Online cart abandonment is a primary pain point for any e-commerce brand. With cart abandonment rates around 70% on average on desktop and 80% on mobile, no retailer can escape the many negative effects of shopping cart abandonment on their business.
What is cart abandonment?
Cart abandonment occurs when a customer adds item(s) to their online shopping cart, but doesn’t complete their purchase. It is different from abandoned checkout which is when a customer abandons their purchase further into the checkout process. Cart abandonment is obviously a lost sale and a missed opportunity to connect with customers. But, the effects of shopping cart abandonment go far beyond the missed revenue opportunity that occurs in the moment. There is a ripple effect that impacts other aspects of e-commerce operations, some of which seem far afield from the e-commerce site. For more insights into the causes of online cart abandonment, read our ultimate guide to cart abandonment.
5 effects of shopping cart abandonment that may surprise you
The many negative effects of shopping cart abandonment are often hidden. Abandoned carts aren’t usually associated with reduced website speeds, lower margins, or issues with inventory management, but these are, in fact, all side effects of online cart abandonment.
Let’s dive in to find out why.
1. Reduced ROI on marketing spend
One reason why customers put items into the online cart is because they were enticed by a marketing campaign. This could be content marketing, paid media, social media, influencer marketing, email marketing, etc. If the customer then abandons the cart, that marketing spend did not achieve a positive ROI. Too many abandoned carts can lead to a huge spike in customer acquisition costs and negative ROI on marketing spend. While some marketing campaigns produce a lot of clicks and traffic to the e-commerce site, they may not ultimately drive conversions.
As customer acquisition becomes more expensive and competitive, brands can drastically reduce customer acquisition costs by recovering more abandoned carts. Brands should pay close attention to which marketing campaigns are driving conversions (i.e. sales) and put the majority of their marketing resources behind these campaigns.
Note: E-commerce marketing campaigns that produce a ton of clicks, but few conversions should be examined more closely. Either they may not be reaching the right audience or there is something off about the website experience that is causing them not to convert.
2. Loss in customer lifetime value
Customer lifetime value or LTV is one of the most significant metrics for retailers.
Successful brands foster repeat customers in order to drive higher lifetime value. However, when a loyal customer abandons their cart, it potentially decreases the lifetime value of that customer. E-commerce brands can increase customer lifetime value by reducing cart abandonment before it happens and recovering more abandoned carts.
Check out these shopping cart abandonment tools for reducing online cart abandonment.
3. Lower margins
Many retailers try to combat cart abandonment by offering discounts via an exit-intent pop up or cart abandonment email. While this can be effective in the short term, discounting merchandise in abandoned carts results in lower margins and decreased average order value (AOV). Not only is the brand accepting less money for their inventory, but they are also cheapening the brand or even encouraging more customers to abandon their carts in order to get a reduced price. When there is an abundance of coupons, customers grow to expect them. It also attracts a different, more discount-oriented customer. This downward spiral of promotions results in fewer and fewer customers purchasing items at full price.
4. Inventory unavailability
Cart abandonment isn’t often associated with supply chain or inventory management issues, but it can cause additional strain on supply chains. The reason is that when items are in a customer’s cart, they are temporarily not available for other customers to purchase. These stock level changes are a major concern for e-commerce retailers. This may not be an issue for a handful of abandoned carts. However, for enterprise brands trying to combat cart abandonment at scale, inventory unavailability can lead to even more lost sales.
This is an ongoing challenge for travel & hospitality websites that always have a fixed amount of rooms or seats available.
5. Slower website speeds
Technical issues such as slow website speeds are a huge cause of cart abandonment. In fact, 90% of shoppers abandon carts if the website loads slow. However, high rates of cart abandonment can also cause website speeds to slow. Cart abandonment at scale can take up server bandwidth and leave customers frustrated by slow site speeds. This can be a huge problem for enterprise brands during high traffic days such as Cyber Monday or right after a product launch.
How to reduce online cart abandonment
The effects of shopping cart abandonment run deep. Yet there are ways for brands to reduce cart abandonment rates and focus more resources on abandoned cart recovery. Some proven strategies retailers have used to reduce cart abandonment and increase their abandoned cart recovery rate are:
- Offer guest checkout instead of requiring customers to create an account before checking out.
- Disclose all taxes, fees, and added costs in the product listing (i.e. delivery fees, resort fees, etc.)
- Provide ways for customers to save items for later through wishlists, favorites, and more.
- Create a favorable and frictionless return policy.
- Make multiple payment options available such as credit/debit cards, PayPal, Apple Pay, Buy Now Pay Later, and more.
- Incentivize customers with high quality photos and reviews that show the value and longevity of their purchase. Also include the number of items you have left to create a sense of urgency to buy now.
- Transform the messaging in the online cart from static and unengaging to dynamic and personalized. Persado Dynamic Motivation uses session data alongside Generative AI to deliver the best message in the online cart to inspire each customer to complete their purchase. Brands that use Dynamic Motivation in the online cart typically see a 3-5% increase in incremental revenue.
Check out our ultimate guide to reducing cart abandonment to learn more ways to motivate customers to complete their purchase.
To transform your online cart into the online cart of the future, try Dynamic Motivation risk-free.