In the e-commerce space, there's no end to the number of plugins, platforms and popups you can install on your store's webfront to try to juice sales.
One of the biggest focuses of this category is around increasing the conversion rate between the moment someone adds a product to a cart, and that person actually pays for it. In fact, I'd venture to say an entire industry now exists in the very specific, but very important space known as cart abandonment. Some studies show that 80% of online shopping carts are abandoned.
In this space, we see everything from urgently worded text messages to time limited discount offers by email. Sometimes these tools encourage people to come back to the site to read the product reviews or browse more product page
But a new paper published last month in the Journal of the Academy of Marketing Science says tactics like that might actually be causing people to abandon their carts.
“This is a digital behavior that's just so different than the real world,” said the study author, Angeline Scheinbaum, an associate professor of marketing at the Wilbur O. and Ann Powers College of Business at Clemson University in South Carolina. =
“If you think about last time you went grocery shopping or even retail shopping, it's very unusual to take something and to put it in your card or your basket or your hands even and get all the way up to the counter and then not go through with that transaction. That led us to study this online, if it's particularly rare in the real world or the non-digital setting, why is it that, as you said in your intro correctly, that 70 to 80% of all carts are subsequently abandoned or not converted to the sale.”
Dr. Schienbaum was a guest on the Today in Digital Marketing podcast recently.
The effect of Abandonment
Show host Tod Maffin asked her why when people start a session with an existing cart, they end up using the cart more, but they're more likely to abandon it in the end.
“We pondered with this as well,” said Dr. Schienbaum, “Because it could be that that existing motivation to actually purchase was never really there all along. Again, we're only speculating because this is clickstream data. Now the beauty of clickstream data is we're measuring actual behaviors. We know where people's eyeballs were. We know where people were clicking throughout the purchase funnel. What we don't know though, is that why? Again, please note that whatever findings we have when I go to explain why they held or why they didn't. I'm merely speculating, because I don't have that ability to ask a customer, our theory or one of our hunches could be in that case, there must have been a reason why somebody didn't complete that transaction in the first place. Maybe the second time it could be the same reason. Maybe nothing else had actually changed from shopping session one to shopping session two.
The study's data set came from a large European retailer that sells sportswear and clothing and home products, online and in stores. They gave the authors access to data from about a million sessions from 2018.
What About Today?
Would the results be different if they'd have used more current data?
“I would hope not,” replied Dr. Schienbaum, “If anything, the results might be confirmed a bit more because what we're seeing now with online shopping from 2018 to Today, the world has gone through quite a hard time with the pandemic. For ecommerce marketers, the silver lining to that is that people's online consumer behavior has changed dramatically because of the convenience and the safety factor. With anything, I would say that the results would hold and they would be much stronger.
How to Handle Sold-Outs?
What should online retailers do with products that are sold out? Do they list them anyway?
When people encounter a sold-out item, which would be a big purchase motivation, it's interesting that in some cases it could increase the demand and the desire because of the psychology is, “Well, we can't get something, therefore it must be good, it must be valuable, other people want it, it's in demand.” The literature has showed it bizarrely can almost enhance somebody's desire to it, but the reality is in this day and age, we vote with our wallets and the era of capitalism and hyper-competitiveness that some consumers are just simply leaving your interface and they're going and they're going to buy it from somebody if they're in that mindset already.
Again, and I don't have the data for this, a lot of times, it depends on somebody's mindset going in, and this is where the data has some limitations. If somebody is in that mindset and it's a utilitarian process or product, you know you're going to buy it because you need to buy it. If it's sold out, you're going to go to a competitor, but then again, if somebody doesn't have that purchase motivation from the get-go, but they want to just organize and get some information search, they're more likely to put technically a sold out item in their cart, and come back to it and buy it when it is restocked.
I would say out of all of our variables, that's probably one of the more time-sensitive ones because, for some people, you don't mind waiting a day or two, but depending on the person and the product and the situation for some people, they have no problem just leaving and going, “Look, if you're not selling it, somebody else is.”
Platform differentials
However, this data was different depending on platform.
“There was more of a substantial effect between shopping on a desktop versus a more mobile device. We think that again, has to do with convenience motivation. Maybe when we're shopping on our phone, maybe we don't have that mindset of purchasing as much, maybe people take things a little bit more serious when they're shopping from a PC,” said Dr. Sheinbaum.
Shared Shopping Lists
Tod: I was thinking about this last night. My wife and I were talking about it. She's also in the academic world. We were chit-chatting about this interview coming up. We have a shared Amazon account, essentially. There is apparently a way to connect up a family version to it, but there are no Amazon families available in Canada so we can't do it. We have a single shared Amazon account, which makes it difficult when we're trying to buy gifts for each other on Amazon but whatever. We use the shopping cart as almost as a placeholder, as a wish list as a I'll think about this later list. Should we encourage consumers to do this? Does encouraging that behavior help or hurt eventual sales?
Angeline: It depends when, because keep in mind, our unit of analysis is one shopping session, which is defined as the second you log on to the second you close the browser or the app in some cases. If we had long-term data, I think the question would have a different answer than the way that I can answer it within that shorter window, because based on our research on the long, the big picture of the last 10 years, I think there are good things about this wish list, because it signals intent. Again, if it's a big picture item, you're more inclined to go back and buy that purchase.
From a short time period, it could actually be a bad thing because you're putting it in a wish list and that's a separate mindset. You're thinking like, “Okay, for this birthday coming up–” or for us, it's whenever Christmas comes, “This is good to put on a list.” Also speaking as a mother, by the way, for a second, not professor Scheinbaum, but Corbyn, Barrett and Wesley's mama, I think it's a very smart idea to have this long-term mentality for the wish list because if you're a parent too, for all the parents out there, you get this thing called pester power.
You want to get it for your kids. They continuously pester, so you want to put it on this list. “Okay, this will be for Christmas, or this will be for their birthday, or this will be for their next big milestone, whatever that is.” I do think that there's a lot of good to use wish lists, but one caveat to this, and I think Amazon has really mastered this and it's good and it's bad for us as parents and consumers in general, is the whole Buy It Now feature.
If you're able to buy something now, versus putting on a wish list that's a sale that the company is getting right that second within that session that we can measure as a conversion. Again, it depends on how you think of it long versus short, but from the long point of view I think it's good to have these wish lists, but from the short-term point of view, it would be much better from the company's point of view if we would just click Buy It Now. I don't want my kids to know where that button is, [chuckles] because then, I would have Pokémon ships to the house regularly. [chuckles]
