Tuesday , October 4, 2022

A Lack of Payment Choices Figures in the Reasons Why Online Shoppers Walk Away

An absence of such payment features as one-click checkout and alternative payment methods at shopping sites is contributing to an overall cart-abandonment rate for online merchants that came to 75.7% of carts initiated in the year through March, according to a study released late Tuesday.

The report, from Coresight Research and sponsored by checkout-technology firm Bolt Financial Inc., indicates that an offering of fraud protection also ranks high with consumers when shopping online. This feature, indeed, generated a “utility score” of 43.8, while one-click checkout yielded a score of 37.8 and alternative payment methods, such as digital wallets, gift cards, and buy now, pay later options, scored 33.7. The scores reflect consumers’ ranking of an option relative to other options. The highest score went to free shipping, at 77.2. The rankings are based on a survey of 222 U.S. adults in July.

While e-commerce sales had been rising before the pandemic, online traffic took off as consumers grew wary of visiting physical stores. Indeed, U.S. online sales are approaching $1 trillion on an annual basis. But a variety of factors have proved to be turn-offs for consumers, leading them to walk away from a potential purchase. Coresight estimates cart abandonment is costing merchants anywhere from $111 billion to $136 billion annually in lost sales.

The report indicates a number of factors influencing consumers to abandon full shopping carts, including the size of the screen they’re using. Merchants contacted for the survey and who had tracked abandonment by device type said the walk-away rate was highest for shoppers using mobile devices, at 84%. The rate for tablets came to 70.5%, and for desktop computers, 73.2%. These results were based on results from 219 online retailers who had noticed a difference in abandonment rates among different types of device. The survey canvassed a total of 271 e-commerce merchants.

But merchants and consumers differ sharply on some of the reasons for abandonment, according to the study. Both sets of respondents ranked extra costs, such as shipping fees and taxes, as the most common reason. But an absence of alternative payment methods registered more strongly with consumers than with merchants, with 25.7% of consumers citing this as a cause for walking away, twice the percentage for merchants. Likewise, fraud protection mattered to 20.3% of consumers, four times the percentage among merchants.

Younger consumers also prefer alternative payment methods more strongly than older ones. More than 40% of GenZ consumers cited them as a factor most likely to get them to finish a purchase. Among Baby Boomers and older consumers, this percentage dropped to 32%.

Coresight concludes that online retailers have some work to do to reduce abandonment rates. “The relative lack of attention spent on the online-shopper experience relative to in-person shopping experiences has resulted in numerous friction points, including long and complicated checkout experiences, which are leading to high online cart-abandonment rates,” the report says.

Check Also

Boston Consulting Group: Payments Revenues Will Stay Resilient Despite Headwinds

Despite economic headwinds from supply-chain bottlenecks and geopolitical instability, the payments industry continues to show …

Digital Transactions