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High Shipping Costs the Reason Behind Shopping Cart Abandonment

A study carried out by Paypal Checkout Abandonment reveals that online shopping is steadily on the decline. A number of factors, including high shipping costs, are attributed to this. In fact, as much as 46 percent of US shoppers cited high shipping charges as the primary reason. Other reasons for decline in online shopping, as found by the survey, are:

-Security concerns
-Lack of convenience

The study also found that lack of transparency regarding shipping costs maybe a reason behind shopping cart abandonment. "The survey found that providing shipping costs upfront might have influenced 40 percent of the survey respondents to complete the purchase."

To help merchants encourage shoppers to purchase, Paypal™ has announced a new Express Checkout feature – which includes Paypal Instant Update API. More information here!


NUTTIE GURU SAYS: The shopping cart abandonment rate as reported by Paypal is just an average, and averages don’t always work for everyone; it may vary from niche to niche, depending on some factors such as:

a) Shipping costs: For some niches it may not be a big deal, especially in niches such as jewelry, cosmetics, electronics, etc., because people who buy such stuff usually have the necessary cash to spare. They are desperately in need of this specific item and (more often than not) also have the ability to pay for it; as such, high shopping costs is unlikely to deter them! ;)

However, in poorer niches such as internet marketing (No offense meant to any IMer) or collectibles, shipping cost indeed may become a dominant determinant of your conversion rate.

b) Checkout process: If the customer is forced to click on too many links/buttons in order to complete a purchase, or if s/he is required to fill up a lengthy order form, you are very likely to have a high shopping cart abandonment rate! If you are selling just digital products, it maybe a good idea to ask just for the customer’s first name and email during the checkout; later on, you can always ask him/her to add more information to his profile so as to [insert customer's benefit here].

For physical goods, the customer understands that you need information such as shipping address, phone numbers (in case of problems), etc, to process the order smoothly. For digital goods however, the customer knows you don’t need all these information in order to deliver the goods! :)

Interestingly, while some people believe that the one-page checkout boosts conversions, others say it actually drops the conversions for them. Go figure! ;)

Brand image of your company may sometimes work in your favor even if you force the customer to fill up a long order/registration form during checkout, because many people would not hesitate to fill up a lengthy order form if they trust the site (for example, think Google™ or Amazon™)!

However, they may refuse to do the same thing when buying from a Nuttie Guru’s store (and for your information, I have had my share of low conversions when I was using the lengthy order form offered by Jvmanager 1- having no other option. Thankfully JVmanager™ 2 offers you much more flexibility in that regard! )! ;):)

c) Upsells: Upsells are a familiar option customer encounters during checkout process, especially in mainstream niches such as internet marketing, weight loss, PC security, etc. Provided that your product is good and the difference in price between the original product and the upsell is not much, people would surely go for the upsell.

However, upsells may not be so successful (or even end up being a downright disaster) in other niches! Also, too many upsells on the order page, even if they are all related to the main product the customer is buying, can actually overwhelm and distract the customer!

While I really love the upsell strategy of Amazon.com, I think sometimes they just overdo it, so much so that I feel like abandoning the checkout process altogether! If this could be my mental condition, imagine that of a customer who is hardly online 24 hours a day! To be honest, we internet marketers are not as big and popular as Amazon either, so we may fare even worse!

d) General Cart layout: A few studies say that shopping cart buttons work better than text links, and that animated buttons work even better than static buttons. Again, this is something that needs to be tested on your end!

e) Payment options: It is not always necessary to sell stuff at rock-bottom prices in order to have the highest conversions possible! If you want, you can use services like Bill Me Later or Trialpay to lower the barrier to entry for customers (note that I DO NOT have any personal experience with these services).

If your target niche/economy is one where the average buyer has a significantly low FICO score, this might be a good option to implement. The entire year of 2009 being riddled with recession blues, it is not just online shops but also physical stores that are facing a downturn in sales!

Incidentally, Paypal supports Bill Me Later as a payment option (although it is available only to a select few countries of USA, as of this writing)!

