Find out how to how to calculate CAR and interpret it correctly.
Everyone who owns an online store should be interested in how many people resign from shopping, even after adding products to their shopping cart. Such behaviour is usually a clear signal to the e-commerce owner that it is necessary to verify their previous actions and consider why customers do not finalise purchases in our online store. The CAR (Cart Abandonment Rate) indicator will certainly be useful here. How to calculate it and interpret it correctly? You will read about it in this article.
How to calculate cart abandonment rate indicator?
Let us start by establishing what exactly the CAR means and how it is calculated. The Shopping Cart Abandonment Rate is the number of online shoppers as a percentage of those who add items to a virtual shopping cart but then abandon it before completing the purchase. It shows the percentage of customers potentially interested in purchasing items that give up on them, compared to the total number of shopping baskets created in the e-shop.
CAR is calculated using a simple formula:
The above equation allows you to determine the relationship between completed and initiated purchases and indicate which part of customers who begin their shopping path does not reach the stage of payment for the goods added to the basket.
For example, if an online store has recorded 55 completed transactions out of 300 initiated, the CAR rate will remain at 72.5%.
Why is the CAR so important?
If your CAR remains high, it should be a clear signal to you that you are losing more money than you are earning, so your e-commerce does not generate a satisfactory income.
The Cart Abandonment Rate Index helps online retailers understand the buying behaviour of visitors to their websites and customers. This metric is often an indicator of how intuitive and trustworthy the order placement process offers your e-commerce. Reducing the value of this indicator is an effective way to immediately increase revenue. Remember to always keep track of this metric against other KPIs, such as average order value, gross profit margin or website conversion rate.