E-commerce

Rethinking cart abandonment

The recent retail lockdowns, and now continued lockdown in metro Melbourne, have rightfully increased the focus on optimising online and omnichannel offers. Even as stores begin to reopen in most states, it is important to acknowledge the long-term impact recent months have had on the increased shift to online retailing. As consumers and retailers alike were forced to interact online, this has accelerated the already growing shift to e-commerce.

As a result, it is more crucial than ever for retailers and brands to optimise their online channels as part of a broader omnichannel strategy. However, it requires a deep understanding of the different ways that consumers use online retail sites, particularly cart abandonment. Otherwise you may be selling mattresses with unnecessary discounts. Let me elaborate.

The five ways consumers use retail websites

In 2017, *a team of academics and I investigated the different ways that consumers use retail sites and how businesses can predict a consumer’s purpose for shopping each time they visit.  

While some aspects of consumer behaviour have since changed, we found some interesting dynamics in how consumers use online shopping carts, which still impact how we think about cart abandonment. However, before getting into those details, it’s useful to briefly explain what we did, and how, to provide the context.

 We started with the clickstream data for a North American fashion brand with multiple sub-brands, similar to Country Road. We analysed the behaviour of just over 2000 consumers during visits to the brand’s websites over a two-year period, resulting in just over 90,000 visits. We analysed variables like the number and variety of pages a consumer viewed, the SKUs they browsed, items in their shopping cart and purchases they made. We also considered factors like how they got to the website, how long since they had last visited and their history with the brand.

We applied an advanced clustering method to identify common patterns of behaviour. We found five types of visits:

Touching base: very short visits with no product views;

Search/deliberation: browsing within particular product categories but not purchasing;

Goal-directed visits: consideration of a variety of products with a high conversation rate;

Cart-only visits: visits spent entirely within the shopping cart with no new pages or products viewed;

Considered visits; very broad browsing behaviour and some cart use, but only a moderate conversion rate

One of the most interesting visit types was the cart-only visit, as it was not one that we expected to see. While this visit type is only around five per cent of all visits, it has important implications for how we think about shopping cart abandonment.

Shopping cart abandonment

According to IBM, shopping cart abandonment is the “percentage of sessions where items are placed into the shopping cart, but an order is not completed”. A report from the Baymard Institute found that around the world, 70 per cent of the time that consumers add products to a shopping cart, they don’t actually end up buying them. This explains why Googling “cart abandonment” leads to firms offering services to help reduce these figures.

 Retailers have approached the challenge of cart abandonment in a variety of ways. The most obvious is to identify any barriers for consumers completing a purchase – maybe delivery fees are too high or the checkout button doesn’t work. These issues undoubtedly need to be fixed, as they lead to lost potential sales. More recently, retailers have retargeted these particular consumers to encourage purchase. This may include digital ads for the items, emails to remind them of their shopping cart, or in some cases, even offering a discount to buy the products.

The logic of these strategies makes sense on the surface. Customers adding items to a shopping cart shows they have at least some interest in the products, so it seems logical to encourage them to complete the purchase if they “abandon” it. But if we look at the way consumers use retail websites and shopping carts in more detail, we see that in some cases, these efforts are wasted and may even be counterproductive.

There are a couple of reasons for this:

The way shoppers use websites and shopping carts

As I mentioned above, one of the key findings when we analysed the way consumers go online shopping is that they visit sites for different purposes on different occasions. Sometimes they’re searching, others they’re planning a purchase. As a result, consumers often use shopping carts as a form of a “wish list” for items they are potentially interested in. They will add many items to the shopping cart and then return later to select the final items to purchase. So, a cart may not be abandoned – it may just be waiting to be completed.

The rise of ‘webrooming’

Another important trend is the increase in consumers browsing online before purchasing in-store, often called ‘webrooming’. Consumers may gather items in their cart, then head in-store to see the items in person before purchasing.

 What these two trends mean is that many times when a shopping cart looks abandoned, it is in fact just waiting to be finalised, which may happen in later visits, potentially on different days, or even through a different channel. Retargeting or offering a discount in these cases may actually have negative effects.

For example, my wife and I were planning to buy a new mattress from an online mattress-in-a-box brand. We searched online and picked the brand and style we wanted. We went to that brand’s website and added the mattress to the shopping cart, about to purchase. Before we could finish the checkout, we needed to leave for brunch (clearly, this was PC – “pre-Covid” – in Melbourne). By the time we got to the cafe, we had been sent a code for $100 off to complete our purchase. This was a purchase we were already planning to make and for a price we were happy to pay. However, because it looked like we had “abandoned” our shopping cart, the automatic retargeting system gave us a discount. In essence, the retailer lost $100 from wrongly assuming we had abandoned our cart.

Rethinking cart abandonment strategies

For retailers, the key message here is to dive deeper into cart abandonment before assuming every session that does not end in a purchase means the cart has been abandoned. This is undoubtedly a complex and challenging task, but there are a few general things to consider:

Rethink what you define as cart abandonment

What matters are the customers who intended to purchase but could not or did not make a purchase for some reason. Try to separate this from people leaving products in their shopping cart to think about later.

Consider delaying retargeting

Retargeting consumers as soon as they leave a site could result in unnecessary discounts. It may be beneficial to wait to give someone a chance to return on their own. Don’t wait too long, most revisits happen within a day.

Try to identify when a purchase is completed offline

As ‘webrooming’ becomes more common, the need to link online and offline purchases is increasing. This is particularly important to help distinguish when a cart has been abandoned and when it has been completed through a different channel.

Cart abandonment, and e-commerce broadly, are complicated topics. It is important that retailers tackling these challenges do so with a clear understanding of what their data tells them, and how to best leverage it to their advantage. This understanding can help leverage the power of online offers – while avoiding selling too many discounted mattresses.

* The academic study was titled ‘An empirical analysis of factors that influence retail website visit types’ and was published in the Journal of Retailing and Consumer Services with Peter Danaher, Sean Sands, and Professor Tracey Danaher.

Dr Jason Pallant is a lecturer in the department of managing and marketing at Swinburne University of Technology.