by Christian Koestler
Online shoppers have got wise to finding the best deals online and, as a result, online shopping baskets are being abandoned at an alarming rate. For online retailers this represents the loss of millions in revenue and has caused some to start re-thinking their marketing strategy or improving the checkout process. But there are other ways to tackle this challenge.
For the retailer, there is nothing more frustrating and expensive than the practice of online abandonment. The consumer logs on, adds the items they want to the online shopping basket and then leaves the website before making the final, crucial purchase. Recent research from Forrester indicates that 88 per cent of consumers have done this and the trend is unfortunately on the increase.
One aspect of this practice is lost revenue to the retailer, but there is also an impact on the retailer’s brand, and how it is conceived by the consumer. This is particularly acute if consumers keep going to the website, ostensibly to compare prices, and never complete the transaction. Does this mean that the site is never competitive? Will the consumer abandon the site completely? What will this do to the value of the retailer’s brand, particularly in the long-term?
Of course, consumers can be put off completing a transaction for many reasons: the cost of postage or shipping is too high, they are simply not ready to make the purchase, they want to compare prices with other sites first, or the item is simply too expensive. This all comes down to ‘price transparency’ whereby consumers have access to prices across thousands of products and services, and via a myriad of different channels, whenever and wherever they want them. The nature of online shopping has allowed consumers to demand this kind of transparency, putting them, and not the retailer, in much greater control.
And whilst online retailers understand the need to be competitive in their pricing, it forces them not only to monitor what their competitors are doing, but also to be as up-to-date as their well-researched, savvy customers. This is what we call a 'triangle of transparency' – where retailers, competitors and customers all have a clear picture of the competitive pricing landscape – and it is the reality in today’s online marketplace. Retailers have to actively participate in the price-transparent marketplace not just to compete and win customers, but to even survive.
Some retailers are tackling this issue through tactical marketing, for example, including delivery and payment information earlier in the checkout process, or reducing postage or delivery costs and presenting these reductions as special offers. And a small number request an email address from a customer before they leave the checkout page, so that they can send a reminder email to the consumer that they haven’t completed the purchase. However, this tactic relies on the customer having provided accurate, or indeed any, contact details, and retailers must time their e-mail message to reach the consumer before they make a purchase elsewhere.
Some retailers have concerns about privacy, the return on investment, and the fear of alienating potential customers by barraging them with e-mail messages. Relatively few, in fact, have an active shopping basket abandonment remarketing campaign in place. But for online retailers who want to attack abandonment at its very centre – not simply treat the symptoms of it – there is another option - price intelligence for online channels.
Price intelligence is cloud-based technology that identifies, compares and analyses prices and other revenue-impacting data for retailers businesses. This enables retailers to assess their own operations as well as their competitors’ – using data that helps them to make informed pricing decisions. Providing the ability to instantly evaluate the market impact that competitor price changes create, price intelligence enables management to gain a deep understanding of what each change means for margin and market share.
Because price isn’t the only consideration for astute consumers, who regard good quality information as equally essential, price intelligence systems can also help a retailer to deliver to their customer rates, rankings, product availability, shipping charges and other qualitative information. Price intelligence provides retailers with everything that their customers see when they are researching and shopping online, giving them an advantage, not only in terms of knowledge, but also in terms of time. And with this level of sound data analysis, retailers can make highly responsive decisions, maximising their benefit to the needs of their customers. These include conducting sophisticated what-if and meet/beat analysis; recognising and acting on market events and opportunities; providing a more accurate picture of competitor pricing; getting a clearer view of consumer opinion and perception and defining the best price responses.
Retailers will find that using price intelligence will leverage their insight into market pricing, terms and dynamics, which will help them to significantly decrease abandonment rates and increase sales. By the same token they will create a positive impression with consumers that their website is current and price competitive and this will help to build loyal customers who trust the brand and its offer. Ultimately, shoppers will abandon not their online shopping basket, but their compulsion to look elsewhere for better value.
Of course, consumers will inevitably continue to compare prices across the Internet using mobile devices and computers to find the best deals. However, to lower abandonment rates, increase sales and revenue, and build a strong reputation with online shoppers, retailers would be well advised to consider the short and long-term value of price intelligence.
Christian Koestler is President & CEO, Lixto Inc