The most important part of a marathon is the final leg of the race. It’s at this point that a racer reaches the finishes line or gives up along the way. This is similar to the checkout process for online retailers, an online transaction isn’t complete until consumers make it through checkout. A recent study finds that getting customers through the checkout process is becoming harder than ever; deliberate cart abandonments have nearly doubled since last year.
Cart abandonment happens, both when shopping online or in-store. Sometimes, people don’t have the time to finish shopping right then; they may not have the money they need to complete the transaction yet; or they may decide to look at another retailer for lower prices. The recent spite of cart abandonments have been tied to consumers who are looking for a better price from the retailer they abandoned the cart from.
Techno savvy consumers know that many online retailers have triggered email campaigns that kick in after a certain period of time after a person abandons their cart. These triggered emails often have coupon codes (e.g. 10% off if you go back and complete your order).
To look at it another way, some consumers are using cart abandonment as a sort of negotiating tactic. It’s like going to the used car dealership, getting very excited about a particular vehicle, then at the last minute, pretending you’re going to leave the lot without buying unless you get a better deal.
According to a recent study from Mindshare, Millennials are clearing their browser and search history to keep online prices down, as well as abandoning their shopping carts to await a triggered email discount code.
Cart abandonment has always been a problem for online retailers, but there is evidence that the situation is getting worse for online retailers. According to a study of 300 online retailers in the U.S. and U.K., there wasa significant increase in the number of online shopping carts that were deliberately abandoned. In the past year, the percentage of deliberately abandoned carts nearly doubled. It was at 8 percent last and so far, it’s 15 percent for this year.
“Though the existing, retargeting technology is an efficient way of attracting customers back, the data suggests that consumers may be abusing this approach in order to obtain a reduction in cost,” says Steve Pritchard, founder of It Works. “We would recommend that retailers focus on reducing their abandonment rates as much as possible and also look at the nature of any deals they offer to retarget customers back to the site.”
An unfortunate side effect of this practice is that it encourages business owners to artificially inflate their prices since they know people won’t buy unless they get an additional discount on the sticker price. This is what happened to JCPenny a few years back. They stopped offering coupons and special prices, believing that customers would welcome a clearer pricing scheme. They eventually had to backtrack when it was discovered that people liked the whole fake pricing and saving with coupons. Consumers like getting discounts. So if a business has their prices set so low that they can’t afford to give a discount, it would be wise to raise the price slightly just so it’s possible to offer discounts that make people feel like they’re getting a good value.
It Works suggests three ways in which retailers can approach this deliberate abandonment behavior – retarget only new customers, limit discounts to more profitable products and ensure technology used can apply multiple filters and offers.
The study also provided some insight onto other things that cause people to abandon carts. According to IT Works, one in three (33%) consumers did not complete a purchase due to delivery cost and about one in four (23%) said they did not like being forced to create an account before the purchase could be completed. These issues can be addressed through better shipping options and using social logins to reduce the hassle of creating an account.
For more information about how online retailers can improve their completion rate, read this article on how proactive customer service can help businesses keep consumers.