online marketing: A New Cure for Shoppus Interruptus - Brief Article

American Demographics, August, 2000

One marketer's attempt to lure back spurned online shoppers.

Your feet are killing you. You've been shopping for hours, cruising up and down the aisles, weaving in and out of clothing racks, book stacks, flipping through piles of CDs. You're standing in the check out line, but when you get to the register, it's broken. And it's the only register in the store. There's nothing to do but walk away. As you slump dejectedly towards the exit, a clerk smiles and invites you to come back again later. Yeah, right. Feeling totally cheated, you walk out the door. Your shopping cart is left behind, filled to the brim with goodies you'll never take home.

In a brick and mortar world, this shopping nightmare would be unusual. Move the whole scenario online, though, and it's all too typical. Forty-four percent of online shoppers experience a technical failure at check out, according to a study by the Boston Consulting Group (BCG). It's why cyberspace is littered with abandoned shopping carts - customers make their selections, but click away from a site in total frustration before closing the deal. And it's happening a lot: An amazing 65 percent of shopping carts are eventually abandoned. Potential revenue loss to e-tailers: Billions.

The most common glitches that cause failed purchases will probably make e-tailers' blood run cold. "Pages on the site take too long to load, the product isn't in stock, the computer crashes, they can't get the site to accept their credit card," says Eric Yolles, analyst at BCG. Last year, this happened to four out of every five online shoppers. And these unfulfilled purchases create a negative spiral. Twenty-eight percent of shoppers who have experienced a failure will not buy from that site again. A smaller but still significant 10 percent say they've stopped shopping online altogether.

It's a problem that keeps Richard Hoffmann up at night. He's the president and COO of Hanover Brands Inc., a subsidiary of Hanover Direct Inc., in Weehawken, New Jersey. Hanover Brands oversees the direct marketing activities for 12 catalogs and their accompanying Web sites. The company services more than 4 million customers each year. Its catalogs (which include The Company Store and International Male) have been online since 1996, and 10 percent of its sales are via the Web.

In its catalog sales, Hanover boasts a near 99 percent conversion rate (the ratio between buyers and browsers). Imagine the company's shock when it learned that conversion rates for catalog-based e-tailers hover in the 2 percent range. Says Hoffmann: "I have very few abandoned shopping carts when people call me to place an order out of the catalog. When you're talking to someone on the telephone, they tend not to abandon the phone call."

But the black hole of cyberspace is another story - strewn with forsaken goods. To solve the problem, Hanover fell back on a direct marketer's best friend, its database. Six months ago, company execs began to track customers who were abandoning their carts. They surveyed shoppers by e-mail and even invited a few to join focus groups. They also hired BizRate.com to have all their customers rate the shopping experience when they logged off the site. Using this data as a starting point, Hanover began to cook up some solutions. The goal: To increase the company's conversion rates by at least 50 percent.

Today, their ambitious task has begun to yield some results. Hoffmann says that some catalogs have seen conversion rates increase by one-third. This month, he expects to expand the anti-abandonment program across all of Hanover's catalogs.

Still, Hanover faces a stiff challenge, because consumers abandon shopping carts online for many reasons, says Yolles. Some are just typical consumer vacillation. "Consumers sometimes get cold feet with a purchase. They change their minds. Or, they get a desire, at the last minute, to actually touch and see the product," he says. And then there are typical newbie concerns, such as the fear of sending credit card information into cyberspace. Or the haunting feeling that there really isn't anyone on the other side of the modem to ship your items. Although many e-tailers attribute low conversion rates to these reasons, it's actually technical difficulties that disrupt most online sales, according to Yolles.

That's just what Hanover is trying to avoid in their anti-abandonment campaign. The company's database revealed that customers were in fact indecisive, and that they wanted the same level of service that they receive when they place a phone order. To accommodate their clients, Hanover installed some wetware - human beings - into the online shopping process. Now, when a customer is on the verge of abandoning merchandise, a message pops up on the screen offering help. A message will also pop up if a customer comes back to the same order screen several times and is clearly trying to make a decision. Hanover is currently testing three different ways of making that human interaction happen: It could be a chat box, a phone conversation on the Web site, or a representative may call the person at their home.