Cart Drop-outs and its effects on Indian E-commerce

December 03 2015

With the rising e-commerce trend in India the trend of abandoning the shopping cart is also rising and stats are shockingly high. The current cart drop-out rate lies somewhere between 60-70 percent which means for every 100 customers only 30 customers actually end up buying the product.

Cart Drop-outs and its effects on Indian E-commerce

Cart and the customer

Talking in terms of tangible/physical shopping experience once a customer enters the shopping mart the first priority is to get the shopping cart. Once the task has been completed, the customer takes the liberty of moving down the various aisles of the shopping cart to collect the items and products which are required by him. Once the customer has collected all the necessary items in the cart it’s now time to move to the checkout counter.

This experience is the same as what one does in an e-commerce shopping cart. In fact, these real-life shopping marts are the main source of inspiration for online e-commerce stores with the difference that all the steps and experiences have been digitized in the case of online shopping.

Now consider the case where the customer collects all the items needed by him, puts them in a cart and then walks out of the store. This phenomenon came to be known as cart abandonment and it is hurting and haunting e-commerce stores across the globe.

India is closely related to cart abandonment

The phenomenon is on the rise across the globe but since, India is the only supermarket left to capture in terms of online shopping it is being seen as the biggest culprit in this phenomenon. Stats suggest that the current abandonment rate lies somewhere between 60-70 per cent which means that out of every 100 people who visit and fill their carts only 30 actually buy the products they intended to. And the majority of customers prefer to pay via Cash-on-Delivery which is another reason for the loss of revenue among all e-commerce portals.

This trend is raising alarms given the number of different options available in India for making online payments. So, why such trends are rising to enable shocking behaviour from customers?

Understanding the cart abandonment

In order to understand cart abandonment let us see what drives this phenomenon in a real store.

Large check-out lines at the counters are a major cause of cart abandonment in stores. Additionally, excessive time taken by the person at the counter and the availability of fewer options to pay the bill are some of the reasons which cause customers to leave without having the buy they intended to.

The factors are the same when we move to the digital ecosystem.

  1. While there is more than a sufficient number of options available to pay money online in India ranging from credit/debit cards, POS, and mobile wallets all of them require to access the payment gateway in order to debit the money from the account The only exception is a mobile wallet.

  2. This has led to the country’s e-commerce depending heavily on payment gateways. Sometimes customer shopping online also found the payment methods to be restricted as a particular portal will only accept payment from such and such banks in terms of credit and debit cards.

  3. Another annoyance is the multi-step verification procedures. Users have to go through them even when they are purchasing from their personal devices. Every time they want to make a transaction they have to check for the unique OTP on their mobiles.

So, now consider the customer going through all these hurdles to make a payment just to find out that the transaction has failed with no specification of the reason and in worse cases sometimes the amount gets deducted from the account and gets stuck in the gateway and is never received by the vendor which leads to automatic cancellation of the order and refunding alone takes 7-10 business day from the date of transaction.

Related: Trends Buzzing in E-commerce sphere: A little more to Routine Marketing

Since, mobile wallets are still not so popular there is a need to develop cutting-edge technologies in payment gateways so that the burden can be taken off of the customer. Good payment gateways are equally important to customers as they are to vendors. Lack of technology is creating a nuisance for the customers and hence the phenomenon of cart abandonment.

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