SMITH BRAIN TRUST — Have you ever filled your virtual cart while shopping online only to leave it without completing the purchase? Consumers often leave behind their virtual carts and retailers have long considered this a huge problem, figuring trillions of dollars are lost due to abandoned online shopping carts. Now new research shows that these numbers are substantially overblown. And the researchers say many retailers are focusing on the wrong thing: They should be trying to get consumers to spend more at their stores instead of just recovering virtual carts left behind.
Marketing professor and retail expert Jie Zhang and three co-researchers (including Smith marketing professor Michel Wedel) say shopping cart abandonment has been seen as the bane of Internet retailing, but retailers can relax a bit if they factor in consumers’ behavior when they shop online. Online retailers allow shoppers to save items in virtual carts and retrieve them later. As a result, consumers often break up a shopping task into multiple shopping sessions — browsing an online store when they have a few minutes of downtime, adding things to their carts for later considerations, but not having to click through to complete a purchase at the end of a given shopping session. This has direct implications on how shopping cart abandonment should be tallied and how to design cart recovery campaigns.
Zhang says the right way to calculate shopping cart abandonment is to trace the same virtual cart over multiple shopping sessions because oftentimes they are picked up later and eventually purchased. Lost sales also need to be adjusted downward significantly because shoppers have the habit of adding multiple similar items to their carts while making purchase decisions with the ultimate intention of only buying a few of those items — say, for example, loading up an online cart with five different pairs of boots while you browse but only intending to buy one.
Of course some carts are truly abandoned, and Zhang says retailers can help reduce this by offering consumers incentives to return to complete their purchases. She points to a robust cottage industry of companies offering “shopping cart recovery” services to retailers, managing emails and promotions to entice consumers to return to their carts to complete purchases. But, she says, retailers should focus these efforts less on maximizing cart recovery and more on getting shoppers to spend more money when they do complete purchases.
The researchers find it pays off to wait when sending reminder email promotions to consumers. Rushing out reminder emails too quickly might entice customers to pick up old shopping carts, but their purchase intentions would not be as high yet, and this could leave money on the table by missing would-be additional purchases or wasting promotional spending.
“Consumers will be more likely to submit a cart and fill it with more items, spending more money, if retailers wait a few days to send promotion emails,” Zhang says.
Read more: “How Bad is Shopping Cart Abandonment? An Investigation across Multiple Shopping Sessions,” is a working paper.
Jie Zhang is a professor of marketing and the Harvey Sanders Fellow of Retail Management at the University of Maryland’s Robert H. Smith School of Business.
Research interests: Applying advanced econometric and statistical models to study consumer purchase behaviors and retail strategies; expertise in Internet retailing, customized promotions, digital retail strategies, and quantitative marketing models; current projects involve online shopping cart abandonment, innovative loyalty programs, daily deal promotions, mobile retailing, and mobile app monetization strategies.
Selected accomplishments: Two-time finalist for the Paul Green Award by the Journal of Marketing Research; winner of the Procter & Gamble Marketing Innovation Research Award, winner of the MSI-ACR “Shopper Marketing” Research Proposal Competition. Chaired a doctoral dissertation which is a winner of the Informs/ISMS Dissertation Proposal Competition and the Shankar Spiegel Dissertation Proposal competition, and a runner-up of the WITS Dissertation Proposal Competition. Serves on the Editorial Review Board of the Journal of Marketing and the International Journal of Research in Marketing, and has won the Outstanding Reviewer Award by the Journal of Marketing. Appointed as an associate editor for Customer Needs and Solutions. Winner of many teaching awards.
About this series: The Smith School faculty is celebrating Women’s History Month 2017 in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Daily faculty spotlights support activities from the school’s Office of Diversity Initiatives, culminating with the sixth annual Women Leading Women forum on March 30, 2017.
Other fearless ideas from: Rajshree Agarwal | Ritu Agarwal | Leigh Anenson | Kathryn M. Bartol | Christine Beckman | Margrét Bjarnadóttir | M. Cecilia Bustamante | Rellie Derfler-Rozin | Waverly Ding | Wedad J. Elmaghraby | Rosellina Ferraro | Rebecca Hann | Amna Kirmani | Hanna Lee | Hui Liao | Wendy W. Moe | Courtney Paulson | Louiqa Raschid | Rebecca Ratner | Rachelle Sampson | Debra L. Shapiro | Cynthia Kay Stevens | M. Susan Taylor | Vijaya Venkataramani | Janet Wagner | Yajin Wang | Yajun Wang | Liu Yang | Jie Zhang | Lingling Zhang | PhD Candidates
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