The Forrester Wave™: Order Management Systems, Q2 2023

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Reduce Cancellation Rates by Enhancing Customer Satisfaction

All about order cancellation rates—how to calculate and reduce this metric

Evaluating this aspect can help your company improve ordering processes

Reviewed By Michelle Soriano

Jan 15, 2024

Your business’ cancellation rate can tell much about the customer experience. Evaluating this aspect can help your company improve ordering processes, allowing for enhanced purchasing. Read on to explore the order cancellation rate—how to calculate it, and ways you can reduce canceled orders.

What is the order cancellation rate?

Order cancellation rate measures the rate at which your customers cancel ecommerce orders. Order cancellation can occur before or after their order is delivered. Order cancellation most commonly occurs during the cart abandonment and product return phases.

Shopping cart abandonment

This is the most common time in which your customers cancel their orders. Shopping cart abandonment occurs when shoppers have intentions of checking out but decide to leave their transaction in the cart. There are many reasons why shoppers may leave their product without purchasing. Some may find that shipping prices are too high. Others may not have had a positive experience with your checkout process.

Post-order and pre-delivery

In the next phase, your customers cancel orders after ordering but before delivery. Users who cancel during this phase do so because of buyer’s remorse. After purchasing, your customer begins to have second thoughts. Maybe it was an impulse buy and they no longer want it. Or, maybe they saw the product for a better price elsewhere.

In some cases, your customer may order a product and find the delivery time is too long, even if the order has already been shipped. To return, your customers must send the item back to the business once it arrives. This phase also when your customers cancel an ongoing service.

Product returns

The return phase is where much of order cancellation takes place. Your customer may return a product after they have received it if it is wrong, defective, or damaged. Refund requests also happen if the product simply does not meet your customer’s expectations or lacks functionality. Maybe the color of the product was off. Or maybe it won’t work in the way your customer expected. Regardless, this information can deliver insight into a product and how it caters to specific customers.

Why do customers cancel their orders?

Dealing with order cancellations is a normal part of running a business. According to CIO Bulletin, consumer returns averaged about $428 billion in 2020. This number continues to grow. The number grew 16.6% in 2021 and 10.6% in 2022. It’s no secret that online shopping became increasingly popular during the pandemic. The numbers show that this method of shopping will continue to prevail.

Because of this, businesses must understand why your customers cancel orders. There are a variety of reasons why your customer may cancel an order. For example, if your customer purchases a clothing item, it may not fit as expected. Maybe the style was off. This is called a preference-based return, which makes up about 75% of returns within fashion companies. 10% of returns are typically faulty or damaged items.

In a different survey, CIO Bulletin reports the percentages and other reasons your customer may cancel an order:

  •     45% of customers cancel items because they changed their mind
  •     35% of consumers cancel products because of long delivery times
  •     40% of shoppers cancel goods because of high shipping costs
  •     22% of customers cancel orders because of expensive service charges
  •     8% of visitors cancel orders because they need an account to purchase
  •     16% of consumers cancel items because they do not agree with the return policy
  •     10% of shoppers cancel products because of challenging payment options

How is the order cancellation rate calculated?

Calculating and evaluating your cancellation rate is essential for improving efficiency. To calculate the cancellation rate, use the following formula:

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

You can choose to calculate their cancellation rates using daily, monthly, or annual metrics.

What is the business impact of the order cancellation rate?

When you understand their order cancellation rate, you are able to gain deeper insight into the customer experience. For instance, your customers may cancel an order because they don’t enjoy the checkout process. Maybe it’s a hassle to get through. Maybe customers are required to create an account, which deters them from purchasing. Regardless of the reason, you can use this information to improve the way customers purchase their products.

When your business has high cancellation rates, it can have a detrimental impact. As cancellation rates continue to increase but your company does nothing to fix the issue, it can lead to decreased sales and a negative customer experience. It can also cause prices to increase and an abundance of inventory.

Reducing pre-purchase order cancellations

To begin combating cancellation rates, you must evaluate the phases in which returns happen. The first phase to look at is the pre-purchasing stage, where customers cancel orders before they purchase them.

According to Shopify, 70.19% of online shopping carts go unpurchased and canceled. Because of this, targeting your efforts to reduce cancellations through the pre-purchase phase is essential.

How to prevent abandoned shopping carts

As stated before, your customers may leave their shopping carts for many reasons. One of the most notable is slow delivery times. In most cases, your customers cannot view their delivery time until completing most of the checkout process. If your customer checks out and sees that the delivery time is too long, they may cancel their order. To combat this, you must ensure fast delivery of items.

Another reason your customers may cancel their orders at the pre-purchase stage is that shipping fees are too high. Similar to delivery times, shipping fees are calculated at the end of the checkout process. You should avoid surprising their customers with high shipping costs, which can deter them from purchasing.

If you own or work for an ecommerce businesses, you should also consider user experience to reduce cart abandonment. offering detailed product descriptions, high-quality images, and other factors can increase customer retention.

Reducing post-purchase order cancellations

The next step in battling cancellation rates is to evaluate the number of post-order cancellations. Oftentimes, post-purchase order cancellations are out of your control. Returns may stem from buyer’s remorse. Buyer’s remorse occurs when a customer purchases a product to satisfy an immediate need or desire, but then regrets their purchase shortly after.

Your Customers may also return a product if they are dissatisfied with your services. Maybe the product arrived and didn’t work as well as expected. Perhaps your customer realized the product wasn’t a good fit for them. Products can also get damaged during shipment.

Returned orders can also stem from further customer research. For example, maybe your customer searched the company online and found that competitor brands offer a better product. They may also find negative reviews as they continue to research.

You can target this by addressing concerns first-hand and offering customer support. If you find that frequent returns come from unsatisfied customers, you can implement ways to improve processes and increase the customer experience. You can also ensure shipping processes are smooth and safe for products.

How Fluent Commerce can help you reduce order cancellation rates

Having ways to improve the customer experience and streamline business processes is important for any business. Evaluating order cancellation rates can say much about how customers view a product or business. You can find solutions for inventory availability and order management through Fluent Commerce.

Fluent Commerce offers a distributed order management system, Fluent Order Management, that allows ecommerce businesses to optimize their sales and returns processes. To learn more about how this can help you improve customer loyalty, contact us today or schedule a free demo.

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