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. (…)
In 2011, the shopping cart abandonment rate continued its rise, reaching a new all-time high of 72% by the end of the year. In this blog, I’ll try to answer why the shopping cart abandonment rate has risen, despite a focus on conversion optimization by many ecommerce sites. I’ll also explain why I predict that the shopping cart abandonment rate will continue to rise in 2012.
Everything is more exaggerated over the holiday period: Retailers offer a dazzling array of new products, coupled with equally dazzling promotions, while trying to manage the constant problem of out-of-stocks. And customers make an abnormal number of purchases in a very short period and abandon their shopping carts in droves as they search for the best deals. (…)
In 2006, a Wharton professor first noticed that online buyers were more likely to respond to a free shipping offer that resulted in a savings of $6.99 over an outright savings offer of $10. The explanation was that it made the online price more comparable with the offline equivalent.
This fascinating insight into buyer motivations has contributed to on a major new piece of research into online buyer behaviour, which I’ve been working on over the last few months. It will be published on December 13th as an ebook titled ‘The Science of Shopping Cart Abandonment.’
To mark Black Friday, I’ve drawn from some of this research to look at the effects of holiday promotions, and how different price points impact buyer behavior. In particular, I’ll look at the relationship between the cart value and the shopping cart abandonment rate.
What are key price points that trigger abandonment? And can different pricing tactics lead to more conversions without eroding margin? I began my research analyzing a random sample of 264,631 abandoned shopping carts in August 2011, from a cross section of B2C e-commerce sites.
What we already know is that the value of the shopping cart has a disproportionate impact on whether an e-commerce purchaser will buy or abandon. What we have discovered is that it’s not a linear relationship and too simplistic to assume this as a general rule. This leads us to conclude that there are three promotional tactics that merchants should test this holiday season to improve conversions:
Offer discounted shipping for low cost shopping carts.
Set a $99 minimum order for free shipping.
Consider specific promotions for individual products with varying abandonment rates.
1. Offer discounted shipping for low cost shopping carts. As might be expected, higher value shopping carts are abandoned more frequently, and as a broad rule, this holds true. (…)
It’s official: Free shipping is the shoppers’ top retail promotion of choice, driving the majority of customers to buy and to spend more than with any other promotion. This holiday season, customers will be even more price-sensitive, looking not only for the best prices, but free shipping and returns as well.
As we have written about before, customers have become trained to wait for holiday offers prior to making purchases. A tighter economy suggests that this holiday season should see good growth for ecommerce sites as consumers look online for the best prices. However, there is evidence that the 2012 consumer is also moving online to save money across a spectrum of goods, including luxury items. (…)
The shopping cart abandonment rate has increased to 75% in the first 6 months of 2011. The rate, which averaged 71% for 2010, measures the proportion of online shopping carts that are started, and then abandoned.
Normal seasonal trends have the rate decreasing in the first half of the year, declining further over the summer months, then spiking in anticipation of holiday promotions being rolled out.
Once the holiday promotions are widely available, the rate declines again as shoppers make their holiday purchases online in volume.
So far in 2010 Shopping cart abandonment rates have been 7% higher compared with 2009. So it was with great interest that we were watching online customer behaviour over Black Friday, the holiday weekend and CyberMonday, traditionally the biggest online shopping weekend of the year. Studying the industry-wide conversion and shopping cart abandonment rates give insight into buyer behaviour and in particular what and when makes browsers become buyers. There are several key lessons to be learned from looking at this data.
The holiday shopping weekend didn’t disappoint this year – estimates suggest that sales were up by as much as 20% over 2009 on CyberMonday, which is great news for the ecommerce sector as a whole. We will also need to see if this growth was distributed evenly across the sector, or like last year, concentrated among the largest and best known e-retailers such as Amazon, Target and WalMart.
Let’s take a look at shopping cart abandonment rates leading up to CyberMonday. In the chart below you can see three key trends suggested by the data:
(1) Average shopping cart abandonment rates are higher than in 2009
(2) In the pre-season, the highest shopping cart abandonment rates happen at the weekends
(3) Purchases were deferred leading to weekend spikes in the abandonment rate until the 2nd week of November when the majority of holiday offers were rolled out
What’s interesting about this season is that it appears that immediately after Labor Day shopping cart abandonment rates peaked at all time high for 2010, hitting 95%. But by the beginning of October rates had stabilized to more ‘normal’ levels, ranging between 68% and 78%, with peaks on the weekends, especially Sundays. You can see this pattern in the data – the humps are the weekends.
Weekend browsing followed by shopping cart abandonment shouldn’t be a surprise – we saw the same pattern last year – and when buyers have time on their hands, they are more likely to comparison shop. (…)
Online retailers roll out holiday promotions this week to combat high shopping cart abandonment rates.
Two thirds of online retailers are rolling out holiday promotions this week or have already done so. 61% of holiday promotions this year will be focused around free shipping, and 29% on promotional discounts. Multi-buy and free product offers will account for only 10%. (…)
So what can you do, during the crazy holiday season, to reduce shopping cart abandonment? We thought we’d put together a holiday season checklist to help you keep your customers in the shopping cart this Christmas. (…)