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    How Choice Paralysis Happens and How AI Can Help

    How Choice Paralysis Happens and How AI Can Help

    In 2021, according to eMarketer, the value of abandoned goods in digital carts in the U.S. was $705 billion. Globally, abandoned cart content was worth more than $4 trillion. The statistics vary across retail and wholesale sites and by geography, but research shows the average abandoned cart rate is at about 75%, but some industries lose upward of 83% of potential sales from cart abandonment. Why do so many people give up on what—at some point—they seemed to want and pursue enough to put it in a cart?

    Abandoned cart in parking lot
    Abandoned cart rate: On average, 75% of potential sales are lost due to cart abandonment.

    Few subjects in eCommerce have had as many studies done on them as cart abandonment, so we do know a few things. The top three reasons for ghosting items in a cart are:

    1. Unexpected shipping costs, taxes or undisclosed required complementary items
    2. Forced to create a new user account
    3. Too long and complicated a checkout process

    You can address these concerns by eliminating shipping, or bundling the extra cost of shipping into the product cost. Or you can allow users to get items with guest checkout, and minimize form elements and streamline your site’s navigation from initiation to completion. Taking these steps will smooth some of the cart abandonment bumps.

    But what does this have to do with choice paralysis and how AI helps alleviate it?

    Choice paralysis is a phenomenon rooted in behavioral science and stems from the cognitive burden associated with evaluating a multitude of alternatives, which can lead to decision fatigue, reduced satisfaction and—at its worst—complete avoidance of decision-making. Research shows that if consumers are surrounded by an abundance of options—whether online or shopping at Target or Walmart, they typically end up less satisfied with their final decision than if they’d been given fewer options initially.

    The inability of consumers to decide and the resulting lack of any action taken affects companies and businesses the most. If your customers can’t decide because they feel overwhelmed and inert from the sheer volume of choices, the result is the abandonment of the entire shopping excursion. Although “too many choices” didn’t make the top-three issues for cart abandonment, behavioral economics shows us choice overload is not always rational, but it is real.

    Researchers at The Kellogg School of Management at Northwestern University identified

    four factors that help explain when choice overload might occur. As you read, think about how your sales funnel or process might contribute to one, or all, of these factors.

    The complexity of the choice set

    According to Kellogg researchers, how the options are organized, the presence of a dominant option, and the information provided about each option affected the perceived complexity of the options. 

    Woman in shopping aisle looking at options
    Choice paralysis: The overwhelming cognitive burden of evaluating numerous alternatives.

    “Complexity is not so much about the absolute number of options, but rather how complex choosing among them is,” the researchers reported.

    Decision-task difficulty

    How complicated is the actual act of deciding? Some decisions must be made quickly, like choosing a meal option in a drive-up at a new fast-food eatery, and other decisions have much longer time frames or no limits. The must-decide-quickly task is more likely to lead to choice overload.

    Preference uncertainty

    How much do you already know what you want? The more you know about your preferences, the easier it is to make a choice. If you’re unsure, you can be overloaded easily. 

    Decision goal

    What is the goal of analyzing all the options? If you want to make a conclusive choice, you may need to consider trade-offs and potentially agonize over your decision. If your goal is just to gather information or “research” that may plan for a future decision—such as reading Consumer Reports or Edmunds before buying a car—then choice paralysis is less likely.

    What Can Businesses Do to Alleviate Choice Paralysis?

    With more choices available, consumers expect brands to provide them with a frictionless experience. This includes guiding them to the services and products that best meet their needs.

    Some immediate steps include limiting options and making the options more distinct (and clear). Simplify the choice by breaking the choice into more manageable bites or chunks, which are easier for the decision-making process, and make the choice for the users with good default options. Some eCommerce sites, including Shopify, advocate for pushing users to decide quickly when they advise on how to overcome choice paralysis and increase conversions, but that can backfire if you push too far, too fast. (See above on decision-task difficulty.)

    How Can AI Help with Cart Abandonment?

    It’s not realistic for most businesses to have staff on hand 24/7 to help consumers navigate their websites and guide them to the right products and services, so having digital assistants fueled by artificial intelligence can increase consumer confidence in buying decisions. They do this by engaging consumers in dynamic conversations that include intelligent questions designed to gauge their needs and interests, which results in a curated gallery of highly-relevant services and products. (Netflix is a case study on this one.)

    Stock photo of AI graphic
    AI and consumer confidence: AI-powered digital assistants help consumers make buying decisions by engaging them in dynamic conversations.

    AI can also enhance the way we turn choices into decisions, says Gian Gonzaga, who honed his skills as a lead researcher at match.com. He has thoughts on how technology is providing humans with more choices, but it can also be used to help us make decisions.

    “Companies are failing to recognize the very real and valuable potential of leveraging technology to enhance human capacity. The truth is that technology does have the potential to do certain things humans cannot, and this includes both providing and eliminating choice,” Gonzaga wrote in Quartz magazine. “If we design technology to streamline menial tasks and narrow the choices that overwhelm us psychologically, we can optimize the ways in which we answer more complex, nuanced, emotional questions that computers can’t be programmed to resolve.”


    FAQs

    What are the top reasons for cart abandonment?

    The top reasons for cart abandonment are unexpected shipping costs, forced account creation, and a long and complicated checkout process.

    How can businesses address cart abandonment?

    Businesses can address these concerns by eliminating shipping costs, allowing guest checkout, and simplifying the checkout process.

    What is choice paralysis and how does AI help alleviate it?

    Choice paralysis is the difficulty of making a decision when faced with too many options. AI can help alleviate it by providing personalized recommendations and guiding consumers through the decision-making process.

    What factors contribute to choice overload?

    The complexity of the choice set, decision-task difficulty, preference uncertainty, and decision goal contribute to choice overload.

    What can businesses do to alleviate choice paralysis?

    Businesses can alleviate choice paralysis by limiting options, making options distinct, breaking choices into manageable chunks, and offering good default options.

    How can AI help with choice paralysis?

    AI can help by engaging consumers in dynamic conversations, asking intelligent questions, and providing curated recommendations based on their needs and interests.

    How can technology enhance decision-making?

    Technology can enhance decision-making by streamlining tasks, reducing overwhelming choices, and allowing humans to focus on more complex, emotional questions that computers can’t resolve.

    About The Author

    Elton Mayfield

    Elton's career spans media, production, digital and building industry expertise. His diverse experience makes him nimble, innovative, and curious – always pushing the envelope to create extraordinary work that delivers real results for our clients.

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