White paper. Cart management: How to encourage your customer to complete their order.
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- Gordon Pitts
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1 White paper Cart management: How to encourage your customer to complete their order
2 Contents Introduction 3 Transparent costings: an absolute must 4 Free shipping and returns as a marketing tool 5 Making payment simple and secure 6 A focus on delivery options and times 7 Improving efficiency in the supply chain 8 Maintain end-to-end control of the user experience 9 Grab that second chance 10 ATLAS: a reliable end-to-end solution 11 Why choose Landmark Global? 12 Sources 13 2
3 Introduction Online shopping is on the rise. In 2014, global sales in the e-commerce sector accounted for no less than 1.2 trillion euro 1 and sales are expected to keep growing by 7% each year. 2 Revenues could be even higher if e-tailers could capitalize on sales lost through incomplete transactions. On average, 69% of online shoppers abandon their transaction at checkout. 3 If we look at mobile online sales, which make up around 33% of all e-commerce sales, this number remains the same. 4 If this abandonment happened as often in bricks and mortar stores, everyone would be scrambling to find a solution. Estimates suggest that abandoned online purchases are in the realm of 3.5 billion euro in lost sales. However, around 63% of that amount may be recuperated through competing sites or through the retailer themselves. Three quarters of shoppers who abandon their shopping cart prematurely claim to return to the site or to the retailer s bricks-and-mortar shop. Omnichannel retailers are clearly at an advantage here, since they have more channels through which to recuperate the lost sales. 5 Of course, it s simpler to retain customers who have found their way to the website than to draw in new ones. This means it s always win-win to bear in mind the customer s wishes with respect to the checkout process. Last year, global sales in the e-commerce sector accounted for no less than 1,2 trillion 3
4 Transparent costings: an absolute must Every online retailer wants to see their customers return. Returning customers have a better idea of what they can expect from the retailer, which cuts down on the costs of communications and returns. Yet there is often a difference between what retailers think will make for satisfied customers during the checkout process and what online shoppers really find important. Research by WorldPay shows that factors such as having the lowest price (51%) and a retailer s brand awareness (39%) play an important role during the purchasing process. But the highest priority for customers is secure payment options as well as certainty and insight with respect to the products and services on offer. that are revealed in the checkout process but not shown previously in the shopping visit. A global survey by WorldPay of 19,000 online consumers shows that a whopping 56% of people did not complete their orders for this reason. 6 Unexpected costs can also present a hurdle in cross-border e-commerce. Consider the taxes, levies, import duty and insurance costs. For the online consumer, it is important to have a clear overview of the total purchase price from the start of the process. An integrated, real-time application that can calculate the complete cost based on all factors involved is a great solution. The main reason online shoppers abandon their transactions during the checkout process turns out to be unexpected costs. These are expenses The main reason online shoppers abandon their transactions during the checkout process turns out to be unexpected costs. 4
5 Free shipping and returns as a marketing tool Online shoppers are very sensitive to the charges made for shipping and returns. More than half of shoppers said they would abandon their shopping cart if the costs of shipping were too high. 7 Consumers also said they would be quicker to purchase if the e-tailer were to charge no shipping costs. For this reason, free shipping is seen as an important marketing tool for drawing in online customers. Forrester Research claims that free shipping and returns can push online sales five times higher over a period of two years. 8 Research by Deloitte shows that 68% of online consumers say they would sooner order something online if the e-tailer shipped for free. Online consumers attach equal importance to free returns. 9 increase in sales, as 58% of online shoppers add items to their shopping cart in order to benefit from the free shipping. E-tailers that would still prefer to charge shipping costs should be sure to make this known at the start of the ordering process. 10 Good, clear communication ensures that customers won t abandon their full shopping carts. In the third quarter of 2014, 68% of American e-tailers were offering free shipping. Large online retailers such as Amazon have increased customer expectations enormously with respect to free deliveries. E-tailers that seek to stand out in such a competitive environment should consider free shipping, even though it may not be easy. Retailers balk at the idea due to the dent made in their margins by the transport and distribution costs involved, but that needn t be an issue. Many retailers only offer free shipping above a certain order amount. According to a study by ComScore, this creates a significant Free shipping and returns can push online sales five times higher over a period of two years. 5
6 Making payment simple and secure A simple and secure payment process is extremely important. Over-the-top security measures may deter customers, but, at the same time, they won t make any purchases if they are uneasy about the security of the payment process. Two thirds of online consumers say that they would not order from sites unless they carried security logos from a familiar organization such as McAfee Secure or PayPal Verified. 11 The number of payment options and the listing of the price in the currency of the shopper also play a role, especially when an e-tailer is seeking cross-border sales. More than 40% of online consumers say that they would spend more online if there were more payment options available. 12 The most well-known payment options are Visa, Mastercard, American Express and PayPal. Even when offering these, retailers should consider additional alternatives, depending on the target consumer. 13 The preferred payment options vary from country to country. For example: Germans and Finns like to pay by invoice, the Chinese make use of AliPay instead of PayPal, and a significant number of Argentinians, Indians, Japanese and Russians opt to pay cash on delivery. 14 A recent study by PayPal suggests that nine out of 10 online shoppers would like more protection on their purchased items. 15 A transparent shipping process is just one of the steps retailers can take to win over the trust of online consumers. The most well-known payment options are Visa, Mastercard, American Express and PayPal. 6
