. To lower dropout levels, it is crucial that sign-up, if at all needed, is intuitive and user-friendly. Asking consumers to duplicate information tests their patience and their willingness to stay online.
The advancement of technology has enabled millions of online transactions. However, as technology has evolved, so have consumers. The ease of shopping online and on mobile devices has created a new breed of more selective and critical consumers. Where once a customer may have stood in a store and debated purchasing a toaster for 3 minutes, they will now likely leave if the website hasn’t loaded within 3 seconds. Subsequently, eRetailers cannot afford sloppy user interfaces and dull sign-up processes. Online stores must be clear and intuitive to ensure as many of the customers who enter the website, stay.