How to Measure it and Why it’s Important
Do you have a good e-commerce website set up, with products that you really believe in, but for one reason or another do not seem to be making profits, or at least not nearly as much as you could be?
One of the most important aspects for any online retailer to be familiar with is the shopping cart, particularly their conversion and abandonment rates. This refers to how many people actually pay for the products in their shopping carts once those items are in the cart.
What we are here to discuss is how to measure your shopping card abandonment and conversion rates, and why these figures are so crucial to your success.
What are Shopping Cart Conversion and Abandonment Rates?
Shopping cart conversion rate refers to how many people follow through and actually pay for their orders after having added products to the shopping cart. You may have 1,000 people put items in the shopping cart, but only 250 of those people follow through and pay for the order; the shopping cart abandonment rate is therefore how many people abandon their shopping carts before completing the order. This is one of the most important metrics to be familiar with when it comes to e-commerce websites.
Measuring Shopping Cart Conversion Rate and Abandonment Rate
It’s important to measure what the shopping cart conversion rate of your website is, as well as what the shopping cart abandonment rate is; these are both two different sides of the same coin. Measuring this is just a matter of very simple math, so let’s go over a quick explanation.
For example, let’s assume that 1,000 potential customers added items to their shopping cart, but only 250 of those customers followed through and completed the purchase. You would then take those 250 completed orders and divide that number by the 1,000 carts initially created.
Then, to get the final percentage value or the shopping cart conversion rate, multiply this by 100. The process of measuring the shopping cart conversion rate is the same as if you are trying to figure out what percentage score you got on a test. Take the number of completed purchases, divide by the initial amount of shopping carts before purchase, and multiply by 100.
In this scenario, this is what we have a shopping cart conversion rate of:
(250/1,000) x 100 = 25%.
The process for measuring the shopping cart abandonment rate is exactly the same, but here you would just work with the number of abandoned carts as opposed to completed orders. In this scenario, for the same example as above, the shopping cart abandonment rate would be
(750/1,000) x 100 = 75%.
It’s a very simple thing to calculate, but very important to be aware of.
Average Shopping Cart Conversion and Abandonment Rates
Now that you have figured out the shopping cart conversion rate and the shopping cart abandonment rate for your online store. What does it mean? How do your conversion and abandonment rates compare to the average?
The average rate of shopping cart conversions is roughly between 20% and 40%, depending on the specific website. On average, you can expect anywhere from 60% to 80% of people to abandon their shopping carts, with around 68% being the median.
As you can see, the general shopping cart conversion rate is actually quite low across the board, with the majority of people abandoning their shopping carts at some point during the checkout process. It’s a very big number indeed, and the higher you can get your conversion rate, the better off you will be.
Why Shopping Cart Conversion Rates are Important
The shopping cart conversion rate of your site is directly related to the amount of revenue you could be making. For a really simplistic example, let’s assume that your site features a 20% shopping cart conversion rate, but it could have a 40% conversion rate.
That 20% difference in conversion is a 20% difference in revenue (not taking product prices into account). Shopping cart conversion rates and revenues have a symbiotic relationship. The better your shopping cart conversion rate is, the more money you’re going to make. It’s as simple as that.
Not only does the conversion rate and abandonment rate directly affect your revenues, it can also tell you some major things about your website. Shopping cart abandonment is often cause by a variety of factors, many of which are in your control, and nearly all of which can be modified or improved to boost that shopping cart conversion rate.
Leading Causes of Shopping Cart Abandonment
To give you an idea of why your shopping cart conversion rate may be low, let’s take a look at the top 6 causes of cart abandonment.
- Customers always hate when they are forced to sign up for an account with a website before being able to make a purchase.
- Slow website and checkout loading speeds are often to blame, with the majority of people abandoning shopping carts when they take 3 seconds or more to load.
- People always hate high shipping costs.
- Some websites have long and confusing checkout processes that are just too tedious for customers to work their way through. It’s all about being simple.
- Websites which are far too aggressive with promotions and upselling often see higher cart abandonment rates. Nobody wants to be bombarded with advertisements when they are already planning on buying something.
- Websites which appear to be cheaply made and lacking in security often have high shopping cart abandonment rates. If people don’t feel safe, they won’t buy.
Conclusion
If you make sure that you have done everything possible to decrease shopping cart abandonment rates and increase those conversions, you will end up being much more profitable, both in the short and long run.