Australians love shopping online. The evidence is in the data, with NAB showing that last year Australians spent close to $1.95 billion via digital channels.
But Australians are also world leaders when it comes to abandoning their shopping carts. So what’s going on?
There are some common obstacles causing consumers to abandon carts. Even small changes to a customer’s online experience can hit an ecommerce retailer’s bottom line.
Boston Consulting Group Data Analysis showed that in Australia alone the annual cost of friction — basically anything stopping a customer from completing a purchase on a product — is $29 billion.
High Shipping Costs
The recently released SAP Consumer Propensity Report reveals that 60 per cent of consumers abandon carts because of high shipping costs, 46 per cent are just using online stores to compare prices with other brands/sites and 32 per cent say it’s because products are out of stock.
On this last point, the study suggests that availability and shipping costs in particular are crucial.
Three-fifths of Australian consumers abandoned carts due to high shipping costs. Retailers must be conscious of supply chain and logistics decisions that impact availability and delivery, and need to integrate these back end systems into their e-commerce platforms and tools to remove barriers to purchasing.
Scott Treller, Executive General Manager at SAP CX ANZ, says Australians abandon their carts at a much higher rate than everybody else in the world.
“About ten per cent higher than North America and 20 per cent higher than Europe — which is unexpected.”
He whittles this issue down to three main problems: the cost of freight, stock availability and longer than desirable shipping times.
“If you think about these three, two of those are just surfacing information about your supply chain to the consumer on the web site.”
Why does cart abandonment happen?
The SAP Consumer Propensity Report identifies groceries, travel and entertainment as items that would more than likely be bought on the day, and mentioned furniture, digital goods and fashion as items most likely to be abandoned in the cart.
Treller says there is no real reason why some items are abandoned more than others, but if a customer does not know when an item is going to be delivered that is when they start to lose interest.
“I think the justification for why is consistent across all categories. It is a buying experience.”
The SAP Consumer Propensity report also found that only 22 per cent of customers are interested in suggested recommendations at least half the time, despite 95 per cent of them recalling seeing such recommendations.
The report comes to the conclusion that the recommendations are not relevant.
Treller says when it comes to recommendations it is really about personalisation. “If you are going to recommend something to somebody then it needs to be relevant. You achieve that by listening to data — and people leave a lot of data with an online experience.
“It is understanding someone better as a consumer. It is one thing to say ‘if people buy this, they also buy that’. That was probably relevant a decade ago, but nowadays there is much more sophistication that can be used to really surface an offer that is specific to a customer.”
How to reduce cart abandonment
Treller suggests retailers should look at great examples of personalisation and offers Adidas up as a case study. The global footwear brand offers consumers the chance to design and order a custom sneaker, and be provided with a delivery date.
“When you think of the technology involved in the backend of doing that — which parts are available to make the shoes, how long it will take to make the shoe, when will it be boxed and arrive at your house — that is an impressive technological feat. That might be nirvana for many, but you don’t have to start there.
“Personalisation is something you can do very quickly. There is a wealth of data that is just left behind by people when they shop online — how long they spend looking at a product which shows a level of interest, and whether they leave your site when they see its not available says a lot about the importance of stock availability.”
However, he does offer a warning: 80 per cent of Aussies will stop dealing with a retailer if they think their data is being misused.
“It is important to be very transparent in how you intend to use people’s data and ideally empower them with what you do with it. So let them decide what information you can collect.”
About The Author
Athina Mallis is the editor of the Digital Intelligence Unit, of which SAP Hybris is a corporate member. Our members provide their insights and expertise for the benefit of the Which-50 community. Membership fees apply.