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Business others 7 Strategies to Reduce Ecommerce Order Cancellation Rate

7 Strategies to Reduce Ecommerce Order Cancellation Rate


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7 Strategies to Reduce Ecommerce Order Cancellation Rate

Consumers returned about $428 billion goods in 2020, and the number keeps growing every year. In 2021, the retail returns increased to an average of 16.6% in 2021, compared to the 10.6% increase in 2022. 

These statistics reveal that a high e-commerce cancellation rate is becoming the new normal, affecting profit margins, reducing retention rates, and making it difficult for businesses to scale. 

First, cancelled orders inflate the operational cost and don’t generate any return on investment. Additionally, customers who cancel orders often leave negative reviews, hampering businesses’ reputations and leading to customer churn. 

So, if you are an e-commerce trader looking to scale your business, you want to keep the cancellation rate to a minimum. This way, you can reduce churn, create positive impressions and keep your customers coming back. 

This article discusses practical tips for your e-commerce strategy to reduce cancellation rates. 

Let’s dive right in. 

What are cancellation rates?

E-commerce cancellation rates are booked products and services canceled by the consumer. You can calculate cancellation rates annually, monthly, or daily. 

How to calculate e-commerce cancellation rate: 

  • Cancellation rate = Number of canceled bookings / Number of total bookings. 

Why do customers cancel orders? 

Customers return items based on different reasons. Research shows customer preference-based returns (style, size, fit, etc.) take about 72% of all returns in the fashion industry. Additionally, non-preference-based returns (broken or faulty items, etc.) take up about 10% of why consumers cancel their orders.

Another survey shows the various reasons customers cancel orders and their rates. They include:

  • I changed my mind - 45%
  • Extended delivery periods - 35% 
  • Too high shipping expenses- 40% 
  • Expensive service charge - 22% 
  • Account creation is mandatory - 8%
  • Unfavorable return policy - 16 %
  • Rigorous payment options - 10%
  • Other reasons- 5% 

How to reduce cancellation rates for your e-commerce business 

You can adopt specific strategies to minimize the cancellation rate for your online business. Let’s check them out below: 

  1. Use payment processing order forms

Consumers fill out payment processing order forms when they want to purchase a product from a vendor online. It records incoming and outgoing transactions, including various details like the transaction account ID of the account where the funds will be debited and credited. It also includes sender and recipient’s account details, transaction amount, purchase date, currency, etc. 

Essentially, it is the statement containing both parties’ agreement on payment or fees. It entails details about refund upon cancellation, returns, etc. 

A payment processing order form mitigates losses for your business. It’s written proof of what you and the consumer agreed on during purchase. 

Payment processing orders contain all the details indicating whether you enable refunds or not after a customer cancels and if you receive or exchange a canceled order. This way, you have evidence to back up your claim if a customer wants a refund after they’ve canceled an order. 

However, you don’t have to set up your payment processing form from scratch. You can use templates online. There are ready-made order forms specific to different industries. So, select the most appropriate for your business and tweak them to suit your purpose. 

Doing this will speed up the payment process because customers won’t have to wait for you to prepare a form during the check-out process. The ready-made payment processing form will be available for them to input details of the transaction as they check out, making the payment experience less cumbersome. 

Therefore, a big step to reducing cancellation forms is an online payment form that reinstates your return, cancellation, and payment guidelines. It’s also proof that helps you skip unjustifiable cancellations, saving your business from unnecessary expenses. 

2. Write clear descriptions

Clear product descriptions are an excellent way to compel customers to buy and ensure they purchase the right items, preventing canceled orders. 

98% of shoppers have been discouraged from completing a purchase because of incomplete or incorrect content. So, don’t leave out essential details while creating product descriptions. Ensure customers are equipped with all the information they need to make the right purchase. This includes an appropriate size guide, product materials, contents, color, etc. 

Also, make your content easy to read to enable customers to digest the information quickly. Do this with scannable, simple, and error-free product descriptions. Use short sentences, bullet points, white space, and readable font sizes. 

Additionally, highlight the features of the products to help consumers decide whether an item has the qualities they want. This reduces your cancellation rates significantly because your customers are sure they buy the right products.

