Shopping Cart Abandonment and Conversions

Shopping cart abandonment is a huge challenge for online merchants. eTailers are constantly struggling to understand how they compare to other eTailers and the reasons of cart abandonment so that they can improve their conversions.
Yesterday I came across some interesting survey data that will help shed some light on the average abandonment rates, conversion rate and the main reasons for cart abandonment.

Industry averages

The following charts are from MarketLive Performance Index Volume 4

Q1 2008

Note: “1-and-out” is commonly referred as “Bounce Rate”. I also conducted a survey on Bounce Rates, you can find the results at http://webanalysis.blogspot.com/2008/03/typical-bounce-rates-survey-results.html

Reasons for Cart Abandonment

A study conducted by Paypal and comscore showed the following reasons for cart abandonment

Chart Source: eMarketer.com

• 43 percent of consumers didn’t pay for items in their shopping carts because shipping charges were too high
• 36 percent of purchasers didn’t pay for items because they felt the total cost of the purchase was more expensive than anticipated
• 27 percent of shoppers didn’t pay for items because they wanted to comparison shop at other Web sites before making a purchase
• 16 percent of consumers didn’t pay for items because they could not contact customer support to answer questions
• 14 percent of shoppers didn’t pay for items because they forgot their usernames and passwords for their store accounts created with the merchants
• More 20% shoppers didn’t complete purchases because their preferred payment option was not offered on the merchant’s Web site
• 21 percent did not complete online purchases because their wallets were not easily accessible

You might also be interested in Targeting Cart Abandonment by Email
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Targeting Cart Abandonment by Email

Today I read an article called Four Ways to Improve Marketing ROI Through E-mail by John Rizzi, CEO of e-dialog. This is a good article for those who are trying to determine how to collect email, learn from email marking and email effectively. In his last point he says “Use Behavioral Targeting” to convert abandoned carts. He suggests using incentives to bring customers back to complete the cart they had abandoned. This is a great idea but I want you to be aware of following two issues before you jump into it.

1. Lack of Email Address: If you don’t have an upfront email collection process it is very likely that visitors (customers) will leave even before they give you their email address. If that’s the case then you won’t have any email to target (You can still deploy anonymous on-site behavioral targeting. Check out my article on behavioral targeting).
   If you decide to put email collection up front it might cause cart abandonment rate to go up. You have to provide a very good reason to your customers on why they should provide you email even before they started buying anything or checking out. Like any other change on the site, I suggest conducting A/B testing before you start collecting email addresses for all your customers. If the tests do not show desired result you might be better off with on-site anonymous behavioral targeting.
2. Backfiring of incentives: Let’s assume you have the email address and are ready to send an email incentive. As you already know the word spreads very fast these days. Most of your customers (visitors) will find out about your offers which could ultimately result in two outcomes:
   1. If the incentive is not too enticing (such as free shipping) your customers (even regular customers) might find out about it and start abandoning the cart in anticipation of receiving that offer or they might just use the coupon or offer code given to them by somebody on the internet.
   2. If the incentive is too good (such as $10 free for any purchase over $5.00, not sure why would you do that but I have seen companies giving free money just to get users to signup), the word will spread sending new customers to your site. So be prepared to handle the amount of traffic this viral marketing will generate and a possible bankruptcy.
      Appendix A shows what happened to Starbuck when they sent out an e-coupon to limited number of employees (or that’s what Starbucks thought).

So should you provide incentives to bring back customers who have abandoned carts? Yes I think so but think about all the pros and cons before you jump into it. Below are some of the steps that you should include into your process for using email incentives

1. Select a sample (say 20%) of visitors, who abandoned the shopping cart, who will receive any offer (I am assuming you have already created and tested a process for upfront email collection).
2. Test different offers within this selected group. Testing will show you which offer works and which ones don’t.
3. You can use more behavioral data (and I encourage you to do so) to determine what offer will make sense to which visitor segments (create few manageable segments so that you can stay focused). E.g. A customer who abandoned at shipping step might be more interested in free shipping than a user who added products to the cart but then left without clicking on the final checkout button (provided the customer has given you the email address), a 10% off coupon might be a better offer for this customer.
4. Unless you purposely want to engage in viral marketing, make sure coupons and codes can only be used by those for whom they were intended for and for specific period only. Also don’t forget to configure your web analytics tools properly so that you can measure effectiveness of these offers.

Note: If you provide users the same kind of incentives 2-3 times to a customer then he/she (most of them) expects it every time.

Appendix A: Starbucks Lawsuit
“Starbucks e-mailed the grande iced beverage freebie to a limited number of employees in the Southeast on Aug. 23, with instructions to pass it on to friends and family.
The forwarding turned into a frenzy as the coupon landed in thousands of inboxes and on Internet message boards – forcing the chain to reject scores of coupon-touting java lovers pouring into stores for the perk.” Source: ocregister.com