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While shopping cart abandonment affects all categories of goods sold online, the consumer electronics category stands out as a problem child when it comes to website conversion. Currently averaging a shopping cart abandonment rate of 74 percent, some 10 percent above the ecommerce average, consumer electronics is one of the worst-performing online categories.
That three out of every four customers put items in their online shopping carts, but then choose to abandon, is blighting the industry. Consumers abandon their online purchases for a multitude of reasons, including price comparison, to purchase in-store, or because of technical concerns somewhat unique to the consumer electronics sector. Marketers can learn important lessons from the apparel sector which also suffers from abnormally high abandonment rates, yet has seen very rapid growth in online sales in recent years.
Consumer Electronics - Specific Reasons for Abandonment
Back in Q3 2009, a Forrester survey looked at the reasons that customers abandon shopping carts across all categories of products sold online, and these include:
- Shipping and handling costs too high
- Not ready to purchase
- Comparing prices
- Product price too high
- Saving items for later purchase
But consumer electronics are a bit different. To the Forrester list above we need to add:
- Researching to buy in-store
- Insufficient information/need advice
- Technical information and compatibility
- Pricing complexity (e.g. mobile telephones)
HD TV’s, mobile devices, notebook computers, and cameras all suffer from abnormally high abandonment rates, in part because they are new tech. Getting advice on the gadgets themselves and how they interface with other gadgets is challenging. Online research provides a valuable avenue for customers to explore, read reviews, and learn more about the technologies. But many customers need to speak to sales advisors before they are ready to purchase, leading to the ‘research online, purchase in-store’ pattern. While this isn’t altogether a bad thing — as long as the customer completes the sale in-store — it is sub optimal. After all, what’s the point of putting up an ecommerce site if customers merely buy in-store? Clearly, getting the sale online is more efficient and profitable.
Lessons Learned from Apparel
Selling clothing and accessories online is beset with many of the same problems that afflict consumer electronics, and it has also suffered from the ‘research online, purchase in-store’ pattern. While Fashion and Apparel has traditionally experienced the highest abandonment rate, the sector is now worth a massive $23B in online sales each year. Electronics, by comparison, is only $11B and PC’s $16B (data from Forrester).
The challenge for fashion is slightly different from consumer electronics: customers often want to feel the fabric, handle the goods, and try them on. But these problems are not insurmountable. Zappos has demonstrated that shoes can be sold very successfully online by integrating customer service into the heart of the Zappos value proposition. Free shipping and free returns have taken away much of the fear that the item won’t fit, and the conversion rate is comparable to the ecommerce sector as a whole, even after returns have been taken into account.
Getting used to a ‘normal’ customer return rate of 30 percent or more and building this into the business model together with free or easy returns (and the associated return logistics) has been key for the Fashion and Apparel sector in establishing online as a force to rival in-store sales. In fact, there is now an increasing pattern of consumer behavior to research in-store and buy online for convenience. This is a breakthrough in a sector where lack of in-store size availability has traditionally caused many lost sales.
What Can Consumer Electronics Ecommerce Teams Learn From This?
The lesson for consumer electronics executives is that you cannot treat the online channel the same as the traditional in-store sales channel. Listen to Jeff Bezos of Amazon talking about ‘obsessing over the customer,’ because this is ultimately the competition. Buying consumer electronics online from Amazon, and returning them just as easily, gives consumers confidence to make evermore expensive purchases without fear of making the wrong choice.
Try returning an opened item to an electronics store because you got it wrong somehow, or it wasn’t suitable, and you know you will be faced with a lot of hassle.
Ecommerce teams need to redefine the business relationship with their customers if they want to make a significant impact on their website conversion rates.
Here are four key starting points on this journey:
1. Simplify pricing plans and product options
Most ecommerce teams know that too many choices and options kill online sales. Unfortunately, this knowledge seems to have bypassed some parts of the consumer electronics sector. Take mobile communications for example. Buying a mobile phone in-store is not a simple or straightforward process, even when you have a sales advisor in front of you. Unless it can be dramatically simplified, online sales will continue to suffer.
2. Free shipping
Customers want free shipping. In the Forrester study on shopping cart abandonment, shipping and handling costs were the number one reason for abandonment. Many ecommerce executives believe that year-round free shipping is an inevitability, not a seasonal promotion, for many categories of consumer goods. The cost of free shipping needs to be built into the business model and delivered as part of the brand offering, much as Amazon.com has done. Many of the most price sensitive electronics products are now routinely advertised with free shipping, and price comparison engines are increasingly itemizing the shipping cost in their listings. Checkout PriceGrabbers’ free shipping section for a preview of where we’re headed: http://freeshipping.pricegrabber.com/ .
