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Shipping costs, lack of transparency harming online sales

By Julie King |

It's a scenario every business owner wants to avoid. A customer visits your store, fills up a shopping cart and then walks out just before the sale is complete, abandoning their purchases.

Yet for online retailers this is an all-too prevalent reality, with 56 per cent of shoppers abandoning purchases they had fully intended to buy, says a new study from Paypal Canada.

The number one complaint? Shipping prices that were too high.

Seventy eight per cent of those surveyed who abandoned a cart either knew the site or had bought from it before. So overall abandonment was not strongly related to a lack of familiarity or trust, although this was an issue for smaller retailers. Sixty-six per cent of those surveyed were reluctant to buy from a store they'd never heard of, due to concerns about sharing their financial information with the site.

Darrell MacMullin, country manager for PayPal Canada, announced a new addition to Paypal's Express Checkout that should help merchants reduce cart abandonment.

Through changes to the payment interface (API), merchants will now be able to show important pricing information such as the shipping costs, taxes and insurance options earlier in the process. Paypal's API can also take care of complex customs paperwork for cross-border shipments.

It's a helpful move for merchants that should further cement the company's leadership in the online payment industry.

Canadians currently purchase more than $2 billion online annually using Paypal. More than 8 million Canadians - 2 out of every 3 online shoppers - have a Paypal account and Canadians make a purchase using Paypal every 1.2 seconds.

Interestingly, the survey found that another 40 per said they abandoned their carts because the payment option they wanted to use was not available to them.

Roughly half of Paypal transactions are credit card based. While there is not an exact breakdown on the remaining half, MacMullin notes that these payments primarily come from accounts connected to the user's bank account and through funds that are maintained in the Paypal account.

The survey identified other areas ways merchants could improve their service. In the perfect world, the ideal payment process would involve a single click, no matter where they were shopping said 52 per cent of Canadians. A further 43 per cent said it takes too long to fill out credit card information.

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