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Why is shopping cart abandonment a logistics problem for retailers?

Posted by Anna Khaletskaya on 21.06.2021
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Why is shopping cart abandonment a logistics problem for retailers?

The COVID-19 pandemic has affected the eCommerce industry. More and more consumers order goods online. However, it is not enough to make convenient navigation through the site and set an affordable price for a buyer. Now there is high competition in this sphere, and the online store has to сonsider all the possible things to increase sales — from the easy-to-use website’s interface to returns policy.

In the article, WareTeka collected information for you on how properly established logistics can increase the percentage of sales for an online shop.

What is a shopping cart abandonment?

With the COVID-19 outbreak and the massive shifting away from offline to online, the number of online shop visitors increased significantly. Undoubtedly, some of them came to so-called “window shopping”. They just browse sites without the intention to buy something. It is more about research, price comparison, gift ideas, etc. People use the shopping cart on the Internet store as a wish list. However, this is only one of the reasons why visitors do not place orders. 

Why is shopping cart abandonment a logistics problem for retailers? - 2

A shopping cart abandonment is a problem when a user adds goods to an online cart without buying them. Thus, most of the possible sales remain incomplete. This is a serious profit that the online store lost.

The consumers name the main reasons for the eCommerce cart abandonment. They are the high shipping costs, long delivery time, and the cheaper price from competitors. And if a retailer can not always reduce the price, then logistics optimization is quite achievable.

How does delivery affect the percentage of shopping cart abandonment?

More and more consumers purchase products online. Therefore, delivery became a competitive advantage for online stores. But if the delivery terms do not satisfy a buyer, he can abandon the sale. To solve the shopping cart abandonment problem, it is necessary to specify the main causes of this phenomenon.

  1. Shipping costs. Before placing an order, a buyer thinks about additional costs. Consumers say that the delivery fees are one of the most important considerations when choosing where to browse. If retailers present their customers with additional delivery costs, there is a chance that consumers will abandon their carts. Buyers abandon the digital shopping cart because of shipping rates, taxes, and fees. So the extra payments are the number one reason for shopping cart abandonment.
  2. Delivery time. Most purchases in online shops are impulsive. This means that a client wants to receive his order “here and now”. In the new realities, consumers expect their order to be delivered in 1-2 days. The delivery becomes a decisive factor in choosing an internet store.
  3. Returns policy. When a consumer buys a product online, they cannot value it visually. Therefore it is very important to arrange a convenient return processing if the item does not fit the buyer. Some online stores may have a returns rate of more than half of the total order number. For example, customers often return clothes and shoes.

Consumers’ desire not to pay for delivery and to receive their orders is often called the Amazon effect. In order not to lose customers, other online shops have to adapt to market realities.

Logistics arrangement: Amazon Experience

Amazon dominates the eCommerce industry. This company delivers products quickly and offers its affordable Prime subscription. Since buyers are aware of the advantageous terms of delivery, 63% of product searches begin on this platform.

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In 2020, Amazon announced it was building 1,000 suburban fulfillment centers to support Same-Day Delivery. An increasing number of consumers already use Amazon Prime One-Day and Same-Day Delivery, and these new, more compelling delivery options are driving revenue. 57% of Amazon Prime One-Day and Same-Day Delivery users say that those offers increase the amount of money they spend with Amazon.

How to make delivery a competitive advantage and solve the shopping cart abandonment problem? 

In order not to “lose” major market players like Amazon, online retailers should pay attention to the logistics strategies of their enterprise. Statista estimates that 15% of retail sales in 2021 will come from eCommerce. And that number is climbing. To stay competitive in the evolving retail landscape, retailers must provide fast and affordable delivery.

It is not profitable for an online store to build its logistics. However, it can outsource it. By adding in their logistics chain more fulfillment centers that are closer to the end consumer, they reduce transportation costs and increase the last-mile logistics efficiency.

Fulfillment service is the complete process from point of sales inquiry to delivery of a product to the customer. It is often used by internet stores. The main processes of fulfillment are the following:

  • Receiving and storing goods.
  • Processing the Internet orders.
  • Picking and packaging of orders.
  • Shipping to the consumer.
  • Handling returns.

Moreover, your fulfillment partner can assume the role of call center and accept orders from customers. The logistic provider performs labor- and resource-intensive part of the internet shop activity. The fulfillment provider arranges delivery in such a way that it will be faster quick and costs less to an end-user. The internet-store does not need to hire staff, rent a warehouse, and can focus on the main activities. Also, the online store owner can be sure that even during the peak season, all orders will be fulfilled.

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Conclusions: fulfillment is an efficient solution for an internet store logistic tasks

With the rapid growth of the eCommerce segment, customers’ expectations are constantly growing. They want fast and cheap delivery. For example, Amazon offers free of charge delivery of its products in one day.  However, it is not cost-effective for internet stores to build thousands of fixed warehouses, as Amazon does to provide advantageous delivery conditions to its customers.

Shopping cart abandonment is a logistics problem. It can be solved by fulfillment. The logistics provider solves the problem of goods storage, order processing, and delivery to the final consumer. Thus, the level of customer service and loyalty to the retailer increases, and as a result, the number of sales is growing. By using fulfillment, the online store gains an important competitive advantage, and therefore this solution of logistics issues is optimal for online retailers.

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