Why your online shop needs an address validation system

Looking to reduce shopping cart abandonment or boost mobile sales conversions? The solution could lie in address validation. Here’s how it works and why it’s a smart move for any online business.

If you’ve ever shopped online and started typing in your delivery address only to have your location auto-complete or pop up as a clickable option, you’ve experienced real-time address validation online.

While address validation was first adopted by large organisations, it is becoming more and more common, even among small businesses. This is partly because address validation software is now quite affordable, and also because of the benefits it offers both your business and your customers.

Benefits of address validation: less shopping cart abandonment

When you’re selling online, shopping cart abandonment is a big problem. SaleCycle reported in May 2016 that in the Asia–Pacific region, 75.9 per cent of online shopping carts are abandoned – the highest cart abandonment rate worldwide. However, Europe – which has a shopping cart abandonment rate of 71.5 per cent – has the lowest abandonment rate (only 4.4 per cent lower), so it’s clear it’s a big issue for online retailers across the globe.

One of address validation’s benefits is that it reduces cart abandonment by up to 15 per cent, according to data specialist Experian. Address verification reduces the keystrokes required to record an address by up to 80 per cent, making the checkout process faster and giving customers less time to change their minds.

Make mobile shopping easier

Reducing the number of keystrokes is also great for customers who are shopping on a mobile. According to Budde, around a third of Australian online purchases are made on a smartphone or tablet.

Because typing and even clicking buttons on smaller screens can be harder, reducing the amount of typing a customer has to do on a mobile makes the purchase process easier and faster.

Improve customer data

Address validation has a long-term benefit: it can help keep your customer data accurate. If you use direct mail in your marketing mix, this again helps reduce undelivered mail and returns.

Down the line, accurate customer data can also help you uncover insights that may help you find new customers. You can unlock the sociodemographic data for a postcode or region and even find “lookalike” audiences in other places that are potential customers to target.

Address verification data sources

So, where does the data for address validation software come from? In Australia, there are two main sources.

The first data source is PSMA’s G-NAF – which stands for geographic national address file. PMSA is a company owned by the Australian Government and local government. Government departments provide PMSA with their mapping data, which is collected, formatted and stored as a geocoded database (including the latitude and longitude values for each address). This list of approximately 13.5 million physical addresses in Australia is updated every 90 days. The dataset was made openly available by the Australian Government in early 2016.

The second data source is Australia Post’s PAF database. PAF stands for postal address file, and it’s a list of all the valid delivery points in Australia – approximately 13 million of them. The database is updated daily, and it also captures all the changes of address when people move house and redirect their mail.

Address verification software developers use one or both of these databases to create APIs, apps and widgets you can use on your eCommerce website or app to verify a customer’s address at checkout.

Adding address validation to your website or app

There are many address verification suppliers to choose from. Some will provide a quote based on the number of address look-ups you have each month. Others advertise a flat monthly rate for a set number of address look-ups and some may also charge a one-off set-up fee. Volume discounts apply: the greater the number of address look-ups you have, the lower the cost per look-up usually is.

For address validation on websites, take a look at DataTools and RightAddress, among many others. Addressify adds address verification to apps.

If you get lots of international orders, make sure you check the address validation system can handle address verification for customers in other countries. You may find that an overseas supplier like Experian Data Quality or Melissa Data will be able to offer you Australian and overseas capabilities.

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