3. Use high-quality images 

High-quality images get your audience’s attention, whether they are scrolling through their social media feed or browsing your website or online store. That’s not all; they also clearly show your product and its descriptions to avoid confusion. 

Statistics show that 75% of customers rely on product images when deciding to purchase. Since buyers can’t see the items they want to buy physically, an online product image is what they trust to determine if they should make a purchase or not. 

So, create high-resolution, quality products to aid customers’ experiences. Ensure the pictures on your website are exactly what you’ll deliver. Also, take the images from different angles to capture a product in its entirety. By doing this, buyers will have a clear idea of what they want to purchase, preventing confusion and reducing order cancellation rates. 

4. Implement virtual try-ons 

As an e-commerce trader, you’ve probably come across customers’ “expectation vs. reality posts” where the items they ordered aren’t precisely what they got. However, this is not always because the items delivered are different. Often, it’s because the products don’t fit due to different skin tones or body structures. 

Therefore, the uncertainty of if an item will fit perfectly discourages many consumers from buying online. They add to the cart with excitement but cancel the order later because they don’t know what to expect when they try them on. Fortunately, a virtual try-on allows buyers to try a product virtually, enabling them to be sure an item fits before they buy. Consumers can try on clothes, shoes, make-up, classes, etc., to see what works best for their skin tone and body structure. Therefore, they are convinced they are selecting the size, color, and most suitable materials, encouraging them to buy and reducing canceled purchases.

5. Create open and responsive communication channels 

An open and quick communication system is critical to reducing e-commerce cancellation rates. 

Statistics show that 82% of buyers want an immediate response from brands on marketing or sales questions. So, create responsive communication channels for consumers to get timely answers to their questions on your website, online store, social media platforms, etc. 

Assign a customer support team to answer queries or clarify their doubts. Create a knowledge base system they can refer to for answers, and install chatbots on your website and store. 

A responsive communication channel enhances consumers’ journeys. No matter the objections customers have after ordering, your support team will be available to answer them on time. As a result, they won’t get apprehensive and cancel their order. 

Additionally, an open and responsive communication system will help customers make changes to their order whenever before delivery. For example, if they want to change the address or product size, they can reach out to the customer care team before delivery. However, if they cannot contact the team for changes, it may prompt them to cancel their order. Therefore, create accessible communication channels for your customers to contact you during purchase. You can also automate these processes with autoresponders and chatbots. 

6. Create appropriate packaging 

Packaging is essential to reducing your order cancellation rate. While fancy packages are great, they mustn’t lose touch with their functionality. The prints and designs shouldn’t mislead consumers into purchasing the wrong items. All packaging topics must precisely describe the item and what it will do. 

For instance, don’t mislead buyers with a packaging that portrays a hair product when the item in the bag is a body wash. From the color to the font and information on the packaging, all designs must work together harmoniously to depict the sold item. 

Also, it’s best not to imitate a competitor’s packaging as it may mislead customers into thinking it’s the competitor’s product. Instead, create a unique identity to avoid confusion. 

Consumers are likely to cancel the order when they discover the item purchased is what they wanted. It could also bridge their trust in your brand and create a negative reputation. So, ensure that the products’ packaging aligns with the item, including the details and descriptions in the packs. 

7. Evaluate canceled orders 

Analyze canceled items when they happen. Doing this will help you identify why consumers cancel orders and find ways to improve. So, record every withdrawn purchase, including the reasons and the period the item was canceled. Afterward, evaluate withdrawn orders monthly, weekly, or daily. Doing this will give you insights into why and when consumers cancel orders. Delayed delivery period? Incorrect descriptions? Poor communication system? Whatever the reasons are, analyzing the cancellation rates will help you identify them. Afterward, you can adopt strategies to refine the purchase experience and reduce order cancellation rates.

Conclusion 

A high e-commerce cancellation rate is terrible for businesses. It reduces sales and ROI and affects retention. So, to lessen canceled orders, use payment processing forms, write accurate product descriptions, use transparent images, and adopt virtual try-one. Additionally, respond to customers timely, use appropriate packaging and analyze canceled purchases. 

Author Bio:


Lydia Iseh is a writer with years of experience in writing SEO content that provides value to the reader. As someone who believes in the power of SEO to transform businesses, she enjoys being part of the process that helps websites rank high on search engines.


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