Data from Statista indicates that the average shopping cart abandonment rate for the past two years has remained largely static at about 80% for shoppers from the UK and US who shop online by means of a mobile device. This high level represents an ongoing concern for retailers and will be top of mind for many as they tackle the challenges of optimising customer revenues through the Black Friday and Christmas season demand peaks, says Will Lovatt, general manager and vice president, Deposco Europe.
There are two main reasons why this issue continues to persist. One is that an expectation of instant gratification is the norm. Customers today increasingly demand that a product is made available to them (in the case of the UK) in as little as four hours. The retail industry, through its marketing and advertising is doing more and more to encourage customers that this kind of capability could be in place all the time. If it isn’t, many will simply abandon their basket and go elsewhere.
The second issue is the prevalence of supply chain problems. The disruption of the past three years has often left stock in the wrong place and not where it needs to be ready to serve customer demand. As a result of this, some retailers have a lack of availability while others, ironically, may be overstocked, having bought more inventory, based on the risk that it was going to be difficult to get hold of.
That’s even more the case over Black Friday and Christmas where demand soars and is therefore difficult to predict and satisfy. The drive to instant gratification is particularly acute at this time of the year also, as stressed customers pull out the stops to get products in to tight timeframes.
Scoping out the customer journey
To better understand the thorny challenge of supply, retailers need to think about the customer journey. When customers engage with any retailer online, they may arrive on the site with an idea of what they want to purchase, and it is a question of adding the product and taking it to the checkout.
Alternatively, they may be browsing on a whim, with no clear idea of what they want to purchase other than the need to buy presents for their children, for example. In this case, the focus will be more around searching for and identifying the product required. Either way, a point is likely to soon be reached when the customer adds their chosen item to the basket.
So why would the customer abandon the basket at this point? It might be that they have not in reality found exactly what they want or it could be that the product is presented on the website but not available to ship. The customer wants to buy the item, clicks through, adds it to the basket, goes to the checkout but then finds to their consternation either that it will take weeks to be delivered, or that the product is in fact out of stock.
Finding a solution
The harsh reality is that retailers stand to lose customers if they can’t fulfil their need for products in a timely fashion. Over time, this will mean increased customer churn rates and longer term damage for the business concerned.
So what’s the solution? If the product is out of stock, a distributed order management system can step in to make that product available from whatever channel it can be sourced, rather than merely looking in a single local location. The key is connecting to more possible sources of inventory, which could be used to satisfy the demand. This then removes the issue of the product not being available within the local stock pool.
Optionality comes into this whole process also. Often today, there is a perception that customer demand is all about receiving a product in the shortest possible lead times. In fact, that there are a number of different possible buying scenarios that the retailer needs to be able to satisfy. The customer might want the product but in fact not really care if it is available for next morning delivery. They might want it for their brother’s birthday in three weeks and as long as it arrives in time for that, the customer is happy.
The specific channel it is sourced from is of no concern to the customer, after all. They would be quite content for it to be delivered for free in two weeks’ time when the retailer has sourced it from overseas, for example. And that’s a much more satisfactory option for both retailer and customer than the customer either going elsewhere for the product or being forced into an emergency next day delivery.
Having that optionality of possible deliveries available and empowering the customer to make the choice is key in reducing the issue of basket abandonment.
Reaping the rewards today and in the future
The above approaches are all symptomatic of a continuing drive across the retail sector towards consumer-centricity. Consumers are increasingly able to find across a number of different touch points the solution to their need. The long-term implications of this for retailers are that if they want to play in a given market and have their product available to customers, they need to make it available through other channels and deliver it to the specific location the customer has chosen.
In that sense, the market is evolving from being about an individual retailer with their own limited product range to one where a supplier is making a product available through all sorts of different channels and touch points with the customer. If they want to stand out from the crowd, optimise revenues and build customer engagement moving forwards, businesses across the retail sector will need to get on top of this trend and harness the right tools and technologies to deliver the timely supply and optionality customers increasingly demand.
The author is Will Lovatt, general manager and vice president, Deposco Europe.
Follow us and Comment on Twitter @TheEE_io