In the two weeks since Black Friday and Cyber Monday, online sales volumes have remained healthy, and the shopping cart abandonment rate steadied down to more usual levels, hovering around 65 percent. But these headlines mask an underlying trend to extensive discounting in order to get the volumes. Shoplocal.com report that promotional offers in the last week are up by 21 percent over the same period last year.
During 2009, we have observed changes in customer behavior towards a deal orientation, and these trends are now so pronounced that they can be measured in the shopping cart abandonment rate.
The shopping cart abandonment rate determines the health of a website. It is not a static number, but a dynamic ratio of visitors to those failing to complete a checkout processes. It is heavily influenced by promotions as well as changes to the site itself — and by your competitors’ promotions. This rate has always been important, now it is doubly so. Despite this, the majority of online retailers do not know their shopping cart abandonment rate. (SeeWhy has a free service you can use to track it on a daily basis, so frankly there’s no excuse!)
SeeWhy tracks website conversions across a large number of U.S. ecommerce sites. When measured in aggregate across the ecommerce industry, the shopping cart abandonment rate gives an indication of the health of an industry. This year, it tells a story that demonstrates the link between discounts and conversions. Holiday volume increases have, to a significant extent, been ‘bought’ with promotions, and that confirms the changes we’ve seen in 2009 as buyers have demonstrated deal-seeking behavior.
Pre-Thanksgiving Online Buyer Behavior
Leading up to Thanksgiving, customers were stalling purchases in anticipation of Black Friday and Cyber Monday offers. This can be seen most clearly by looking at the shopping cart abandonment rate, which averaged 71 percent in October.
On the weekends, a strong abandonment pattern developed, (with the peak at 83 percent on Sunday, October 11) indicating that mass customer shifts in behavior were under way.
Transaction levels were way down — at about half of what you would normally expect. This illustrates how customers developed a strong pattern of researching on the weekends, looking for deals leading up to Black Friday. Many purchases were deferred altogether in anticipation of the promotions we’ve trained them to expect. The transaction volume chart below (showing transaction volumes relative to the peak) illustrates this perfectly.
Then the industry rolled out its Black Friday deals and opened the flood gates: the abandonment rate dropped dramatically, and transaction volumes rose steadily.
Volumes Rise, Then Fall
Although traditionally the biggest online shopping day of the year, this year Cyber Monday was eclipsed by December 8 at 109 percent of the sales volume of Cyber Monday. Since the peak, online volumes have been declining. By Monday, December 14, they had fallen back to 81 percent of the volume seen on Cyber Monday and 75 percent of the peak on the 8th.
Given the proximity of Christmas and the impending shipping cut off, it’s likely that volumes will continue to fall until they start turning around on Christmas Day when the post-Christmas sales kick in. We can also expect the shopping cart abandonment rate to increase as we get closer to Christmas.
What Does This Mean For 2010?
During 2009 discounting-seeking buyer behavior has become mainstream, and this has impacted how and when consumers buy. A significant proportion of customers have become trained to wait for ever deeper discounts, use price comparison sites, search for voucher codes, and use the internet primarily to save money.
In 2010, we should expect abandonment rates to rise again once the last remains of the holiday sales are over. In response, we expect online retailers to get serious about:
• Permanent free shipping on some product categories
• Intelligent use of promotion codes to reduce misuse and limit the effectiveness of voucher sites
• Automated and optimized remarketing to recapture the lost value and target promotions much more specifically
• Tighter integration of social media with ecommerce sites and specific social marketing promotions
• More selective promotions, with the use of VIP clubs and one-day sale tactics
I’d be interested to hear your thoughts about what the ecommerce landscape will look like in 2010.
