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Online retailers losing money despite no signs of slowdown

Despite a healthy outlook overall for online retail in 2011, there is evidence that many businesses are continuing to lose potential e-commerce revenues at an alarming rate.


Online retailers losing money despite no signs of slowdown

According to research conducted by customer experience marketing specialists, Epsilon, sales that are lost through incomplete purchases or ‘abandoned shopping carts’ present a huge missed opportunity for online retailers.

“While click rates appear healthy, conversion rates tell a different story,” said Jon Maddison, Epsilon’s UK head. “Online retailers simply aren’t converting as many prospective customers into sales as they could be, and this is costing their businesses a good deal of lost revenue.”

Some of the main reasons cited for abandoned online purchases are the complexity of checkout processes and the high cost of shipping and handling costs. However, another factor may be consumers’ changing shopping habits. Two-thirds of consumers polled in a survey conducted by Forrester Research last May, said that they preferred to shop around before committing to a purchase.

Epsilon’s report showed that, despite the high returns that can be generated by prompting customers to complete abandoned transactions, only 30.7% of retailers surveyed are doing so. And, of those retailers that seek to re-engage customers only 32.3% mailed them promptly, within 72 hours.

“There is a huge opportunity for retailers to convert customers that are still researching their purchases, but retailers need to act promptly to achieve this,” said Maddison. “We see very high conversion rates when retailers seek to re-engage these customers quickly. After all, you know precisely what they are looking to buy, but if you leave it too long many will complete their purchases elsewhere.”

In the UK, 77% of adults who have conducted an online transaction said they had experienced problems in doing so, according to industry website, e-Consultancy.

“User experience is a concern,” agreed Maddison. “Customers can sometimes be dissuaded from completing purchases by transactional processes that feel too cumbersome or are time consuming. But clear re-engagement emails present an opportunity for retailers to improve customers’ experience by taking them directly to the point of purchase. For time sensitive customers, that can only aid the buying decision.”

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