Solving The Shopping Cart Abandonment Problem

This is an old post that somehow got deleted.  So I am reposting-

Without a doubt this is the most interesting brainteaser in all of e-commerce land: 1/3rd of all online shoppers leave their shopping carts.  People abandon for a number of reasons:

1. Lack of trust.  This can be remedied with assurances (‘guaranteed returns’, ‘secure transactions’, ‘privacy protection’ etc).
2. Using shopping cart as a temporary storage device.
3. Unknown.

This ‘unknown’ segment is an area where marketers can improve conversion.  Here is one theoretical idea-

Let’s assume a specific SKU is listed at $33.00.  Run a split A/B test where visitors to version A see the $33.00 price and others see $34.00.  For version A add-to-cart is a standard interface.  For version B when someone adds to cart the item is listed as $33.00 on cart page.  Being fully aware the item cost a buck more in the previous page the shopper will become insanely excited and assume the e-commerce system made an error.  They will now focus on checking-out ASAP.  Incentive has shifted to maximizing this unexpected saving.  Run test to see which version generates higher conversions.

I know what you’re thinking- “this is a bait and switch tactic”.  It’s not; it’s no different from offering a $1 off coupon.  We just don’t promote the discount;  the way Starbucks doesn’t advertise they own Seattle’s Best Coffee.

Why do I think know this will work?

Value is a convoluted concept and we humans struggle assigning a $ amount to a product.  However, comparison is a cut and dry strategy.  If an identical item is priced at $14 and $13, buy the $13 option.  Back to our example- when someone sees a price and adds it to cart what they are saying is “this price is acceptable”, there is a certain level of intent.  When the next page (cart page) has that same item $1 cheaper suddenly perceived value goes up because the shopper is comparing this price with the price on the previous page.

5 thoughts on “Solving The Shopping Cart Abandonment Problem

  1. Hi, abandoned shopping carts are a huge opportunity.
    We found that in our market (office supplies) customers really use them as a storage device (in the morning someone says “I’ll place the office supplies order today, and loads products all day long). A supporting fact is that approx 50% of our sales are done after 4:30PM… And we sell mainly to businesses.

    BTW, I think the math in your last paragraph is wrong. If you lose $1 in all orders out of $4 profit, you are getting $3. To get to the same total GM dollars, you should sell 33% more.

    • Hi Leo,

      If the customer is using the cart as a holding spot then I don’t think this idea will work.  Also, you are right about my math being wrong, I should have said 33%.  The best way to test such an idea is on a sku by sku basis.  I would start by picking a sku with a very high abandon rate.

      Rishi

    • Hi Leo,

      I thought some more about your comment.  So here is my modification: pick a sku that has a high cart abandon rate.  During the test period increase item display price by $1.00 and give surprise $1.00 discount when the item is added to cart. Run this as a split A/B test.

      Rishi

      • Hi Rishi, I think it can work!
        The challenge would be with repeating business (i.e. office supplies) twofold:
        a) Most of carts have 7 to 10 skus – a single item price might not be sufficent to force a change in behaviour
        b) Customers would learn… This should be done rotating the skus, or in some other unpredictable way. In fact, this could lead to increased excitement (“hey! I’ll buy there to see what great surprise I get when checking out”)

      • Hi Leo,

        You are right, this strategy needs to be executed cautiously.  As you pointed out, it cannot be used for all scenarios.  Also, it’s value gets lost if shoppers figure it out.  Excellent points.

        Rishi

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