If the bulk of your site traffic comes from a country where very few customers possess credit cards (such as India), it is perhaps a good idea to offer offline purchase options such ordering by phone, fax, money order etc. A majority of people in India (I don’t just mean the masses but also banks and other financial institutions) don’t even have any idea of what Paypal is, and very few indeed posses international credit cards.

In such a country (I am sure there are many other countries similar to India; for the record, a non-IM customer from Ghana once asked me if he could pay me via Western Union™ since that is the only available mode of payment in his country; for those who are reading this, DO NOT pay or receive money via these modes of payment as they are frequently abused by internet fraudsters and scammers. I refused that prospect from Ghana as I thought it more prudent to lose a sale than trust a stranger with something as risky as Western Union).

Ordering by money order/check is quite outdated and not something I recommend unless you have no other way! Ordering by either phone or fax seem to better alternatives!

f) Coupons: Coupons are evil, but not a necessary one. Several marketers point out that the absence of the coupon code box on the checkout page resulted in higher conversion rates compared to its presence! Again, it is very niche-specific and may or may not apply to you!

At the same time, you also need to consider whether withdrawing the coupon code box from the checkout page would do more harm than good. There are some ways to use the coupon system differently and carefully (depending on the e-commerce platform you are using) as suggested here.

g) Overall look and feel of the store: If your "Add to cart" and "Checkout" buttons/links are not clearly visible, i.e., if the customer has to try hard to find those buttons, chances are that he would hop to somewhere else. Also, if your checkout page contains third party ads, they may distract your customer and you may lose sales!

If you must include third party ads on order page, add them to the very bottom because only those who have little or no interest in buying your stuff would scroll down at the bottommost part of your checkout page (expecting a better deal or freebie?).

f) Security seals: If the Trustguard™, BBB™ or Hackersafe™ seals on shopping cart checkout pages are familiar to you, there is a good reason why these merchants use those seals. Apparently they help build trust among customers, epically those who are either paranoid of or new to online shopping.

If your order page is secured by SSL, it might further help in the trust-building process. These options however cost a lot of money and may not be affordable for you unless you have reached a point where you are making a decent income from your store!

Of course if you are a dishonest scammer out to con customers then no amount of seals and logos would save you from angry buyers and their refund requests! ;)

A SIMPLE SPLIT TEST PROVED OTHERWISE: While you might have seen such "security badges" in many eCommerce sites, I would give you an example of one of our fellow internet marketers: Mike Filsaime. He uses such security seals and logos on the Paydotcom checkout page, apparently to build trust and confidence in the shoppers.

However, a simple split test between a PDC and a non-PDC affiliate link (with no seals as such) revealed to me that many people hesitate paying via paydotcom, for reasons perhaps best known to them. In both cases, the salespage was same! Whether it is because of PDC’s association with Mike F or something else I don’t know.

I would like to add that while I like the Mike F guy, I am not a fan of any of his products, including Paydotcom (I am saying this both from a merchant’s as well as an affiliate’s point of view)!

Most probably I forgot to give you the details of the split test. Here is the story: a certain internet marketer uses an in-house affiliate manager script on her main salespage; that salespage used to (and still does) generate significant revenue for me. One day, I discovered that the same marketer has setup a similar salespage on her site, with Paydotcom as payment option (possibly to get sales from PDC’s affiliate network).

I quickly signed up to her Paydotcom affiliate program to give the PDC link a try and see if it makes me more money than the pervious, non-PDC link. Right from the date I started using the PDC affiliate link, I stopped getting sales altogether! It was not until I reinstated the old non-PDC affiliate link that I started making money again! This can be quite an exceptional case though!

g) Customer reviews: I know only too well that customer reviews are dime a dozen; yet, almost always I find myself getting attracted to the Amazon products which have lots of positive reviews and ratings! ;)

h) The KISS principle, commonsense and tracking: Even if all other rules of web design change over time, one rule would almost always work today, tomorrow and beyond – the rule of simplicity. If you keep your website or shopping cart user-friendly and easy-to-navigate, you will have fewer abandonment rates than otherwise; this is true for every niche!