7 A focus on delivery options and times The number of available delivery options is also crucial to the ordering process. Online consumers will always favor ease of use and expect to receive their order at the most convenient time and place. A study by Ecoconsultancy shows that half of online shoppers who prematurely end their transaction do so because they are dissatisfied with the delivery options available. 16 Clearly, it is important for retailers to respond to the desires and expectations of local markets. In Europe, home delivery is the most popular option, as is mostly the case in Argentina, South Korea and Turkey. 17 Click and collect is another option growing in favor among consumers. In the U.K., the number of online consumers that opt to collect their orders from a retail outlet will increase from the current 26% to 35% by In France and Germany, more and more online shoppers want their products delivered to a secure home delivery box. 18 Other delivery options are also gaining in popularity, such as automated parcel collection lockers and collection points in parking lots. Since the British supermarket chain Asda started offering online customers the option of receiving afternoon/evening delivery of orders to their cars in London Underground parking lots, the retailer noticed that online orders rose sharply. 19 Online consumers also want to know when they can expect the delivery. Recent research shows that 30% of online shoppers in the U.S. abandon their shopping cart because it s not shown when the products will be delivered. In cases where a clear indication of the delivery time was given, most American shoppers still gave up if the delivery period was more than 11 days. One in four would wait no longer than five days for their order. However, the purchase price also plays a big role in the ordering process; shoppers are prepared to wait four extra days if delivery is free. Free shipping therefore has the upper hand over fast shipping. 20 7
8 Improving efficiency in the supply chain The total product price is very important for online consumers. It is even among the five top reasons online shoppers leave a website without buying anything: the consumer will often find a better price elsewhere online or will simply give up if the price is too high. 21 Distribution costs account for a significant portion of the total price in e-commerce operations. As such, retailers stand to make a difference by improving efficiency in the supply chain. This can be done within the organization by, for example, implementing more efficient picking strategies or by reviewing warehouse locations. Partnering with specialized, external partners can also increase efficiency, resulting in the ability to deliver at a lower cost. This is certainly true where dense distribution and international shipping are required. Thanks to their large-scale operations, logistics service providers can offer better prices for cross-border shipping. Postal networks are the obvious choice for local distribution. Their historical foundation means they have a well-developed, extremely dense distribution network. 22 When you combine postal networks with strong, international logistics networks like that of Landmark Global you get the best of both worlds: a cost-efficient, dense-distribution solution. When you combine postal networks with strong, international logistics networks you get the best of both worlds: a cost-efficient, densedistribution solution. 8
9 Maintain end-to-end control of the user experience It s already been mentioned several times before: the online consumer wants a fluid, integrated ordering process. If any of the steps in the process go awry, the chance of lost sales increases significantly. For this reason, retailers need to make sure they are in complete control of the ordering process. After all, retailers are well placed to estimate what their customers want to know and the information they will require from the customers. Digital technologies such as geolocation and data analytics make it possible to collect a great deal of information about online consumers without having to ask. These technologies allow retailers to personalize the shopping experience. If local information is shown to the online shopper, the chance of a sale increases by a factor of six or seven. If, for example, the customer s geographical information is only established toward the end of the ordering process, the previously mentioned delivery period of three days may suddenly change to three weeks which may lead the customer to abandon the transaction. 23 By retaining ownership of their payment page, as opposed to using third-party services for international sales, e-tailers remain free to continually optimize their services. This way, they have access to and can thoroughly analyze important data relating to the checkout process. In a time of increasing digitization and focus on personal customer experience, having solid data regarding the browsing and purchasing behavior of online consumers offers a great advantage. If local information is shown to the online shopper, the chance of a sale increases by a factor of six or seven. 9
