Consumers who abandon their online shopping carts before completing the checkout process may get a little tap on the shoulder.
That tap may come days or weeks later in the form of an e-mail message offering a discount on items they placed into a Web site shopping cart but did not buy. Retailers are divided, however, about how best to apply technology to capture Internet sales lost to shopping cart abandonment. Some question whether it’s a good idea to try. They cite customer privacy concerns and the fact that online shopping behavior is not well understood, particularly the nuances of how consumers use tools like shopping carts and “wish lists.”
Still, online shopping cart abandonment rates and potential sales lost as a result keep retailers focused on these metrics. For every dollar consumers spend online, items valued at $4.10 are left behind in shopping carts, according to New York-based DoubleClick, an advertising services company. While 57 percent of shoppers abandon their carts, all those sales do not stay lost. In its quarterly “E-Commerce Site Trend Report,” DoubleClick notes that 26 percent of online sales are purchases that were initiated, aborted and then eventually completed.
The Sports Authority, a $2.4 billion Englewood, Colo., sporting goods chain, is among those e-retailers trying to lure customers back online to buy items they appeared ready to purchase but did not. Sports Authority online shoppers who abandon their shopping carts may receive a personalized e-mail five to 10 days after their visit, said Jeff McCall, vice president of one-to-one marketing for GSI Commerce of King of Prussia, Pa. GSI operates The Sports Authority’s electronic commerce Web site, as well as those for Estée Lauder, Burberry, Kate Spade, Liz Claiborne and others.
McCall said online shoppers are responding well to such targeted e-mail contacts. On average, 26 percent of consumers who receive e-mails triggered by shopping cart abandonment on GSI-operated Web sites click through the message and reenter the Web site. That’s more than triple the average e-mail click-through rate (7.9 percent) estimated by DoubleClick. McCall stressed the numbers are representative of all GSI’s clients. Officials from The Sports Authority declined comment.
GSI said 21 of the 50 companies that outsource their e-commerce operations to it are using shopping cart abandonment e-mails to boost sales.
“Shopping cart abandonment remains a big issue,” said Lauren Freedman, president of the E-tailing Group, a Chicago e-commerce consulting firm. The company’s 2005 electronic commerce survey of merchants found that 20 percent of respondents have cart abandonment rates ranging from 41 to 50 percent. Fully one-third of respondents said shoppers abandon their carts with even greater frequency than that. The survey of more than 250 merchants revealed that e-retailers are testing tactics to bring customers back and that the shopping cart abandonment e-mail strategy is gaining ground.
“I think you have got to have [customer] permission to do that,” said Shelley Nandkeolyar, president of direct brands for $73 billion Home Depot, when asked about e-mailing shoppers about items they left in their online carts unpurchased. Many Web sites offer shoppers the right to refuse such e-mail contacts, but the prominence of the “opt-out” command varies from site to site.
Giving shoppers the ability to opt out of such campaigns is key, but it does not address the fact that online activity is monitored and shoppers still bristle at that.
“The big, dicey thing is the privacy creep-out factor, that someone is watching” online behavior, said David Fry, chief executive officer of Fry Inc., an Ann Arbor, Mich., e-commerce service provider. “Retailers have this conundrum of using [customer-specific] information to provide a better shopping experience, but not really letting shoppers know that’s going on, because it makes them uncomfortable.”
Fry said sending customers relevant information that doesn’t correlate too specifically to the shopper’s online behavior gives the impression retailers are “magically clairvoyant” and tuned to shoppers’ preferences.
At Atlanta-based Home Depot, customers are coaxed to return to the Web site in a subtle fashion, said Nandkeolyar. For instance, if a shopper spends a good deal of time on the retailer’s site researching a particular product, Home Depot may send related information to that consumer, provided he or she has given permission to be contacted for that purpose.
Customer e-mail campaigns need to be managed with care and sensitivity, he said. “You have to be careful with this and use it with relevance.”
Nandkeolyar noted some shoppers may use an online shopping cart as a “wish list” placeholder for a possible future purchase, while others use the shopping cart with intent to complete a purchase on the spot. Shopping cart abandonment rates among these two distinct groups, then, have different implications and a misguided e-mail campaign could backfire. An e-mail pressing a shopper to finalize a purchase, when that was not the intent, for example, could be a turnoff.
“Technology allows us to do a lot of things. The challenge is how to be smart about it instead of doing the dumb things we’ve done before,” said a senior vice president at a chain with more than $10 billion in sales, who requested anonymity. For example, he pointed to one site that’s programmed to display a pop-up discount offer when shoppers initiate, but do not complete, a purchase. This tactic effectively trains shoppers to deliberately initiate, and then abort, a transaction to generate a discount they would not otherwise be offered.
A better practice, he said, would be to offer first-time visitors a 10 percent discount if they are willing to explain why they cut their Web site visit short.
Home Depot’s Nandkeolyar said shopping cart abandonment is an important metric for Web site performance. “We are constantly working to lesson abandonment. This is still a nascent industry. We are trying to not make mistakes. We are trying to do the right thing by the customer and sometimes we get ahead of ourselves with a great new idea without thinking of all the implications. We may test something and realize it may not be the right thing and we go back and recalibrate,” he said.