Putting yourself in the customer’s shoes is a good idea as well. Test out the order process (right up to the product delivery) to get a feel of it! Even better, use one of your friends (probably someone who is not very familiar to the world of online shopping would be a good fit for this) as a guinea pig.

You would instantly know what is working and what is not, as well as what needs to be improved, thus enabling you to nip any problem in the bud or even do away with any superficial step from the checkout process. Generally speaking, the fewer hoops you have in the checkout process, the more conversions you would have!

Finally, nothing beats LIVE TRACKING! I would even go as far as to say that you should take everything mentioned above and on other websites as a grain of salt and see things for yourself! Throughout this article, I have repeatedly pointed out that your mileage may vary. If you really want to have 100% correct information, TEST and track!

i) Customer Followup and Feedback: If your shopping cart allows it, it is perhaps a good idea to send follow-up emails to those who abandoned the order process midway for some reason (I don’t mean that you auto-add these people to your autoresponder and irritate them with unrelated promos). Ask them for the reason behind the shopping cart abandonment and offer them a "secret" or "exclusive" discount coupon or bonus as incentive.

While you should not take every prospective customer’s comment at face value (some people can be downright nasty while others are quite impatient), this procedure should give you a broad overview of what you could do to minimize shopping cart abandonment rates and maximize your sales and revenue!

THE BIG QUESTION : The million dollar question remains: which shopping cart software supports all the above features? Hmm, that is a tough question, one that I don’t have an answer to! Whether you are using a hosted eCommerce service such as 1shoppingcart or self-installed scripts such as Dlguard or anything else, you need to be certain that you are making the right choice.

Just like in case of marriage, a wrong choice of ecommerce platform can melt down your entire business!

If you don’t get anything to your liking, your last option is hiring someone for building a custom eCommerce solution for you. However, it may not be an affordable option for everybody, especially those who are on the lower-end of income strata! Speaking of 1shoppingcart, I do like their order and checkout pages but in my opinion their affiliate page is not that impressive; moreover they are very costly too! 

Many people predict that Magento is going to be the "next big thing" in eCommerce (their feature list looks quite impressive, plus it is open source too), while others complain that it is a resource hog (you would need a VPS or Dedi to run it without issues) and also very difficult to operate for an average, unetechie person!

What this means is that you may need to outsource the technical part of Magento (including maintenance and upgrades) to a third party (which is not a big deal if you can find someone truly reliable and intelligent) or opt for their enterprise edition (which costs about 8,900 USD per year, or roughly about $750 per month)! ;)

Further articles on shopping cart abandonment, and how you can minimize it significantly:

Paypal checkout page credit card abandonment
PayPal: Shopping cart abandonment rates rise
Don’t Give Your Customers a Reason to Park Their Carts
Can anyone recommend a best ecommerce shopping cart software?
Ecommerce Solutions – Start Online Business Easily

Resources: Ecommerce forum

After I finished writing this article, I found the following thread that maybe helpful as well (although it seems most of the tips offered by this forum member overlap with mine, it is still worth a look):

Ecommerce Tips

I hope this article offers you some food for thought, if nothing else. If you have a shopping cart software (preferably a self-installed one) to recommend (with a link to your store please, if you don’t mind) you can let me know and I truly appreciate it!

23 Comments

  1. Salt Lake City Guaranteed Carpet Cleaning

    I don’t think it is just the cost of shipping that makes people abandon shopping carts. I think a lot of it is people have to get to the shopping cart to find out what it will actually cost. So many websites hide their shipping charges. I hate that.

  2. Salt Lake City Guaranteed Carpet Cleaning

    A lot of times if I cannot find the shipping charge on an item I will go to the trouble of going to the final step before paying and then dump the site. I get really frustrated at sites that do not disclose shipping charges clearly.

    1. Arindam

      You are right. It seems a lot of online retailers believe that if they are transparent about product price/shipping costs many people won’t buy it. Which further takes me to the question-if the seller is not confident enough to display the price of his product openly, why should I invest in it anyway?

      It is not just physical product retailers; take a look at the salespages of clickbank stuff too. Most of the time you would have a hard time finding the product cost!