10 Grab that second chance All is not necessarily lost if the consumer decides to stop the ordering process at checkout. The important thing is how the e-tailer responds to this situation; they can win back a sale by bringing the product back to the online consumer s attention using Google Adwords, AdRoll, Retargeter and other online advertisers. While browsing the Internet, the consumers will then see a banner ad from the e-tailer containing the products they were interested in. Specific online advertising campaigns can also allow retailers to present consumers with special offers to get them to reconsider purchasing the products they previously showed interest in. 24 Another method for making a conversion is to send personalized s to the online shopper. Such s can include images of the items the shopper was interested in, reviews by other consumers, clear information on the returns policy and, most importantly, a strong call to action. 25 The important thing is how the e-tailer responds to consumers who stop the ordering process at checkout. 10
11 ATLAS: a reliable end-to-end solution To earn the trust of online consumers, retailers have to give them more than a trendy-looking website and a good price. Consumers want every aspect of the process to be as easy as possible, not least when it comes to checking out. Online consumers want a secure and simple payment process with multiple payment options, a transparent overview of costs and a choice of delivery options in which their local preferences are represented. 26 The whole experience has to sit right with the customer. Landmark Global developed ATLAS to support retailers in offering a smooth checkout experience. This platform offers a definitive answer to the demands of a growing cross-border e-commerce market and the additional challenges brought along with it for retailers with respect to cart management. The entry threshold for global online shopping is removed by offering consumers a transparent overview of costs in their own currency, with all relevant taxes, customs and shipping costs included. ATLAS can show the retail price in more than 40 currencies and offers around 150 local payment options, all integrated in one tool. ATLAS also seamlessly integrates existing e-commerce sites with leading e-commerce platforms. With ATLAS, retailers can maintain control over their checkout process at all times and personalize the checkout experience according to local market preferences without taking on investment risks. What s more, ATLAS is completely optimized for mobile use, giving online consumers a seamless checkout experience, regardless of the device they are using. Delivery options are another very important consideration for online shoppers. As experts in international logistics, Landmark Global is perfectly positioned to respond to this need. The ATLAS platform combines all the strengths of the organization that developed it, such as technology and a strong distribution network. This unique combination makes it possible for retailers to reach customers worldwide without the typical challenges involved, such as international transactions, a complex supply chain and large capital investments. 11
12 Cart management: How to encourage your customer to complete their order Why choose Landmark Global? In the digital age, the customer is more powerful Our network of local postal operators and and more demanding than ever before. If e-tailers alternative local delivery services helps us to stay want satisfied customers, they have to personalize attuned to the preferences of our international their checkout process in line with the needs of the customers, which in turn has a positive effect on customer, wherever in the world they may be your customer satisfaction. which is where Landmark Global comes in. Our customer-focused solutions and our local We offer a wide range of shipping, returns presence in the European market, the Asia-Pacific and fulfillment solutions. Our experience and region and North America give our clients the tools knowledge of worldwide distribution makes us they need to grow and grow. We operate from the ideal logistics partner. We put our teams multiple locations across the globe, with offices vast e-commerce experience to work in boosting in the U.S. and Canada, London (U.K.), Groningen your global online sales. We combine our years of expertise in international logistics with technological solutions, such as the ATLAS solution, to ensure that your customers enjoy a seamless shopping experience and receive their orders as quickly as possible. (Netherlands), Brussels (Belgium), Warsaw (Poland), Beijing (China), Shanghai (China), Guangzhou (China), Hong Kong (China), Singapore and Sydney (Australia). 12
13 Sources 1 E-commerce: evolution of revolution in the fast-moving consumer goods world? Nielsen, augustus illuminating ecommerce stats from January-March Econsultancy, 23 maart Cart Abandonment Rate Statistics, Baymard Institute, mei Retailers, Listen Up: High Rates of Mobile Shopping Cart Abandonment Tied to Poor User Experience. Jumio, mei Shopping cart abandonment: online retailers biggest headache is actually a huge opportunity, Business Insider, maart Are you giving your customers what they really, really want? A global research project exploring consumer attitudes towards online shopping. WorldPay, greater-transparency-may-influence-ecommerce-sales/ 8 Boost Marketing Returns With Model-Driven Insights. Forrester, December Retail Outlook. Deloitte, Shopping cart abandonment: Why does it happen, and how can you stop it? Internet.com, augustus Are you giving your customers what they really, really want? A global research project exploring consumer attitudes towards online shopping. WorldPay, Are you giving your customers what they really, really want? A global research project exploring consumer attitudes towards online shopping. WorldPay, Modern Spice Routes, The Cultural Impact and Economic Opportunity of Cross-Border Shopping, PayPal, Econsultancy Multichannel Retail Survey Global B2C E-Commerce Delivery 2014, ystats oktober The last mile. Exploring the online purchasing and delivery journey. Barclays, september Why Shoppers Ditch Their Digital Carts. Free shipping, delivery times are top trends among shopping cart abandoners. emarketer, maart Are you giving your customers what they really, really want? A global research project exploring consumer attitudes towards online shopping. WorldPay, Evaluation of innovations in B2C last mile, B2C reverse & waste logistics, Roel Gevaers, Can-Improve-eCommerce-Sales 24 Shopping cart abandonment best practices. CPC Strategy, augustus Are you giving your customers what they really, really want? A global research project exploring consumer attitudes towards online shopping. WorldPay,
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