3. Slick return logistics, no quibble warranties
To impact your conversion rate, your customers have to believe that if the product is not right, for whatever reason, they can change it. If there is doubt about the website’s return policy, then the shopping cart will inevitably get abandoned and the product purchased elsewhere, or if you’re lucky, in-store. This means having a very clear message about making it easy to take goods back — at your cost, not at the customer’s expense. There may be some categories of goods (Plasma TV’s for example) where this requires extra care, but it can be done. For example, Hewlett Packard has got this completely right. If you’ve ever had cause to send back an HP printer you’ll know exactly what I mean: their return logistics are superb — generating long-term brand loyalty and a willingness to pay a premium for that service.
4. Technical information and compatibility
Buying technically advanced products, such as high definition TV’s, requires customers to educate themselves. The customer shouldn’t have to undergo a crash course in understanding obscure technical standards, compatibility and interfaces. Yet in many cases, this is exactly what we make our customers do. Our product marketing teams get so bound up in the latest and greatest technical specifications that they forget the humble consumer doesn’t speak the same language. To fix this, some ecommerce teams leap to integrate onsite chat — which can help — but the real cure is to make these products simpler to buy and easier for the customer to configure their own ‘solution.’ For example, customers often buy a new DVD player and HDMI cable as well as the HDTV they started out researching. This is an HD solution, enabling the TV product to be used in the home to achieve the customer’s goal. The TV on its own may not be a solution. Making it very clear about compatibility between different systems is critical to achieving a customer solution that closes the sale online.
Recognizing that abandonment rates in consumer electronics are too high is the starting point. But making the four changes suggested above is often not simple; some of these changes are high impact on a business and may be difficult to sell. But take a leaf out of the Fashion and Apparel playbook where significant strides have been made by implementing easy return logistics in particular, and the results will begin to show through.
Of course, shopping cart abandonment will be a recurrent theme, even if you obsess about the customer as Amazon does. So your playbook also needs to recognize that different products have different buying cycles as customers educate themselves on the possibilities. And this is where remarketing comes in. It enables you to gently nudge the customer to more sources of information so that they can formulate their decision suitably informed by other customer reviews, product information or by contacting a call center.
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While shopping cart abandonment affects all categories of goods sold online, the consumer electronics category stands out as a problem child when it comes to website conversion. Currently averaging a shopping cart abandonment rate of 74 percent, some 10 percent above the ecommerce average, consumer electronics is one of the worst-performing online categories.
That three out of every four customers put items in their online shopping carts, but then choose to abandon, is blighting the industry. Consumers abandon their online purchases for a multitude of reasons, including price comparison, to purchase in-store, or because of technical concerns somewhat unique to the consumer electronics sector. Marketers can learn important lessons from the apparel sector which also suffers from abnormally high abandonment rates, yet has seen very rapid growth in online sales in recent years.
Consumer Electronics - Specific Reasons for Abandonment
Back in Q3 2009, a Forrester survey looked at the reasons that customers abandon shopping carts across all categories of products sold online, and these include:
- Shipping and handling costs too high
- Not ready to purchase
- Comparing prices
- Product price too high
- Saving items for later purchase
But consumer electronics are a bit different. To the Forrester list above we need to add:
- Researching to buy in-store
- Insufficient information/need advice
- Technical information and compatibility
- Pricing complexity (e.g. mobile telephones)
HD TV’s, mobile devices, notebook computers, and cameras all suffer from abnormally high abandonment rates, in part because they are new tech. Getting advice on the gadgets themselves and how they interface with other gadgets is challenging. Online research provides a valuable avenue for customers to explore, read reviews, and learn more about the technologies. But many customers need to speak to sales advisors before they are ready to purchase, leading to the ‘research online, purchase in-store’ pattern. While this isn’t altogether a bad thing — as long as the customer completes the sale in-store — it is sub optimal. After all, what’s the point of putting up an ecommerce site if customers merely buy in-store? Clearly, getting the sale online is more efficient and profitable.
Lessons Learned from Apparel
Selling clothing and accessories online is beset with many of the same problems that afflict consumer electronics, and it has also suffered from the ‘research online, purchase in-store’ pattern. While Fashion and Apparel has traditionally experienced the highest abandonment rate, the sector is now worth a massive $23B in online sales each year. Electronics, by comparison, is only $11B and PC’s $16B (data from Forrester).
The challenge for fashion is slightly different from consumer electronics: customers often want to feel the fabric, handle the goods, and try them on. But these problems are not insurmountable. Zappos has demonstrated that shoes can be sold very successfully online by integrating customer service into the heart of the Zappos value proposition. Free shipping and free returns have taken away much of the fear that the item won’t fit, and the conversion rate is comparable to the ecommerce sector as a whole, even after returns have been taken into account.
