In case you hadn’t noticed, yesterday was Cyber Monday, traditionally the largest online shopping day of the holiday season. SeeWhy tracks website conversions and ecommerce shopping volumes. Online shopping volumes were up by 19 percent compared with Black Friday and up by 46 percent compared with Monday one week ago. We estimate that this equates to $705M in online spend on Cyber Monday.
The good news is that the abandonment rate has steadily dropped since the end of October. Back in August, the shopping cart abandonment rate was a relatively healthy 63 percent, and it climbed steadily to reach a peak of 71 percent in October 09. But when you look beneath the monthly average, then a strong weekly cycle is apparent. While retailers expect day of week variations in sale volumes, looking at website conversions/abandonments by day of week shows that the abandonment rate is highest during the weekends, especially on Sundays.
The chart below shows the daily abandonment rate for September through to Cyber Monday.
The pattern of high shopping cart abandonment rates during the weekend is normal throughout the year as customers research online before potentially making a purchase during the week.
However, this pattern was much more pronounced from mid September through to mid November, reflected in a peak abandonment rate for the year. It is also mirrored in the chart below which shows how transactions are significantly lower during the weekends, as you would expect.
What happened in mid November, of course, was that Black Friday-specific promotions were being rolled out across the board, triggering seasonal buying—not browsing—behavior and the ramp-up to the peak (so far) on Cyber Monday.
This coincides with the bulk of the promotional rollout and suggests that even though many retailers rolled out their seasonal promotions early this year, it had little impact on sales until of November 9.
This seems to confirm anecdotal evidence of customers searching for bargains and the willingness to spend only when they find them.
The holiday period around Thanksgiving throws the weekend pattern off completely: Sunday, November 29, was as big a shopping day as Black Friday, though the abandonment rate was slightly higher at 64 percent.
While the shopping cart abandonment rate is now on a downward trend, these charts illustrate clearly how customer behavior is being driven by the desire to get a bargain. Customers have come to expect a deal, and this seasonal effect has changed their behavior.
Based on this year’s pattern, we should expect that from mid October onwards—until the big Thanksgiving promotions get rolled out in mid November—customers will defer purchases, having become conditioned not to purchase online, but to wait.
This reinforces what we have known for decades; that promotions shift the timing of revenues and may not provide significant lift overall. In the past, maybe this didn’t matter so much. After all, putting cases of beer on promotion in-store allows a brand to increase market share, at least temporarily.
But online customers are different. Customers are increasingly sophisticated, and in 2009 we have seen the emergence of widespread bargain-seeking behavior online. Today, it’s the affluent and better educated that search for voucher codes and use social media to find deals. In 2010, this behavior will undoubtedly spread.
The danger of conditioning customers to expect widespread discounting is that we transform the Internet from a ‘convenience sale,’ where the customer’s primary motivation is ‘ease of purchase,’ to a price-based sale, where price is the only thing that matters. This does not bode well for margins in 2010.
We’ll be monitoring both the discounting trends and the shopping cart abandonment rates through the rest of the holiday season, and it will be interesting to see whether the rate continues its downward trend, or as is more likely, kicks back up again when the promotions end.
Whatever the rate, recovering abandoned shopping carts is clearly one of the most effective ways to boost revenues, and it allows you to convert those deal-focused customers with a personal offer. It also reinforces that real-time follow up is the only way to go: the weekend abandonment rate is significantly higher than during the week, so following up midweek is nowhere near as effective as an immediate follow up to an abandonment.
To find out more about SeeWhy and how we help hundreds of retailers reduce their shopping cart abandonment rates, visit us at www.seewhy.com
