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May 02, 2006
Event Presentation

MarketingSherpa Ecommerce Benchmark Data for 2006: Audio Conference Transcript

SUMMARY: No summary available.
May 2, 2006

Anne: Welcome to our annual teleconference on Ecommerce Research 2006: Trends and Data. This is Anne Holland, I’m the Publisher of MarketingSherpa and with me today is Stefan Tornquist, our Research Director. Hello Stefan.

Stefan: Hello Anne

Anne: You should have downloaded a copy of our presentation before you started this MP3 file. If you haven’t had a chance to download it, click on the link to download it now. It is a PDF of our PPT slides and you can print that out and share that link with your colleagues and share your print out as well. On page 1 you’ll see what both Stefan and I look like. And then moving to page 2, we have a description of where we get the data from for our benchmark guides. Stefan, can you talk us through where the data we’ll be presenting today came from?

Stefan: Absolutely. Well the most important places we get data are from primary research studies, many we do ourselves like the eye-tracking or the surveys of Ecommerce marketers but we also do partnered studies and in this book we did a survey of consumers who were online shoppers, over 1100 of them with the cooperation of Directions Research. We also looked at all of the Ecommerce data that is out there, all of the secondary data, and we looked for the best of. We imported into the book and we talked to it. We tried to put it in the cold context of our findings. This time around I think we like 94 sources for that secondary information.

Anne: That’s great.

Stefan: And finally, we use the anecdotal evidence that comes out the interviews and case studies that you and the editorial team generate. And we don’t reprint those as much as we use them for guidance for what’s really happening out in the industry. Although, we certainly do use some examples in the book.

Anne: I liked to give a personal call out, if you are listening to this and you are one of the 1100 Ecommerce marketers who answered our call, asking for your data and you took our survey that helped us create this guide, thank you very much and we will be presenting some of the data you helped us with today. Why don’t we move onto page 3 in our presentation? This is the first chart. This is a very good overview chart. This is Ecommerce growth for the past year. Now Stefan, can you explain what the call out is? What is the difference between the top chart and the bottom chart?

Stefan: Absolutely. Well on the top chart we see how online retail is still booming in comparison with retail sales. Retail sales themselves were healthy overall for the year but as you can see online is still far outpacing traditional retail because it is so much smaller and is growing so quickly. One thing to remember when we look at these companies in the bottom chart this is the spread of companies whose orders are growing by various percentages. That ecommerce, you know, they’re new companies getting into it all the time so while the industry as a whole is growing at 25% and certainly there are those Ecommerce marketers who are doing so as well, since so many new organizations are coming into Ecommerce still, you know wouldn’t necessarily expect it to hit 25% growth. And of course matters very much by vertical and other factors. But this break out shows us while little under half of 5% fewer than half of the companies saw a growth in orders of 20%, the majority did not. Now one thing also to remember is that while growth in orders is a decent proxy for how an organization is doing. This is the internet and there are certainly a lot of companies who still have a business plan of taking over a share of the market at fairly low profitability. So it’s now a direct proxy for profitability but it’s a number we’re able to get at much more easily since profitability is so closely held within organizations.

Anne: Ok, so in English, if I’m working in a Marketing Department and I’m not a research expert, basically what you’re saying is: if our orders didn’t go up more than 20% last year – first of all, I’m actually an average. I’m doing ok, my site is not a total loser, and I’m not doing a dreadful, dreadful job just because I didn’t go up by more than 20%. I’m actually…there’s plenty of other marketers who are growing as fast as I did. And also, if I didn’t grow so incredibly quickly it may have been because I chose as a marketer to be more profitable and to ratchet down perhaps spending that would have brought in a whole lot of sales but it would have cost me so much for the sales that we wouldn’t end being profitable. So slower growth can sometimes be more profitable.

Stefan: Oh that’s absolutely right. However we did use this high growth metric as a proxy for how companies are doing and we’ll see in this presentation and throughout the Ecommerce guide that we use those high growth marketers as a point of comparison with the average. 

Anne: Cool. Well, let’s move onto page 4. This is, of course, the chart everyone’s dying to know about which is out of your total marketing budget, if you’re an Ecommerce marketer, where are you putting the money? How are you slicing the pie? And of course, here we’re showing two different bars. One of them is, the top one, which is the darker bar, which are those high growth folks. Those are the people who are growing by at least 20% in overall revenues per year, Ecommerce revenues. And the bottom bar, which is the lighter bar for each one of these categories, is the folks who are growing with flat or declining orders. What’s interesting here is there is a real difference in their budgeting tactics.

Stefan: There absolutely is. The most interesting is one that is underlying all these numbers, because when we look at these individual tactics we get averages for each one individually and the combined them to create this chart. So that’s why you can see that high growth marketers appear to spend more than 100% and more on each individual tactic. They don’t on a percentage basis anyway, but what they do is focus more resources on a smaller number of tactics. For instance, if high growth marketer is in search and email they are likely to spend higher percentages of their budgets than the flat or declining orders folks on those tactics. Of course, they may not be doing something else such as web ads and comparison shopping engines.

