Why Your Online Checkout System Hurts Your Sales

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May 23, 2012 by Graham Cooke7

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Graham Cooke is the CEO of QuBit, a technology company specializing in advanced website data collection, analysis, and optimization products. He was previously a senior product manager at Google. Follow him @thegrahamcooke.

The checkout is, arguably, the most important part of any retail experience, online or offline. You can do what you like to get customers through the door and you can merchandise and market at them to your heart’s content, but if your checkout doesn’t let them pay for their goods or services, all of your effort is wasted.

This is why it’s surprising that so little has changed in the world of checkouts since retailing began. In fact, the main development in recent history has been the dehumanization of the process. Fixed prices, tills, electronic point of sale (EPOS), and now the online checkout have all been about removing human interaction from the process, thus saving costs.

That approach is fine in a brick-and-mortar setting where, by and large, people who fill their cart with items tend to go on and purchase them. However, online 60% to 70% of people abandon their carts before completing a transaction. Something is clearly very wrong. Here’s what it is and how to fix it.

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The Problem With Checkouts

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If we can agree that something is wrong with the online checkout model, what specifically is happening that’s causing these problems? Here are the three main issues.

• Checkout Process: People abandon a shopping cart because of functional issues with the site. Problems with payment methods, issues with localization, and complex registration processes can all make a shopper switch off instantly. In fact, a Forrester Research study found that 23% of users will exit a checkout if they’re forced to register. It’s a simple thing, but it drives people away.
• Operational Issues: There are a range of issues that are not directly caused by checkout functionality, but which still cause people to abandon their purchases. A major offender here is shipping costs, which cause up to 74% of cart abandonment, according to Toluna. Sites that don’t clearly state shipping costs when a shopper chooses a product run the risk of losing a sale when the full price of their purchase becomes apparent at the checkout stage.
• Site-Wide Issues: Some of the issues that cause checkout abandonment don’t stem from the checkout itself, but from broader problems with the site. A major culprit here is site speed. Research by Akamai showed that for 46% of people, a quick checkout was the most influential factor in deciding whether a shopper would visit the site again.

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How to Solve the Checkout Problem

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There are at least five things that online retailers can do to reduce abandonment and directly increase their sales.

• Details: Eighty percent of top retailers have now ‘quarantined’ their checkouts by moving shoppers away from the main retail functionality of the site in order to reduce distractions. Similarly, 40% have introduced the ability to save card details for future transactions. Together these two features can create a small but significant improvement in checkout conversions. On the payment side, the introduction of PayPalpayments can increase conversions by as much as 14% and the use of mobile phones to facilitate simple payments also promises to drive down abandonment rates.
• Simplify: At the moment, the average online checkout is a 5 to 6 step process involving multiple data entry and decision points. This should be simplified for visitors. Amazon’s One-Click setup is the best example of a simplified checkout process, and is one that any retailer would do well to observe.
• Centralize: The online retail market is crying out for a centralized system where users can use a single login to enter all the relevant details to check out. While something like PayPal removes some of the stages around payment information, such a centralized system could also take into account things like shipping preferences.
• Collaborate: One of the key issues in checkouts at the moment is that every site’s checkout is, in some way, different. Collaboration and sharing of best practices between retailers could result in a much more unified checkout experience for consumers and stronger revenue streams for companies.
• Integrate: Any effective set of checkout or payment processes should be the same across all company platforms. By presenting shoppers with a single payment and checkout solution for all of their retail needs you’re once again reducing complexity and increasing the potential for conversion.