For the past four years, we have been commissioning independent surveys of online small to medium-sized businesses (SMBs) across the globe to find out more about their online plans and priorities when it comes to evolving their online checkouts. We surveyed over 900 online businesses in October 2021 for our report Lost in Transaction: Finding competitive advantage at the checkout.
One major issue that businesses have continually told us is that card abandonments are a pressing concern. And there is a good reason for this; cart abandonments can have a severely undermining impact on an online business. If customers either cannot or do not want to take the journey through an online checkout then the impact on revenues can be catastrophic.
So we wanted to find how the issue of cart abandonment had evolved in the past 12 months. We asked online SMBs in the UK, U.S., Canada, Germany, Italy, Bulgaria, Austria, and Brazil to tell us how they viewed their abandonment rates in 2021, whether their concerns had increased, and why they believe consumers are failing to complete transactions.
How big is the problem?
Managing abandoned transactions is a serious and virtually universal issue for many types of online businesses. Overall, 88 per cent of online SMBs say that cart abandonments are more than negligible in their online checkout, compared to 75 per cent when we asked businesses in 2020. Only 19 per cent say they are comfortable with the volume of abandoned transactions they are seeing, and 40 per cent of businesses view cart abandonments as more than minor issue.
These numbers have improved slightly since 2020, when 13 per cent of businesses said they were comfortable with the percentage of transactions that they see abandoned, and 47 Per cent said that abandoned transactions were more than a minor issue for them. However, overall, the issue of abandoned transactions is currently getting worse, not better. Half (49 per cent) of all businesses we spoke to in 2021 told us that the percentage of abandoned transactions in their online checkout has increased in the past 12 months, compared to only 9 per cent that have seen abandoned transactions decrease.
So, what can be done about it?
Tackling this spiralling issue is going to be critical for businesses as eCommerce becomes even more competitive in the next 12 months, and that begins with understanding why consumers are abandoning transactions in the first place. Consumers only coming to a website to browse or adding products to their checkout basket that they never intended to buy is the commonly cited reason by businesses. This consumer habit is unavoidable and there is little businesses can do to combat it, but only 35 per cent of businesses name this as even a top three reason consumers are abandoning transactions. Of the other reasons that are most commonly mentioned, businesses can focus their checkout strategies accordingly. Some issues are non-payment related, such as delivery options or shipping times, but the majority focus on the payments experience. These consumer issues that are leading to abandoned transactions include:
Not being able to pay with their preferred payment method – As we have discussed in previous articles, consumer payment preferences are becoming more diverse. Less and less consumers prefer to pay with cards, and overall 56 per cent of consumers say that they only shop with online businesses that offer their preferred payment method. Offering more payment methods in the online checkout is now imperative to keeping customers as the payments landscape continues to evolve.
Not being able to pay in their preferred currency – As well as wanting to pay with their preferred payment method, overall consumers are more likely to complete a transaction if they can pay in their local currency. For businesses that already or plan to sell to consumers overseas, working with a payments partner that can offer the maximum number of currencies will expand target markets without increasing the risk of higher abandoned transactions rates.
Combat declined transactions – In addition to abandoning a transaction out of choice, consumers are also leaving the checkout because their card payment is declined. This could be for a number of reasons in addition to not having enough funds in their account. Again, offering more payments methods is an effective solution; not only will the overall percentage of payments made by cards fall, consumers will also have options as a second preference to recover the transaction if their initial card payment fails.
Working with a payments partner that can offer more payment methods and currencies through a single integration is the key to many checkout best practices, including reducing abandoned transactions – something that businesses must consider as they see this issue continue to grow.