High shipping costs repel online buyers: PayPal

High shipping costs, security concerns and lack of convenience are leading many online shoppers in the United States to abandon their purchases, research conducted by PayPal revealed.

The PayPal Checkout Abandonment Study showed that 46 percent of US shoppers cited high shipping charges as the primary reason why they discontinued their online purchase. While nothing could have prevented one-third of shoppers from abandoning purchases, the survey found that providing shipping costs upfront might have influenced 40 percent of the survey respondents to complete the purchase.

Thirty-seven percent of online shoppers said they backed out of a possible online purchase because they wanted to compare prices in a different online store. Another 36 percent said they lacked money to complete the transaction while 27 percent said they wanted to look for a coupon.

Twenty-six percent of respondents in the PayPal survey said they wanted to shop offline while 24 percent said they couldn't find a preferred pay option.

To help merchants encourage shoppers to purchase, PayPal has announced a new Express Checkout feature – which includes PayPal Instant Update API. By integrating the new API, merchants can show order details earlier in the process including shipping options, insurance choices and tax totals.

"To get shoppers to complete their purchases, it is critical that merchants make the checkout experience easy and costs transparent," said Mario Shiliashki, General Manager of PayPal Southeast Asia and India. "Our new PayPal Instant Update API will help merchants get customers the information they need upfront to drive sales."

The survey also uncovered signs that the economy still has shoppers wary about clicking the "purchase" button. More than one-third of respondents abandoned checkout because they didn't plan for all of the expenses; while more than 25 percent left the site to search for a coupon. However, one-third of shoppers later returned to the same site to buy. Twenty percent of those surveyed eventually went on to purchase the items at a physical store or at a competitor's website.

“Besides the cost factor, merchants who aim to sell to a global audience need to remember that online shopping needs to be a hassle-free and safe experience for the buyer,” added Shiliashki.

The PayPal Checkout Abandonment Study was conducted by comScore among active shoppers who had recently abandoned a shopping cart. In the United States 553 people participated between May 12-15, 2009. All respondents were asked about their most recent abandoned session, regardless of the site involved.