How to lower your ecommerce cancellation rates
Kelli Trapnell
·December 21, 2023
In ecommerce, order cancellations are common, and can occur at one of several stages during a transaction, either before or after the order is delivered.
“Order cancellation” is a broad term that includes when a customer cancels the purchase of products or services that they were in the process of buying, as well as the post-purchase cancellation of products or services that have already been delivered.
Order cancellation rates are especially high during both the pre-purchase (cart abandonment) and post-purchase (product return) phase, though they can occur anywhere in the buyer’s journey.
In this article, we’ll look at why and when order cancellations tend to occur, and what you can do as a retailer to curb high cancellation rates and increase customer satisfaction.
Pre-purchase order cancellations
First, let’s look at the orders that are canceled before the customer has even paid for the order.
Shopping cart abandonment
The most frequent point at which customers decide to cancel a transaction is during the checkout process — a trend that’s known as “cart abandonment.”
Nearly three-quarters of all shoppers cancel orders at this point, according to recent studies. In this case, the shopper may not be fully committed to the purchase; they may be discouraged by high shipping fees or long delivery times; or they have a poor user experience during checkout that discourages them from completing the transaction.
Ecommerce shops can attempt to combat shopping cart abandonment by sending out reminder emails or text messages, encouraging the shopper to complete the purchase. Approximately 17.6% of customers who see such messages go back to complete the purchase.
It’s also important to ensure that you have a streamlined checkout process – don’t force shoppers to fill out 30 fields during the registration process; collect only the minimum amount of information you need to complete the transaction, and offer integrations with payment gateways like Apple Pay, Google Pay, and PayPal, so the customer doesn’t need to enter credit card information.
Post-purchase cancellation
The next stage at which an order cancellation may occur is after the product has been paid for, but before it has been received.
Post-order, pre-delivery order cancellation
In this case, the cancellation may occur because the buyer has changed their mind or experienced buyer’s remorse. Maybe they saw the same item for a cheaper price, or realized they didn’t need the item after all.
If your brand has not yet shipped the product and it is still eligible for free cancellation, they may elect to cancel the order. Ecommerce sites like Amazon include a self-service portal where customers can cancel eligible orders themselves, without waiting for customer support — by making it as easy as possible to cancel an order, you can avoid the costs associated with processing a return later.
Order cancellations can also occur at this point if your delivery schedule is longer than the shopper had anticipated, leading to low customer satisfaction. In fact, 53% of shoppers have canceled orders if their delivery is too slow.
These delivery delays may be caused by stockouts, warehouse issues, or carrier issues — but in any case, if a customer does not receive the order within their anticipated timeframe, they may request a refund, even if the item is already en route to them. In this case, they’ll be expected to send back the item when it arrives. If the item has not yet been shipped, the shopper should receive a refund immediately.
High cancellation rates also occur after the customer has already received the product, and opts to send it back for a refund or an exchange — or in cases where a customer has subscribed to an ongoing delivery or service, and decides to terminate the service.
Product returns
Product returns are a common form of order cancellation, with anywhere up to 30% of customer orders ending in a return.
In some cases, this may be due to a manufacturer defect, shipping damage, or receiving the wrong product: These situations account for about 48% of all returns.
However, it’s even more common for customers to cancel orders they’ve already received in cases where there’s nothing wrong with the product itself — it just doesn’t work for the customer. Check out our ecommerce returns report to learn more about return rates by industry.
Fifty-five percent of customers said they’ve returned products because they were the incorrect size, fit poorly, or they didn’t like the color; and 36% said that the item didn’t look the same as it did online. These types of returns are not due to a product defect, but even so, the product failed to deliver a positive customer experience for one reason or another.
Subscription service cancellation
For retailers that encourage customers to sign up for recurring purchases through a subscription service, customers may decide to opt out before their next order. In this case, the customer may have decided they no longer need the certain product or service on a frequent basis. However, make sure that you offer them the option to decrease the frequency of their orders, rather than cancel, in case they still want the delivery at longer intervals.
How to curb high cancellation rates
In most cases, whether it happens before or after the product is delivered, high cancellation rates are largely tied to customer satisfaction.
By putting strategies into place to ensure you’re meeting customer expectations through the entire buyer’s journey, you can cut down on your order cancellations while increasing customer satisfaction metrics.
Some tips for lowering your cancellation rate include:
- Ensure fast delivery
Don’t encourage customers to buy products that you don’t even have in stock yet, especially if you don’t have a clear delivery timeframe. Instead, promote products that you have in inventory and can deliver quickly — 90% of customers expect to see their orders at their door within two to three days. - Don’t surprise customers with high shipping fees
Many shoppers abandon shopping carts because of high shipping costs. To combat these types of order cancellations, consider offering free shipping for orders over a certain price point, such as $50 — this will encourage shoppers to add more items to their cart to qualify for free shipping, helping you gain additional revenue from the transaction instead of missing out on the sale completely. - Make sure product descriptions are accurate
When it comes to product returns, customers often send back items that don’t align with their expectations — so it’s important to give them as much information as possible up front so they can make smarter purchasing decisions. Make sure that your product pages include detailed product information; photos and videos; customer reviews and UGC photos; and recommendations for proper sizing. - Encourage exchanges over refund requests
When ecommerce shoppers request product refunds, you’ll pay high fees in reverse logistics, and may lose the customer for good. By using a returns automation platform like Loop, you can encourage shoppers to use their refund credit to choose a different item from your store, and have it shipped to them immediately even before you’ve processed the return. This can help you deliver a great customer experience by helping them trade in a product they don’t want for one that they do, and will help you retain revenue from the transaction and preserve customer loyalty.
Want to lower your post-purchase cancellation rate by optimizing for exchanges? Find out how Loop can help. Sign up for a demo today.
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