As the Internet phenomenon matures, there is a greater demand on
e-businesses to satisfy customer needs. Online businesses, whether large or
small, who fail to satisfy customer needs are finding that customers are
leaving their sites, never to return. Getting eyeballs to the site is of
lesser import compared to getting these visitors to buy something from the
site. This problem is not only endemic to the bigger dot-coms, but also
affect online small businesses as well.
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Abandoned Shopping Carts
Online retailers are being plagued by what is called “abandoned
shopping cart” problem. Majority of online consumers starts the purchasing
process, but fail to hit the "buy" button before they leave a Web
site. In fact, an April report by Boston Consulting Group (BCG) estimates
that some 65 percent of online consumers bail out of a transaction and
abandon the shopping carts before the final purchase transaction took place.
This, of course, represents significant lost sales for the online retailer.
Another study, this time by market analysis firm Datamonitor, estimates
that e-businesses lost 3.2 billion dollars in 1999 due to poor customer
service. Of the 237 million online transactions attempted in 1998, only 80
million or 20 percent were completed. The study also shows that for every
complete online transaction, nearly four times as many are abandoned. If
this trend continues, Datamonitor forecasts a cumulative loss of more than
$173 billion in potentially salvageable sales over the next five years.
The trend of shopping cart abandonment continues. In 2006,
MarketingSherpa
in a survey conducted among 1,100 emarketers found that the rate of shopping
cart abandonment remains a very high 59.8 percent
Several reasons have been put forward to explain why shoppers leave their
carts in the online aisle. Some suggest that security fears prevent buyers
from completing the purchasing process. Others contend that sticker shock
after shipping charges get tallied makes them flee. Still others point to
the fact that like offline shoppers some people just like to browse.
But with the number of online retailers grasping for air to survive,
e-companies are concentrating as never before on getting customers to buy.
By all accounts, the foregone sales represent a big chunk of online
retail. In the 4th quarter of 2006,
U.S. retail e-commerce sales reached $29.3 billion, an increase of 6.3
percent (±2.8%) from the third quarter of 2006,
according to the Census Bureau of the Department of Commerce. Ecommerce
sales increased 24.6 percent (±3.5%) from the fourth quarter of 2005.
With the pressure on for online retailers, both big and small,
to produce revenues and profits, every e-tailer should strive to minimize
the rate of abandoned shopping carts.
Improve Customer
Experience
The problem of incomplete online transactions is not isolated to big
money dot-coms alone. Even small businesses have their share of this
difficulty, perhaps more so given the lack of robust and sophisticated
purchasing systems as well as inadequate technical and customer support
personnel that the well-financed dot-coms enjoy.
Abandoned shopping carts highlight the need to improve the total consumer
experience, including the shopping and checkout processes. For a small
business to succeed online, customer relationships should be a top priority
and carefully managed despite the company’s resource constraints. Focus
should be given on the best possible (and flawless) customer experience and
converting first-time shoppers to valuable repeat customers. While small
businesses do not enjoy the same kind of technology that the big dot-coms
have, like Amazon’s one-click ordering process, there are several ways
small businesses can still improve their services.
To improve the sales conversion rate, and thus enhance revenues and
customer retention, small business needs to start with the basics.
