Shopping Cart Abandonment: Scourge of Online Retail Sales
By Steve Weber, nChannel
Shopping cart abandonment is a problem that costs retailers nearly $20 billion each year, according to a study by SurePayroll. If you’re putting effort into attracting customers and enticing them with products they’d like to buy, only to have them stop short of the finish line, you’re leaving money and opportunities for repeat business on the table.
Customers cite a variety of reasons for walking away before completing a transaction – including a tedious purchase process, disorganized or incomplete product data, lack of suitable delivery options or simply a poorly managed multichannel experience. Here are a few ways to overcome these common issues.
Think about roadblocks that may discourage a shopper from finalizing a purchase. User Interface Engineering found that a surprising 75% of shoppers said they would bail on a purchase if they were forced to complete a registration beforehand. To avoid this problem, it can be as simple as offering an option to check out as a guest. For those who would like to register, provide a “save information” function, so they can return later to complete their purchase. Nearly one in four cases of shopping cart abandonment happen when customers want to save products for a future transaction, but the retailer hasn’t enabled that function.
When it comes to the actual shopping cart, provide clear thumbnail images to remind the buyer of their selections, making it easy for them to swap, delete, edit or add. Offer clear and simple navigation so customers can continue shopping or proceed to checkout. The last thing you want is for your customers to feel trapped in their cart or to have to start from square one because their items were lost.
When shoppers think about trust, they immediately think of the security of their credit card information. Show your customers that you are a trusted site and that their payment information will be safe, without going overboard on security checks. Concerns about payment security and conversely, excessive proof of security were found to be nearly equal causes of unfulfilled sales. Find the happy medium.
Another way to build trust is to make them a promise and then keep it – specifically around delivery. A lack of delivery options plays a critical role in whether a consumer completes a transaction. To avoid this common pitfall, synchronizing inventory and streamlining the supply chain and fulfillment processes gives consumers more options for the speed of delivery.
Moreover, free shipping options have almost become a necessity for ecommerce stores – a Deloitte study showed that 66% of shoppers are more likely to make a purchase when free shipping is an option.
Offering free delivery and making delivery promises, however, is not enough. Presenting it clearly builds trust with your buyer and encourages them to complete the checkout process. Actually delivering when promised cements that trust and helps to build a loyal customer.
Give Them What They Want
When a buyer puts an item into their cart then clicks that button to “continue shopping,” it’s critical that they can find that next product they’re looking for. This starts with a solid product information management system that creates a centralized product database to feed all of your sales channels, ensures all the needed attributes are included, and organizes data about each item to publish online – making it easier for consumers to search, find and understand more about the product before they purchase. And make sure the system manages images as well – research shows retailers can see as much as a 10 percent bump in conversion by adding pictures of the products on their site.
Maintaining real-time and accurate inventory levels also helps ensure that shoppers add that second or third item to their cart instead of abandoning it due to an out of stock item. Synchronizing inventory with back-end systems is a start, but offering “endless aisle” ensures that customers find the product that they’re looking for. By presenting items from drop ship suppliers, you can not only reduce abandonment but also increase average ticket amount, improve cash flow and operations and enhance your customer’s shopping experience.
These steps can help you remove the headaches for your customers – and reduce/eliminate the dreaded practice of abandoning the shopping cart. Think about the experience you would provide to shoppers in-store and mirror that online to make the purchase process seamless and the opportunities for repeat business endless.
Steve Weber is the president & CEO nChannel, a provider of multichannel management software that simplifies selling for retailers of all sizes. He is the former VP of eMarketplace outsourcing services for Sterling Commerce, a division of IBM. More recently, he was named Microsoft Partner of the Year for Dynamics Retail and awarded Microsoft Retail Independent Software Vendor of the year.
It's interesting that this article was written by a multichannel retail expert, but misses some very key metrics regarding cart abandonment. While it's true that shipping cost is the number reason for cart abandonment, it can be easily assuaged by offering alternative fulfilment options. According to a recent Forrester survey 50% of consumers surveyed expect a store to have in-store pickup. This might be why buy online, pick up in-store is the number one priority for retailers (Forrester, 2014). Though retailers may be streamlining their ecommerce experience and offering free shipping to improve conversion rates, retailers are still missing out. A very simple method of cutting shipping costs and driving in-store traffic to offer buy online & pick up in-store.
