November 13, 2004
Abandoned Shopping Carts May Be Good News
By Evan Schuman, eWEEK
Opinion: The changing way customers shop online today prompts Evan Schuman to suggest retailers must rethink their thinking
In the first year or two of e-commerce, one sign of sure trouble was seeing a high number of abandoned shopping carts.
I've always loved the term "abandoned shopping carts" because it's one of the rare examples in technology where the term quite accurately—and explicitly—describes what it means to describe. It refers to a customer who starts to shop, puts some items into a virtual shopping cart and then simply goes away before buying anything.
The early conclusions drawn were that something bad had happened, driving the prospect into the arms of another e-tailer or—egads!—into a brick-and-mortar. The possibility that the prospect had decided that money was too tight and no purchase should be made at all was always dismissed as too horrible a scenario to consider.
Perhaps it was a blue screen of death (Redmond's gift that keeps on giving) or a database error? Maybe the instructions were too complicated or the tender-process kept refusing a legitimate credit card?
A couple of years ago, those fears were more often than not correct.
Today, though, an abandoned shopping cart is more likely to indicate a realistic sign of the times. This is not to suggest that technical glitches and site crashes aren't still a part of the holiday shopping experience, along with holiday carols playing right after Halloween and bad-tasing eggnog. (Sorry, eggnog lovers, but I'm not drinking raw eggs unless I have a hangover. And I fight it, even then. Instead of a gulp of SushiMilk, opt for an eggcream, which should be called the retail marketer's drink because it has neither of the two advertised ingredients. But, fully in character, I digress.)
Today's e-commerce customers are probably comparison-shopping so they will leave eight or nine abandoned shopping carts around while making their decisions. Another likely explanation today is the "I'll analyze and narrow down my choices today and come back next week and make decisions."
The decision-process might look like this: A customer decided that she wants to purchase a coffee-bean burr grinder. But which one? She'll look into quite a few choices, read a bunch of reviews and will then go to her favorite merchant and drop three or four acceptable options into her cart. She can now return to her day, knowing that when she decides that she will now make that purchase, she won't have to recreate the research. She can quickly go to her cart and make her decision then.
Another common use: Someone will grab appropriate gifts for various friends, relatives and children of same as they come upon them throughout the year. Then, as various events crop up, then can go to their cart and make some quick decisions.
Instead of resisting this trend and dismissing those non-instant-buyers as dastardly shopping-cart abandoning bandits, why not embrace them? Offer shopping-cart compartment-like folders, so that a folder of possible gifts for cousin Mikey can be easily found? Perhaps it can be combined with birthday or anniversary reminders?
Encouraging this kind of shopping-cart behavior could be a bonanza to your CRM efforts, similar to traditional wishlists and wedding registries.
I've been waiting for some aggressive retailer to save the lists of people who buy wedding registry items, match it with regional hospital records and send e-mails suggesting newborn baby gifts and then one-year-old gifts. Hey, it's a cut-throat retail world out there.
Some retailers are already looking at abandoned shopping carts as golden opportunities to e-mail special discounts if they'll come back and make those purchases within 48 hours. That could be a mixed-blessing. It might discourage some customers who don't like the idea of their store looking through their personal cart.
They know they do it, but an in-your-face e-mail might be forcing them to think about it. You want them to continue to use their cart for shopping intent as well as for immediate purchases. There's also the risk of rewarding customers for not buying immediately.
Rebates And Other Retail Oxymorons
When Staples announced that it was Web-automating its rebate process, it started monkeying with one of those great oxymoronish retail traditions, like a grocery chain rewarding its worst customers with the express lane. ("You want to buy a whole shopping cart worth of items? Sorry, ma'am, you can't use the fast lane. Go over and wait with the others." Turns to someone else: "You're just buying a box of toothpicks? Right this way, sir. Only the fastest for you!")
The time-honored rebate has always been based on the belief that most people won't bother filling in the forms and applying for the money. Of course, it depends on how large the rebate is, but the more onerous the process, the more the retailer can win brownie points for making the offer without having to actually pay anything.
A company called Parago has sold to Staples and other retailers a package to significantly accelerate the rebate process, making it a lot easier on consumers. Will this make a lot more consumers take advantage of rebates?
Parago CEO Ken Johnsen says that he doesn't think so.
"There may be incremental sales on this, but I'm not so sure we'll be seeing an increase in the redemption rate," he said. What then does he see as the most powerful upside? More sales of the items themselves and related items, as the easier system can tout lots of related products.
And if retailers start using their services to turn a $50 rebate check into a $75 store credit, the increase in secondary sales could be huge.
See what can happen when you treat your customers as allies and not enemies to be duped? Maybe we can teach that to the airlines and get them to stop rewarding their best customers with free tickets. And then permit only one seat to be available on any desirable flight. "Well, sir, I can book you on the redeye to Nome, if you'd like. That's better than boring old Hawaii, isn't it?"
In God We Trust. All Others Must Use Plastic
Visa was recently touting an analysis of its customers and found that the transactions using cash and/or checks were sharply dropping.
When we called asking for the specific numbers, Visa couldn't place its hands on any of them. Not that we don't trust Visa to have honestly come upon its self-serving conclusion. ("Visa: It's Everywhere We Tell You To Be")
But this claim does raise some interesting retail technology implications. Merchants have historically preferred cash. Besides honesty, it more often revolved around those kickback fees to the card companies.
Even with today's razor thin margins, the cash-to-credit, trust-versus-track fight is shifting to the track side. (I'll refrain from saying that dollars bills are from the wrong side of the track. It's too easy.)
The potential increased revenue from being able to track every sale and tie it back to individual customers is too exciting a CRM prospect to turn down. As we've discussed before, the relatively small number of retailers that are actually using CRM—as opposed to the simpler basket analysis—is disheartening.
But as margins get even thinner, the need to boost overall revenue becomes essential.