There are all sorts of reasons why consumers abandon their purchases at online checkouts, but most of the solutions tried by retailers fail to overcome this payment issue. Consumers are being offered more choice than ever, but many retailers don’t think about the stages shoppers must go through to actually make the payment.
Research* shows that almost 7 in 10 (68%) of British shoppers have abandoned their baskets online, at an average value of £120.80. That equates to an average value of £37,062 per retailer each year – a total annual cost to the UK economy of £5.5 billion across the country’s estimated 150,000 online stores.
Currently, there are a series of ‘stumbling blocks’ before, during, and even after the transaction that result in lost sales. These include complicated and time-consuming registration processes at the end of what might have been a seamless shopping experience up until that point.
Even though some retailers now offer many payment choices for customers, this can actually cause more hassle for the consumer and still leads to complex registration processes.
The number of steps a consumer has to go through to apply for finance on a big ticket item can be as many as 45 steps in some cases, with the whole process taking up to an hour. In many cases, retailers assume that because a consumer has gone to the checkout they’ve committed to purchase, and don’t put enough emphasis on having a seamless transaction experience after this point.
With competition growing for a share of the consumer’s wallet and a decline in demand for some retail categories, retailers need to ensure that every single step in the buying journey is optimised. This need is heightened by the fact that for most retailers, the greatest percentage of their sales and profit each year come from a handful of events like Christmas, Black Friday and 2-3 sale periods. 73% of organisations say the festive period alone has the greatest impact on their business, according to OneHydra research.
Retailers that are discounting during these peaks will want to make even more certain that they maximise basket completion, and achieving this means offering shoppers a seamless end-to-end experience, with flexible payment options – particularly around Christmas, when budgets can be tight.
Yet, when placed under pressure, retailers’ ecommerce offerings can let them down at this crucial moment, resulting not only in high abandoned basket rates, but smaller Average Order Values (AOV) among those that do convert.
Klarna’s view is that retailers who create a frictionless online shopping experience all the way from the payment process through to delivery and returns, drive both customer spend and loyalty – defined as repeat purchase and higher AOV. European merchants who use Klarna financing see an average order value increase of 58% and a 79% increase in conversion.
Here are four essential steps online retailers should take to mitigate basket abandonment:
Click here to read Klarna’s report on how to use payments and consumer financing as a strategic weapon for boosting repeat purchase and higher Average Order Value
* Research was conducted by Censuswide between 12 and 19 May 2016 and surveyed 1,046 consumers and 254 online retailers with 10 employees or more across the UK.