Anne: Now, I was always surprised by how little people are spending on comparison shopping engine and one of the reasons traditionally, is that traditionally you’ve only been able to bid in some of the bigger comparison shopping engines by category so you really couldn’t break out your bidding by key term, you couldn’t really get niche with it which of course might you end up paying a lot than you want to for a lot of the terms so a lot of e-Retailers pulled out of the categories all together. Recently there has been a movement in the Ecommerce, shopping comparison sites, to actually allow you to bid by sku. It’s going to be amazing. I think it’s going to change the budgeting here. And I think we may see a significant change over the next year because that will actually make it much more profitable and safer to go into comparison sites search marketing. So, although this is the lowest here I wouldn’t say that this is going to be dropping off forever. The other thing that I thought was interesting, looking at your data Stefan, was that folks that were super, super heavy search marketers because I know you had broken these numbers out by people who have spent an insane amount on search and they tended to be spending a lot less on affiliate marketing. In fact, they were spending about half what the average marketer was spending on affiliate marketing. So it seemed like if you ratcheted up your search marketing it sort meant you were taking away affiliate marketing from the affiliates. You were in a way taking it in-house. So that has real implications for the future of affiliate marketing.

Stefan: That’s absolutely right. And we’ve seen other data to corroborate that. That retail marketers, especially while the model of a few years a go might have been to use their affiliates essentially as an outsourced search provider because so many affiliates are quite advanced in using search marketing so retailers were willing to allow them to use trademarked and branded terms. And really with the incredible growth in search and so much research coming out on the efficacy. I think a lot of marketers saw those sales as really being redundant. So those new sales that happen on the website if they place enough emphasis on search and sell. Their willingness to allow those trademarked and branded terms has dropped markedly in the last eighteen months.

Anne: Now one last thing to look at on this chart. Take note how much marketers are putting towards their own websites and I’m assuming micro sites and landing pages are probably lumped into that website that figure. It tends to be one of the largest slices of your marketing budget. Now later on in this presentation we’re going to talk about what is actually the effective thing to do with your website, what’s actually working. Take note of how important that budgetary figure is. Now, why don’t we move on and of course, this next slide on page 5 of the presentation is the first of our two eye-tracking studies. People love the eye-tracking studies. Very briefly, if you’ve never attended a MarketingSherpa presentation like this before. Eye tracking is, we actually use an eye-tracking labs, what happens is consumers, actual people, off the street, come in and sit down at what looks like a regular computer. They’re sitting at a regular chair, there’s no headset, no fancy, nothing weird going on, nothing that will skew the results. And a tiny webcam is perched on top of the screen and their mouse is wired so that they also, the computer system notices what their mouse is doing. The tiny, tiny camera can actually track what their eyeball is doing, where they’re looking, how long they’re looking. And of course, we’re tracking where they’re clicking and how far down they’re scrolling. All of this information about what people are doing is translated into a heat map. Now the cool thing about heat maps is, ok not only are they’re incredibly fun to show in presentations and very high impact. They’re also extremely useful when it comes to web design. If you’re having any sort of in-house battles or big decisions about “Ok, we want to change our nav(igation) bar or we want to move/make images bigger or smaller on the page or this really needs to be above the fold. You want to find out what needs to be above the fold. Eye tracking can help you make very fast decision about this stuff based on what human behavior tells you. Most human eyes are hard-wired to behave, to look at a computer screen in roughly the same way. So you can just use, I think we used thirty people to look at these screens and had enough evidence from that to very statistically accurate and draw out conclusions that could affect millions of people on the web. It’s a very nice, neat tool. I’m not saying it’s the end all and be all, we love web analytics, we love multi-variate testing. We love A/B testing, we love focus groups, we love surveys - there’s a lot of other things you can could. I’m just saying let’s also look at eye tracking. It’s a great low cost technology to really analyze very quickly what might be right or wrong with your web design. Now Stefan, over to you, can you explain what’s going on with this Bombay chart?

Stefan: Absolutely. Well, for those few who haven’t listen to us talk about eye-tracking before, as you can probably guess, the brighter the colors the more attention the space on a page received. The purple x’s shows us where people clicked and the red lines, that’s the fold. So, in that context, you can see people quite a lot of attention to the horizontal navigation on the top. They paid some attention to the category messaging along the bottom of the image but they paid extraordinary little attention to the image itself. And in fact, if you see that headline in there about French flair, almost no one spent any real time looking at that.

Anne: Yes, no one read that headline.

