A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
Some say nearly 8% of abandoned shopping carts can be saved with improved customer service—and that could result in increasing web e-retailing revenue by $11 billion.
They’re 25 to 44 years old, live in the suburbs, and have annual household incomes of more than $50,000. Not only have they been buying on the web regularly for a year and more, but they’re in the top half of online spenders. It’s the profile of the dream customer sought by every web merchant. And it’s the profile of the online customer mostly likely to abandon shopping carts, according to The Yankee Group, Boston.
Some 77% of online shoppers have at least once selected an item for purchase but failed to complete the transaction, according to Yankee’s recent survey of 3,500 web shoppers. And as the Yankee Group data show, it’s not just online newbies ready to bail out at the first whiff of trouble.
“These cart abandoners are experienced online shoppers who are comfortable navigating web sites and purchasing online under the right circumstances,” says Christine Loeber, Yankee analyst. Confident web shoppers with increasingly high expectations, they’re ready to click out of the site instantly if their needs aren’t met because they’ve figured out that the web marketplace is a near-limitless one.
“Through the online channel, people have a greater variety of sources than ever to look at and shop before they make a final decision,” says Glenn Koser, analyst at New York-based Datamonitor.
So has the sheer number of choices for consumers on the Internet spawned a universe of peripatetic shoppers who make the high rate of cart bailouts an unavoidable fact of life online? E-retailers are saying no to that, and pursuing a mix of services and technologies ranging from speedier page downloads to live online help-all aimed at getting the shopper to stay with the cart until the purchase is completed.
How to make $11 billion
While there’s been much weeping and wailing over the issue of abandoned e-shopping carts, dig deeper into why shoppers abandon carts and it becomes clear that many shoppers don’t complete purchases on the web for the same reasons they don’t in the offline world.
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.
Small but critical
“Last fall, we changed the product page to pull up for the customer a color and size grid that lets them know instantly if the color and size they want is available,” Nelson says. Easier for the customer, this feature alone saves up to three clicks in the process.
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.