  3. Professor

    I found the following list about a year and a half ago on the website of a commercial shopping cart ( don’t remember which one ), and sent it to one of my customers to show him why the cart I designed for him was such a good one.

    Why Shoppers Give up

    Unknown shipping prices or delivery times
    Total cost of items is too high
    Checkout process is too long
    Checkout requires too much personal information
    Site requires registration before purchase
    Site is unstable or unreliable
    Checkout process is confusing
    No time to complete the transaction at that time
    Credit card issues
    The list goes on and on.

    As you can see, the reason you have in your title is a combination of the first two in the list. I would personally put it first as well, but one reason I abandon carts myself is that they have programmed the checkout process to last through 3 or 4 different pages, which is asking a lot of a customer, and completely unnecessary. On my shopping cart checkout page ( there’s only one ), I ask for only three things, and let PayPal ask for the other stuff. I find that a customer is usually already committed if he gets that far.


    Professor

  4. Ecommerce Blog and Shopping Cart

    Good article, I’m always interested in the conversion issues.

    I wonder about stats like this, how much of it is swayed by things like the marketer not putting the full price till the check out (a pet peave of mine) forcing people to get to the cart page before they show the price.

    We provide a platform the includes ecommerce and digital product delivery.

    I’d welcome some reviews – there’s a free 60 day trial with no credit card required, just visit SoldWith.com

  5. James Dunn

    Thanks for an excellent article.

    Since we primarily work the offline to online market, this adds validity to the story we’re always telling – that over 80% of people research products and services online and then 65% of those people go out and buy locally.

    They abandon the shopping cart because they now have all their information – total cost of the product. Now, they can check to see if the local price is higher, lower, or the same. Some may return if the product is competitive, but most will not because once they’re in the store looking at the product, it’s hard to go back home and order it only to wait a few days for delivery.

    We all like the instant gratification and buying offline provides the “fix” for that desire. The closest to satisfying that “fix” is using Amazon’s Prime service where they will ship second day for free and next day for only $3.99 – but even then, you have to wait a day or two.

    This is great information that I will definitely share with our local businesses as further proof that they need to be “found” when people are looking for their products and services.

    Thanks for a very valuable post.

  6. healthygreenlivingtoday

    A very interesting article. There is small percentage of people just might ask themselves “do I really need this product?” and change their might at the last minute. I know I have.

  7. Ramon Ross

    I read an article in my home town newspaper that said, about 50 to 60% of shoppers at the grocery stores were leaving items at the checkout. The stores started asking people why – they found that it is because they could do without that item. Last year that number was only at 10 to 15%. Could it be that people are just being more careful how they spend there money today? I know I am!

  8. ManieE

    Shipping cost are a real problem, more so if you are an “international” customer. Sometimes the shipping are more than the products you want to buy!

    1. Arindam

      >>Shipping cost are a real problem, more so if you are an “international” customer.

      @ManieE: I agree because I am one such grumbling “international” customer who ends up paying more for shipping than the original item every time I shop for something from Amazon. It all comes down to how DESPERATE you are for that item; in my case I am so desperate that my desperation offsets the shipping costs I have to pay lol. ;)

  9. ManieE

    I suspect this trend does not appear in markets for down-loadable products like software or ebooks, does anyone seen statistics regarding this?I searched but could not find any information about this.

    1. Arindam

      >>I suspect this trend does not appear in markets for down-loadable products like software or ebooks, does anyone seen statistics regarding this?

      @ManieE: That depends on what kind of downloadable products you are selling. Shopping cart abandonment occurs in case of digital products too; I know it because my ecommerce software keeps a record of both unfulfilled and fulfilled orders. If you track the unfulfilled orders of your cart most likely you may see a pattern; if you cannot then ASK your customers! :)

  10. Michael Searles (EXACT NUMEROLOGIST)

    Once again Arindam, you have left no stone unturned in researching your topic of the day: High Shipping Costs the Reason Behind Shopping Cart Abandonment.
    Amid all of the e-mail notifications I receive daily I always look forward to getting your e-mails linking me through to your informative blog.
    Perhaps only co-incidence but PayPal recently sent me an invitation to partner with one of their own business partners overseas (a Chinese based drop-ship warehouse) whose USP was ‘Free Shipping World-Wide – No Minimum Order!).
    While drop-ship marketing is not my main business, it does become even more appealing in the light of your comments about online check-out purchase numbers falling because of perceived high shipping costs.
    Michael

    1. Arindam

      Thanks for your kind words, Michael. I have not used drop shipping either, except as an affiliate! :)

  11. ManieE

    I have been guilty of Shopping cart abandonment in the past, the reason is only one, on some pages it is a mission to find the price, and the easiest and quickest way to get it is to go through to the shopping cart.

