The Wall Street Journal reported recently that both Target and Best Buy plan to price match online prices with Amazon and other major online merchants in an effort to combat showrooming. This is a flawed tactic to compete with online merchants on their turf rather than focusing on strategic differentiation to change the game. It illustrates a lack of understanding of how and why customers are buying and what drives loyalty.
Both retailers have plenty of caveats in their terms and conditions: You have to be able to prove that the price and product is available, and managers will have a right of veto in some cases. Will this stop showrooming or actually encourage it?
Over the holiday period last year, 60 percent of holiday shoppers started their holiday shopping search at Amazon, looking to establish a base price. Research shows that showrooming is real: Consumers use their mobiles first for checking store locations and opening hours, then for price checking.
However, this is missing the point. Yes, consumers can and will check online prices when in store. Yes, consumers are heavily driven by price in today’s economy.
But, consumers also value other things in addition to price alone. These are essentially ‘experiential’ benefits of shopping in the mall — the ability to just drop into a store when you’re passing, try on items of clothing or look at the available connections on a TV, to get advice from a friend or from a member of staff, and of course, the instant gratification that comes with taking the item away immediately. Not focusing on these benefits to concentrate on price on your competitors’ terms makes no sense.
All big box retailers should read PwC’s Experience Radar which examines the motivations
of consumers to buy from a particular retailer. In this chart, while price is the number one factor influencing where to shop, past experience, brand and convenience are also significant factors. (…)
The average shopping cart abandonment rate is 72% across all devices*. But mobile devices (excluding digital downloads), have an astounding 97% abandonment rate*. Recently, several people have asked me about the difference and whether or not they should be considering separate mobile device strategies.
My short answer is ‘Yes’ and ‘No,’ because there are really two answers.
Before I explain, let’s take a quick look at why customers abandon shopping carts in the first place and what makes the mobile experience so different. Then we can explore specific techniques for improving the mobile shopping experience.
Why visitors abandon mobile shopping carts
The main reasons customers put items into shopping carts but then don’t complete their purchases are:
There is a price objection, in particular the cost of shipping and handling, but also the desire to look for a promo code or better deal somewhere else.
They are not ready to buy but are putting items in a shopping cart so that they can easily find them when they are ready.
While both of these apply to mobile devices as well, there are three additional factors you need to consider to better understand mobile’s inflated abandonment rate:
1. Device purpose
Consumers that own a PC, tablet and smart phone, use each device for different things. Take a look at this infographic from the IAB (Interactive Advertising Bureau) — not only does it show you how each device is used at different times of the day, but also for different purposes:
Desktop: The primary purchasing device; safe, secure and stores my information.
Smartphone: Getting up-to-date information on the move; keeping in touch and socializing
Tablet: Browsing and entertainment
Of course, generalizations are always dangerous and it would be wrong to say that there are no purchases made on smart phones: mobile ecommerce is growing very fast, but from a small base. (…)
Now that Labor Day is behind us, between now and Cyber Monday consumers will fundamentally change the way they shop online. The majority will now defer their purchases in anticipation of the upcoming holiday deals. This is based on analysis of more than $1bn of ecommerce transactions for each of the last two years. The most obvious indicator of this change in buying behavior is illustrated by the shopping cart abandonment rate. This is a critical ecommerce metric which measures the proportion of shoppers that added items to an online shopping cart but didn’t purchase. In 2011, 72% of all potential ecommerce purchases were abandoned; only 28% were completed.
But after Labor Day everything becomes more extreme.
Last year, the shopping cart abandonment rate hit at an all-time daily high of 89.2% on November 23rd. And it’s a safe bet that we’ll see 90% this year, on November 21st to be exact, the day before Thanksgiving.
Practical actions for Brands
Recognizing and understanding this shift in consumer behavior is the first step in reducing shopping cart abandonment. Beyond this there are four simple actions that merchants can take to encourage customers to commit earlier:
Capture more email addresses
The number one reason consumers will subscribe for email updates is to get special offers and promotional codes. The number one place that customers look for holiday offers is email. Now is the time to remind customer of the benefit of subscribing to your email program. Make it clear that signing up for emails will means that they will get holiday deals first.
Mobile abandonment is not a problem
When consumers use smart phones, tablets and PC’s, for e-commerce, each device plays its own role in the purchase process. Think about how you personally use them: mobile devices are most often used when away from the home to look up information quickly (store locations and price checking), and tablets are often used for researching potential purchases, typically from home, and for browsing and exploring. (…)
Digital marketers know they must measure and optimize all of their efforts, with the goal of increasing sales. They must also be able to prove a positive return on their investments. That said, digital marketers are constantly on the hunt for the latest technologies to help with both.
Shopping Cart Abandonment Emails Report Highest ROI
Recently, the e-tailing group produced their 2012 Merchant Survey which studied the ROI impact of different personalization techniques.
The highest ROI reported is from shopping cart abandonment emails. This shouldn’t be a surprise — 72 percent of site visitors that place items into an online shopping cart don’t make the purchase. Since they did almost purchase, cart abandoners are now your best prospects. And, a sequence of carefully timed emails will recover between 10-30 percent of them.
It’s these types of recovery rates that propel shopping cart abandonment emails to the top. They generate millions in incremental revenue for only a small effort and cost.
The second most successful technique is retargeted advertising, a fantastic complement to shopping cart abandonment emails. Retargeted advertising works in a similar way, by nudging visitors to return to a website after they have left. And while retargeted advertising works across the entire funnel — from landing to purchase — the biggest opportunities lie where there is some level of intent to purchase, such as browsing category and product pages.
While the two techniques deliver a high ROI, they are definitely not the same. For example, brands using SeeWhy’s Conversion Manager to engage their shopping cart recovery emails average a 46 percent open rate and 15 percent click-through rate. Retargeted ads, by comparison, average a 0.3 percent click-through rate.
See the difference?
The real power comes when you combine the two techniques together — using retargeted advertising when no email address has been captured and email remarketing when it has. (…)
Consumers feel most secure making ecommerce purchases on traditional desktop computers. Clearly, there is a usability issue as well: Entering in shipping and payment details on a touchscreen can be a pain.
We see this reflected in the shopping cart abandonment rate. In 2011, the average shopping cart abandonment rate for mobile devices was 97 percent, compared with 72 percent across all devices.
What this means in practice is that digital catalogs, just like their paper-based ancestors, provide a great platform for customers to shop and research potential future purchases at their leisure. The future potential purchase will often be in a different session and on a different device.