American Eagle soars past Street in Q4; promotes brand heads
Pittsburgh – American Eagle Outfitters Inc. soared past Wall Street expectations in the fourth quarter, helped by reduced promotions and discounts and the elimination of asset impairments. The teen retailer on Wednesday posted better-than-expected fourth quarter results and issued an upbeat outlook for the first quarter, projecting earnings of $0.09 to $0.12 per share, versus analysts' estimates of $0.07 per share.
In other news, American Eagle has promoted chief merchandising officers, Chad Kessler and Jennifer Foyle to the positions of global brand presidents for the American Eagle Outfitters and Aerie brands, respectively. In this newly-created structure, they will have responsibility for all brand design and merchandising functions.
For the quarter ended Jan. 31, American Eagle posted net income of $61.6 million roughly six times the $10.5 million recorded in the year ago period.
Total net revenue increased 3% to $1.07 billion from $1.04 billion. Consolidated same-store sales were flat.
“After a tough start to fiscal 2014, I’m pleased to see our initiatives and business priorities begin to deliver results,” said Jay Schottenstein, interim CEO. “We achieved a solid fourth quarter, exceeding our expectations. The team executed well through an incredibly challenging macro environment. Improved merchandise assortments, combined with a better customer experience, drove strengthened sales trends and we successfully reduced promotions.”
During fiscal 2015, American Eagle plans to open 20-25 new stores but close 70 stores, for a net closure of 50 stores. The retailer also plans to remodel 45 stores.
The company expects capital expenditures to be approximately $150 million in 2015. This includes the chain-wide roll-out of a new Oracle point-of-sale system, supporting technologies and the completion of a new fulfillment center, as well as new and remodeled store investments
For the full year, American Eagle’s net income dropped 3% to $80.32 million from $82.98 million. Total net revenue decreased 1% to $3.28 billion from $3.31 billion. Same-store sales decreased 5%.
The company also felt the impact of an after-tax hit of $8.5 million due to an arrangement in which a third-party operator assumed the leases for stores that had been part of its 77kids children’s operation, which American Eagle exited in 2012. The retailer became liable for obligations under the lease agreements when the third-party operator didn’t fulfill them.
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Abercrombie & Fitch posts painful Q4; sales, earnings slip
New Albany, Ohio – With its core teen audience attracted by fast-fashion and tech gadgets, Abercrombie & Fitch had a tough time of it in the fourth quarter, with declines in both income and sales. Looking ahead, the company said its priorities include increasing comparable sales trends, making strategic investments in its omnichannel business, ongoing expense reductions, and selective expansion in high-growth international markets.
Abercrombie’s net income for the quarter ended Jan. 31, declined to $44.4 million from $66.1 million in the year ago period. The decline, however, beat analysts’ estimates, helped by cost control efforts that saw stores and distribution expense drop to $445.6 million from $505.6 million.
Net sales for the quarter decreased 14% to $1.12 billion, driven by a 10% same-store sales decline (with a 6% drop in the U.S. and a 17% decline internationally), the adverse effects of changes in foreign currency exchange rates of approximately 3%, and net store closures. Direct-to-consumer sales were a lone bright spot, rising 1%.
By brand, same-store sales fell by 9% at namesake stores, 6% at Abercrombie Kids stores and 11% at Hollister Co.
“Our sales for the fourth quarter were somewhat below expectations, but a slightly better gross margin rate and strong expense management enabled us to deliver EPS within our guidance range,” said Arthur Martinez, executive chairman (Abercrombie CEO Mike Jeffries stepped down in December and the company is searching for a CEO). “For the full year, our results came in well below our initial expectations, as an expected improvement in comparable sales did not materialize, and further progress on expense reduction was insufficient to offset weaker sales.”
The teen retailer, which has closed 275 U.S. stores since 2011, anticipates closing approximately 60 U.S. stores this year, mostly through natural lease expirations. It plans to open 15 full-price stores in fiscal 2015 in the key growth markets of China, Japan and the Middle East. In addition, it will open four full price stores in North America., as well as 11 outlet stores.
In addition, Abercrombie is targeting capital expenditures of approximately $150 million for the fiscal year, which are prioritized toward new stores and store updates, as well as direct-to-consumer and IT investments to support growth initiatives, such as omnichannel.
“We expect the first half of 2015 to remain challenging, with declines in our logo business in 2014 persisting in the early part of 2015, but at reduced rates, as well as significant currency pressure,” said Martinez. “However, we believe that the benefits of all of the changes we have made will be reflected in improved performance in the second half of the year."
For the full fiscal year, net income fell 5% to $51.8 million, from $54.6 million. Total company sales fell 9% to $3.74 billion and same-store sales dropped 10%. Direct-to-consumer sales climbed 10%.
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