  12. Nan

    Excellent post!

    We sell a tangible product (Wineopoly game) at our website and use a shipping calculator that is based on zip code. To me, this is much better than a flat rate shipping charge — for both the customer and us.

    Also, we give the customer shipping options. They can use USPS or UPS and can also choose speed of delivery. All this is based on the shipper’s charges, not some arbitrary amount based on the total $$ of the order.

    Of course, we’ll never know the real reason people abandon the shopping cart, but as other people have said, it’s probably because they’ve decided they can ‘live without it’ — especially during these tight economic times.

  13. ManieE

    How do you handle international orders?

    1. Arindam

      >>How do you handle international orders

      Credit cards mainly, and right now I just sell digital stuff. Physical goods maybe an option in future if I find the “right” shopping cart and a cool and reliable fulfilment company (I know which ones to go for so this is not a biggie). :D For selling digital goods you can use 3rd party processors such as Paypal, 2checkout, clickbank, etc. for processing your payment or your own merchant account if you have one. Other options can be Google checkout, Amazon payments, etc.

  14. ManieE

    Apologies, I did not make myself clear, I was wondering how Nan is handling their international shipping. I use Paypal but have no product of my own, I’m still selling other peoples products :)

  15. Arindam

    I hope Nan drops here to answer your queries, but assuming that you would sell physical goods, you can use a shopping cart software that integrates with fulfillment services like Kunaki. That way, your software collects the buyer’s shipping address from paypal, passes it on to the fulfilment service, who then despatches the item and issues a tracking number. This is just my conjecture; as I said I don’t have any experience selling phyical goods. FYI Rapid Action Profits script now supports Kunaki integration (RAP is good if u use only paypal) by means of an “addon” that you would need to buy separately! ;)

    Personally I prefer Fedex and DHL for fulfilment, because I have very good experience with them as a customer. They r not cheap but since when is “cheap” good? ;)

    If you use Amazon for processing payments they also offer you a fulfilment service. As far as I know, they primarily use UPS.

  16. Nan

    Hello again!

    The shipping options on our website are limited to domestic and Canada. We have a note on our website to contact us for international shipping. Then I do the research and provide the potential customer with cost options.

    We RARELY ship international (maybe once in 10 years?) because the costs are prohibitive (more than the item). Nevertheless, we do offer the option, just in case. ;-)

    BTW, we keep inventory on hand, so we ship ourselves (no fulfillment service). The holidays get a little frantic, but so far, we’ve been able to handle it.

    Hope this answers your question.

    1. Arindam

      Thanks Nan. Appreciate the update! :)

      I was wondering what types of merchandise you generally sell on your store (that is, if I too could find some stuff to buy lol ;) )

  17. Professor

    I just have to put in my 2 cents on the international shipping discussion. Living in the US Virgin Islands is like living in limbo. When I buy a physical product online I get one of these responses: 1) We don’t ship to international destinations, or 2) Yes, we’ll ship to you using [ UPS, Fedex ], or the only response I like, 3) Yes, we ship using USPS.

    1) If I get this response, I usually give up because it’s almost impossible to convince the seller that I DO live in the United States, ( We have a ZIP code! )

    2) Shipping via UPS or Fedex almost always costs more than the cost of the item. So with this response I can either give up, or try to convince the seller to ship USPS.

    3) When I get this response, I know my shipping cost is going to be the lowest possible.

    So most of the time, I don’t even try to buy physical products online. I just window-shop to find out what I want — then look for it locally. It’s best to let my local merchant handle the shipping and customs problems for me.