Online retailers are facing a growing basket abandonment crisis

According to figures from Retail Economics and GFS, there was a 9% increase in shopping cart abandonment last year, equating to around £3 billion in lost sales.

Online retailers lost out on £34.4 billion in 2023, with consumers citing high delivery costs, limited shipping options and new returns fees as the main reasons for canceling their orders.

This is only the second year that Retail Economics and GFS have collected such data, but previous studies indicate a sharp increase in this trend. A 2018 report from Barclaycard found that online stores lost £18 billion due to shopping cart abandonment. While overall online spending and inflation are contributing to this increase, the growth in abandonment rates is outpacing that of online sales, which have increased by approximately 79% since 2018. Conversely, abandonment rates have increased by 92%.

Richard Lim, Chief Executive at Retail Economics, partly attributes this trend to the current economic climate, noting a significant increase in basket abandonment among middle- and high-income millennials. Despite being digitally savvy, millennials (25-34 years) are now more than three times more likely to abandon baskets of clothes and shoes than those over 65, and twice as likely to forego furniture purchases than those in the age group of 55-64 years.

“This is partly due to the second wave of the cost of living,” Lim explains. “These ambitious millennials, who likely bought their first home in the last decade and are accustomed to low interest rates, are now facing higher borrowing costs.” As a result, they are more careful with their spending and increasingly sensitive to higher cash costs.

Delivery and handling costs have risen steadily. As inflationary pressures and shipping disruptions escalated in 2021, retailers began quietly raising checkout fees. Many have introduced higher minimum spend requirements for free delivery, while others have increased costs outright. For example, Next's home delivery charges have risen from £3.99 in May 2020 to £4.95 today. Similarly, Argos' fast same-day delivery for small items now costs £5.95, up from £3.95 in 2021.

In addition, the cost of returning items has increased. Many fashion retailers have introduced new return fees to combat overordering and returns. Oh Polly recently announced a return fee of up to £8.99, joining H&M and Zara in implementing similar charges. While these measures reduce the number of repeat customers, they also deter a wider range of customers.

The number of active customers at online fast fashion retailers such as Asos and Boohoo has fallen over the past year. Although these retailers claim to be losing customers who regularly return items, data suggests that higher costs are driving general customers to abandon their orders more often. According to Retail Economics and GFS, 55% of people who abandoned their shopping carts did so because of return fees, up from 49% last year, while 80% cited high delivery fees.

Gillian Ridley Whittle, former fashion director at Topshop and now head of sustainable underwear brand Peachau, notes that some shoppers habitually fill baskets with no intention of purchasing anything. However, she understands why more and more people are canceling entire orders due to unexpected costs at checkout.

Customers are accustomed to a seamless shopping experience and any disruptions, such as hidden fees, can cause them to abandon their purchases. As retailers grapple with rising costs and strive for more profitable orders, the challenge of balancing customer satisfaction and profitability increases.

The stakes are high for online retailers as more shoppers return to high street stores. “In today's increasingly competitive consumer environment, retailers cannot afford to let potential sales slip away,” Lim warns.

Persistent follow-up emails can also backfire, as customer John Burkitt illustrates. “A reminder and a working voucher code might have convinced me,” says Burkitt, “but five emails a day is just too much.”

Retailers must tread carefully and balance engagement without overwhelming their customers to navigate the complex landscape of online store abandonment.

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