Getting used to a ‘normal’ customer return rate of 30 percent or more and building this into the business model together with free or easy returns (and the associated return logistics) has been key for the Fashion and Apparel sector in establishing online as a force to rival in-store sales. In fact, there is now an increasing pattern of consumer behavior to research in-store and buy online for convenience. This is a breakthrough in a sector where lack of in-store size availability has traditionally caused many lost sales.
What Can Consumer Electronics Ecommerce Teams Learn From This?
The lesson for consumer electronics executives is that you cannot treat the online channel the same as the traditional in-store sales channel. Listen to Jeff Bezos of Amazon talking about ‘obsessing over the customer,’ because this is ultimately the competition. Buying consumer electronics online from Amazon, and returning them just as easily, gives consumers confidence to make evermore expensive purchases without fear of making the wrong choice.
Try returning an opened item to an electronics store because you got it wrong somehow, or it wasn’t suitable, and you know you will be faced with a lot of hassle.
Ecommerce teams need to redefine the business relationship with their customers if they want to make a significant impact on their website conversion rates.
Here are four key starting points on this journey:
1. Simplify pricing plans and product options
Most ecommerce teams know that too many choices and options kill online sales. Unfortunately, this knowledge seems to have bypassed some parts of the consumer electronics sector. Take mobile communications for example. Buying a mobile phone in-store is not a simple or straightforward process, even when you have a sales advisor in front of you. Unless it can be dramatically simplified, online sales will continue to suffer.
2. Free shipping
Customers want free shipping. In the Forrester study on shopping cart abandonment, shipping and handling costs were the number one reason for abandonment. Many ecommerce executives believe that year-round free shipping is an inevitability, not a seasonal promotion, for many categories of consumer goods. The cost of free shipping needs to be built into the business model and delivered as part of the brand offering, much as Amazon.com has done. Many of the most price sensitive electronics products are now routinely advertised with free shipping, and price comparison engines are increasingly itemizing the shipping cost in their listings. Checkout PriceGrabbers’ free shipping section for a preview of where we’re headed: http://freeshipping.pricegrabber.com/ .
3. Slick return logistics, no quibble warranties
To impact your conversion rate, your customers have to believe that if the product is not right, for whatever reason, they can change it. If there is doubt about the website’s return policy, then the shopping cart will inevitably get abandoned and the product purchased elsewhere, or if you’re lucky, in-store. This means having a very clear message about making it easy to take goods back — at your cost, not at the customer’s expense. There may be some categories of goods (Plasma TV’s for example) where this requires extra care, but it can be done. For example, Hewlett Packard has got this completely right. If you’ve ever had cause to send back an HP printer you’ll know exactly what I mean: their return logistics are superb — generating long-term brand loyalty and a willingness to pay a premium for that service.
4. Technical information and compatibility
Buying technically advanced products, such as high definition TV’s, requires customers to educate themselves. The customer shouldn’t have to undergo a crash course in understanding obscure technical standards, compatibility and interfaces. Yet in many cases, this is exactly what we make our customers do. Our product marketing teams get so bound up in the latest and greatest technical specifications that they forget the humble consumer doesn’t speak the same language. To fix this, some ecommerce teams leap to integrate onsite chat — which can help — but the real cure is to make these products simpler to buy and easier for the customer to configure their own ‘solution.’ For example, customers often buy a new DVD player and HDMI cable as well as the HDTV they started out researching. This is an HD solution, enabling the TV product to be used in the home to achieve the customer’s goal. The TV on its own may not be a solution. Making it very clear about compatibility between different systems is critical to achieving a customer solution that closes the sale online.
Recognizing that abandonment rates in consumer electronics are too high is the starting point. But making the four changes suggested above is often not simple; some of these changes are high impact on a business and may be difficult to sell. But take a leaf out of the Fashion and Apparel playbook where significant strides have been made by implementing easy return logistics in particular, and the results will begin to show through.
Of course, shopping cart abandonment will be a recurrent theme, even if you obsess about the customer as Amazon does. So your playbook also needs to recognize that different products have different buying cycles as customers educate themselves on the possibilities. And this is where remarketing comes in. It enables you to gently nudge the customer to more sources of information so that they can formulate their decision suitably informed by other customer reviews, product information or by contacting a call center.
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Web analytics visionary Charles Nicholls is founder and chief strategy officer of SeeWhy and author of “In Search of Insight” which has established a new agenda for the analytics industry. As a veteran of the analytics space, he has worked on strategy and projects for some of the world’s leading ecommerce companies, including Amazon, eBay and many other organizations around the globe. Incorporated in 2003, SeeWhy helps companies improve website conversion rates by bringing back up to 50 percent of visitors that abandon sites prematurely. Learn more at http://www.seewhy.com and the Website Conversion Blog, http://www.seewhy.com/blog . Contact Charles at charles.nicholls@seewhy.com , and follow him on Twitter at @webconversion.
Please feel free to publish the above commentary in full or in part with attribution according to the Creative Common license.
