According to Business Insider, approximately $4 TRILLION worth of merchandise will be abandoned in online shopping carts this year, of which only 63% is recoverable for those retailers with the necessary “savvy”.
The reasons behind this abandonment are as myriad as the individuals making the purchases, but to truly understand the root cause, you must examine the people themselves. From an online purchasing perspective, they fall roughly into these 5 categories:
- Mind-Changers – People change their minds all the time, which is much easier when you’re online than when you’re face-to-face with a sales rep. The longer the purchase process, the more time retailers are leaving open for this category to have second thoughts;
- Distractors – For those who don’t really care about their purchase, the slightest distraction will cause them move on. Long and complicated check-out processes will see these folks following the next shiny thing;
- Impatient – Again, long check-out processes will see the impatient group give up fairly quickly even though it means starting again. The issue is that they will undoubtedly start again on a competitor’s site;
- Private – Asking a significant number of questions unrelated to the transaction itself, or forcing them to create an account first is not an option for this category.; and
- Frustrated – Too many steps and customers become frustrated and lose interest in purchasing the item.
Other reasons include hidden fees, unreasonable shipping & handling cost, loss of bandwidth and a multitude of others, but these are mostly issues with the merchant, not with the buyer.
The simplest and quickest checkout process helps mitigate these all-too-common behavioural flaws. However, it’s just not that easy when both the merchant and their underpinning acquiring bank(s) have responsibilities that go far beyond customer convenience.
Anti-fraud, anti-money laundering, and significant numbers of industry specific regulations mean that sellers must be reasonably sure that the purchaser is who they say they are. Currently this is performed by authentication; payment card details including the Card Verification Value (CVV) etc.
However, as a direct result of increasing online fraud rates banks now require digital shoppers to prove who they are with more than just their card details. For example, 3D Secure was introduced in 2005 to help combat this fraud by adding another layer of authentication, but the oft-quoted “significant abandonment rates” experienced as a direct result have forced many e-commerce retailers to turn the service off during peak seasons (e.g. Christmas), or even cancel the service altogether.
So far the uncertain balance between convenience and security has only been good for the bad guys.
The Holy Grail of digital commerce is a frictionless checkout. This is only possible if the many disparate inputs are seamlessly integrated and made invisible to the consumer. The only device that has a chance to combine all of this into a process that basically mirrors the every-day behaviour of the consumer is the mobile device. It also just happens to be the one thing that can combine many forms of authentication that far exceed every regulation in the industry.
No-one doubts that e-commerce and m-commerce will continue to enjoy enormous growth, but it is only by getting the convenience vs. security balance right that the full potential of these markets can be reached.
Only authentication holds all the cards.
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[Ed. Written in collaboration with www.myPINpad.com]