The Long Road to Online Checkout

If the product offering or pricing isn’t right for the targeted customers, they’ll leave products on the shelf, whether virtual or in-store. In fact, Datamonitor reports that 92.2% of abandoned shopping carts are dumped for reasons that aren’t directly related to customer service issues.

Still, 7.8% of abandoned online purchases are potentially salvageable if merchants were to provide a better customer experience, Datamonitor believes. And that equals about $10.9 billion in lost sales that could be recouped.

But before merchants start wringing their hands about high shopper bailout rates industrywide, they should look offline for context. If the real-world equivalent of abandoning shopping carts online would be a shopper trying a sweater on and leaving it in the dressing room without buying it—and if that activity were readily measurable—it could yield purchase abandonment rates that are as high as online.

And while the overall abandoned shopping cart rates are big numbers, they’re aggregated from the experience of many retailers. That means that what’s lost to one may actually be a gain for another—and thus not affect the overall rate of shopping online. “If an online shopper abandons carts at two e-retailers, but then winds up purchasing the item he wanted on a third site, he’s still shopping in the marketplace—someone’s getting the business,” says Koser. “If you look at the straight percentages, it can be misleading. So you have to go into a more qualitative arena.”

The Yankee survey did that, analyzing the reasons for shopper bailouts due to unsatisfactory experiences online to provide a roadmap to guide site improvements and corral more carts at checkout. Most of shoppers’ dissatisfaction relates to issues within an e-retailer’s power to change. Yankee’s consumer survey asked online shoppers to state why they abandoned shopping carts. Respondents could cite more than one reason if, for instance, they abandoned a shopping cart at one site because the shipping charges were too high and at another site because navigation was too difficult (see chart).

“Some of the most basic issues are overlooked by online retailers trying to lure customers with bells and whistles, but if they can’t execute on the fundamentals, that’s bad business,” Loeber says. “They’ve spent a lot of money attracting visitors, but if they lose a customer because they haven’t explained shipping charges, or talked about the return policy, they’re out of luck.”

Online shoppers have such a varying range of needs that it’s impossible for a web retailer to totally make carts abandon-proof. But some of them are implementing strategies successfully to reduce lost carts and increase sales. Lands’ End deals almost exclusively in apparel, one of the more difficult categories to sell online. Yet the purchase rate at LandsEnd.com is 11%, among the higher conversion rates tracked by PC Data.

Lands’ End e-commerce manager Terry Nelson says the company’s established offline brand plays a key role in creating high browse-to-buy ratios, but LandsEnd.com’s dedication to the customer’s experience is the rest. For example, in a review of its web site operation, Lands’ End determined that giving customers real-time information on inventory earlier in the shopping process would promote sales and reduce bailouts. So it added an inventory alert feature that tells shoppers when the item will be available, offers to send e-mail notification, and shows shoppers similar items available immediately when the original choice isn’t.

At SmarterKids.com, where the purchase rate is about 6%, shoppers are benefiting from a revamp of the site that drilled down to such small but critical elements as relocating live chat from a customer support page to a prominent spot in the checkout area. Now, shoppers have the opportunity to ask questions at checkout as an alternative to leaving their carts at the last minute.

With e-retailers’ high cost of customer acquisition, it’s not surprising that e-services providers are lining up to help them protect their investment with solutions to smooth the path from selection to checkout. Datamonitor estimates that the e-services solutions market for software and services that attempt to remedy customer service issues online will reach $2.3 billion by 2005.

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Westminster, Colo.-based Finali Corp. is rolling out fully integrated, live and automated web-enabled customer service software this spring. The company’s proprietary automation technology is designed to automate up to 80% of customer interaction in real time. This allows shoppers to resolve questions themselves on the web rather than phoning them in.

The automated portion of the soup-to-nuts offering is an animated character called a “netSage” that appears on pages to greet customers, explain features, gather information and cross-sell and up-sell. Online customers also can choose to be transferred to live help. In beta testing with a major computer manufacturer, customers with the automated virtual agent on their screen were two times more likely to add to a shopping cart and they accepted 20% to 40% of the up-sell suggestions.

LivePerson is a New York-based application service provider that supports online chat services for web merchants including multi-channel retailer The Wedding List.

“Any time shoppers are buying a luxury item such as a wedding gift online, they’re going to spend a bit more time doing it,” says Daphne Murray, The Wedding List’s vice president of marketing. “Almost everyone who comes to our site has questions.”

To handle them—and keep shopping carts on track—the site added LivePerson’s technology, putting the live chat help button on its the front page last May. While The Wedding List doesn’t disclose its web site bailout rate, sales figures suggest it’s decreased big-time. “Our sales went up 100% from May to June, and they’ve stayed strong,” Murray says.

Though e-service vendors can deliver results that sound impressive, consultants warn they can come at too high a cost. “If an e-retailer is selling commodity items that are low margin, it doesn’t make as much sense to implement expensive strategies to hold onto customers—the cost of the strategy or technology may be more than they’re making on their customers,” Loeber says.

Reducing checkout aggravation

One reason shoppers abandon carts is that the checkout process can be so cumbersome. Witness the success and favorable press that Amazon has gained from its one-step checkout. Now a start-up company is hoping to make that one-step process—or as close to it as possible—available to all web retailers.

Philadelphia-based Catavault has created a web site where consumers can register user names and passwords. When they are ready to shop, they click from the Catavault site to the retail site. When they need personal information to log onto a site or to check out, they click the Catavault button and the appropriate information is filled into the blanks.

While some PC programs will remember names and passwords, that service does not help if the user is away from home or office. In fact, that was what gave rise to Catavault. Jon Bari was at an airport trying to get onto a web site to change a flight and he couldn’t remember his password. “All my credentials were in Philadelphia and not with me in Boston,” Catavault’s founder and CEO says.

Web shoppers register at Catavault.com, which stores all user names and passwords. The cost to the merchant of participating is nothing. Catavault makes its money by licensing the service for private label use, as it has done with Time Warner, and by working out performance-based marketing arrangements with retailers. It has signed 375 merchants who pay commissions of 1% to19.5%.

Catavault launched last year and today has more than 3,000 merchants. One of the first users was BabyAge.com. “We had a lot of customers who were continually e-mailing us asking for their passwords,” recounts Jack Kiefer, founder and CEO. “When I heard about this, it was just a natural.” While Kiefer cannot quantify whether Catavault has resulted in saved sales or additional sales, the number of customers seeking passwords has diminished. Other Catavault merchants include CDNow, Amazon and Zany Brainy.

Bari says Catavault users number in the tens of thousands. The company is marketing through viral marketing, p.r. activities and through placing buttons on retail sites. The company promotes usage by offering special deals at participating retailers through the Catavault site.

Reasons shoppers abandon their carts