Three Pricing Tactics to Reduce Shopping Cart Abandonment

By Charles Nicholls | 09 Sep 2011

Online retailers can help curb shopping cart abandonment by introducing some simple, customer-centric pricing strategies, according to Charles Nicholls.

There is a strong relationship between the shopping cart abandonment rate, and the value of the shopping cart. In general, higher value shopping carts are abandoned more frequently, but it’s not a linear relationship and it is too simplistic to apply this as a general rule.

There are three key exceptions to this rule that all online marketers need to be aware of:

  • Low value carts have high abandonment rates
  • Carts at critical price points have very high abandonment rates
  • Individual products can have very different abandonment rates

Let’s look at each in turn using data is based on a sample of 250,000 abandoned shopping carts across multiple ecommerce sites.

1. Low value carts have very high abandonment rates

In the chart to the right, you can see that when the value of the shopping cart reaches $100, then from then on, the abandonment rate keeps climbing as the cart value increases. But it also shows how lower value baskets have very high abandonment rates.

The reason for this is that as the ratio of shipping cost to the value of the basket approaches 100%, customers inevitably abandon their cart. Many people face an emotional block if the shipping costs come close to the cost of the item(s) in the cart. For example, would you buy a $15.99 item if it costs an additional $10.95 to ship? In this case the shipping cost is 68% of the item value.

So it’s well worth checking the ratio of shipping cost to cart value for some of your lower value abandoned baskets and seeing whether you can adjust shipping policies to try to get the ratio below a maximum of 50% for at least some of them. Fifty percent seems to be the critical threshold – we’ve all be taught from an early age to divide by two and most people can recognise 50% instinctively.

 

2. Carts at critical price points have very high abandonment rates

We all know the psychological difference between a $99 purchase and a $100 one, is more than one dollar. That extra zero means that we perceive the item to be significantly more expensive, even though we know it is not. Not surprisingly, the same emotional response applies to shopping carts. In this chart we have broken down the abandonment rate curve into smaller price breaks, for baskets up to $200. You can see clearly that there’s a hurdle close to $100.

 What this tells you is that there are some key price points at which spikes in the abandonment rate will occur. The $100 spike is the most significant, and has the highest volume, but there are similar spikes at $250, $400 and $500.

What this suggests, of course, is that these are great break points at which you might offer minimum order free shipping.

Very often if the cost of the shipping takes the purchaser over the psychological barrier, then they are more likely to abandon. Minimum order free shipping may also help with the low value cart / high shipping cost problem as well, and often has the added benefit of increasing you average order value as customers add items to their carts to reach the threshold.

Notice how Macy’s offer free shipping at, yes, you guessed it, $99.

 Macy’s also does a great job at reminding the buyer about their $99 free shipping on the cart summary page. This often gets forgotten, but is really important because the cart summary page is such a high exit point.

In a perfect world, your reminder will tell the shopper how much more they need to spend in order to reach the free shipping threshold.

3. Individual products can have very different abandonment rates

Individual products have their own shopping cart abandonment rate, and it’s amazing to see how huge the differences are. For example: two items at the same IR500 online retailer both cost $499. While you might not be surprised that an item costing $499 is abandoned frequently, at 95% of the time, it’s very high. That means that having been added to the cart, it gets bought only one in 20 times.

But figure this. On the same site a different item, also costing $499, is abandoned only 32% of the time that it is added to a cart. It gets bought 2 out of every 3 times.

There are many potential causes of this, of course, and sometime these are completely understandable given the specifics of the item.

However, if both of these products are frequently abandoned, it is worth examining why and seeing if you can address some of the causes.

If you are interested in learning more about the causes of shopping cart abandonment, there is a short webcast recording which looks at this data and other causes. Click here.

 

1 Comment

One thought on “Three Pricing Tactics to Reduce Shopping Cart Abandonment”

  1. I would be fascinated to see the rate of cart abandonment for other online retailers when there are no shipping fees, meaning the customers just pays the ticket price.
    I’d also love to know the different rate of cart abandonment depending on whether the shopper is a man or a woman. Women shop more frequently while men spend more

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