Stefan: And we see something in this that is quite common, with images creating a kind of wall of attention. Now it’s important to remember an image might still do it’s job even though on face value it seems like it doesn’t, it really depends on what the job of the image is. If, as with Bombay, it’s all about communicating the Bombay brand – it does that. Because the mind and eye only need a fraction of a second to glance at something, establish relevance, and move onto other content. So, on a page like this, it may well be doing its job. The concern though is, for those web sites that do put any sort of internal navigation or kind of put meaningful messaging inside these large images, there is a risk of those being lost.

Anne: I think this really shows you another thing as well and that is, that consumers are treating Ecommerce sites, and you see on the next slides as well, consumers are treating Ecommerce sites in a very different way than they treat print catalogs and in a very different way than they treat brick and mortar retail stores. What you’re seeing is very little browsing activity. I mean, I know when I sit down with a catalog and in fact there are eye-tracking studies in the catalog industry, that if you are sending a catalog, in particular to your house list. They’re really looking at the images. They’re really examining it. They’re saying, “Hmmm, should I buy this…” They’re really enjoying that browsing, shopping activity. The same thing happens with a lot of shoppers in brick and mortar, depending on the type of store you have. But they’re coming in and enjoying the environment. They may be examining a lot of different things. You know, you’re in the mall, it’s Saturday afternoon. You’re enjoying yourself. This is almost an entertainment activity. It doesn’t seem to be the case with online Ecommerce according to the eye-tracking studies. Now we studied eight different Ecommerce stores including Amazon, eBay, a whole bunch of them. Most of them you didn’t see that kind of entertainment activity and what I think is interesting is that a lot of/some Ecommerce marketers are making the assumption that the entertainment mindset is there. Certainly Bombay with that big gorgeous picture is sort of thinking, “Well, we know our Bombay shopper. They love to look at these big beautiful pictures.” But indeed, people barely glanced at it. What are people doing instead? They’re looking at the navigation. And we see consistently, people going zooming right to the navigation. Pretty much ignoring anything else. So they’re treating the Ecommerce site as a search engine, as a search tool. You are not a store; you are a search tool to get to where people want to go. 

Anne: Why don’t we move on and look at the next page. This is page six of our download. Now this is Wal-Mart’s home page. Now, Stefan, when people came to look at this in our study group, what were the directions they were given?

Stefan: Well, in this case, they were given open budget and a free search. So you’ve got $200, go crazy. 

Anne: In other words, they weren’t told to do anything. Here’s 200 bucks, they could just go spend it.

Stefan: That’s right. In some of the other research we had them do directed searches because we wanted to look at how they viewed search, internal search and product pages. But in the case of home pages, we just let them go wild. And what absolutely supports what you were just saying, you can see that even in the scenario where someone’s got $200 they didn’t know they had and no obligations to go look at something specific, that’s still almost immediately what they do. They go right to the navigation, whether it’s the horizontal tabs across the top or the vertical. They get roughly equal attention – horizontal wins by a nose. But you don’t see a lot of browsing behavior even in this scenario. You know, people pay a little bit of attention to the various headlines but nothing significant. They certainly aren’t using the home page to give them ideas as much as going to areas that they’re already interested in. 

Anne: The home page really is purely a navigation device as opposed to almost anything else. Actually, last night in fact, an ecommerce marketer called me and asked – they were having an argument in house about whether they should be focusing on their horizontal nav bar or their vertical one … which one was more important. And so that’s interesting advice that you really still need both and that, indeed, for your most critical areas of your store you probably should have them in both of the nav bars because you never know which one someone’s going to look at. 

Stefan: That’s absolutely right.

Anne: You can have them represented in both place.

Stefan: I think some people are tab people. Some people are list people. 

Anne; That makes perfect sense. And the other thing that we see here is that not a heck of a lot of attention is paid to images. Again, I sort of thought the images would be much more interesting than boring old tabs and navigation, but they’re really not getting sucked in by the images here. Now, Stefan, you had said that there is some data around images and the scroll line. 

Stefan: There absolutely is. In several of these eye-tracking studies, we’ve noticed a possible phenomenon, and that is it appears that on pages where the typical fold – and, of course, the fold does vary – but most people are in a couple of different resolution groups. Anyway, the point is that when you cut an image in half it seems like it encourages people to scroll more, whether it’s a subconscious thing – we don’t know – but it appears that having something that’s cut in half seems to open up what’s down there in people’s minds and we see somewhat more scrolling. It’s a possibility for site designers to experiment with. 

Anne: That’s cool. There’s something else that I’m noticing here, and I think I’ve seen this in some of the other eye-tracking studies you’ve been doing. And that is that one of the clicks is actually on the far left down toward the bottom, near the video game section of Wal-Mart navigation bar. They’re clicking on some thing that’s actually not clickable. Does that happen a lot? 

Stefan: Oh, it happens all the time. In fact, this is an unusual example because so little random clicking takes place. We typically will see 10-15%percent of the clicks – clicks to nowhere.

Anne: Wow. So if you’re designing a site, should you make your click bigger or should you make things that are white space clickable? I’m not sure.

Stefan: I don’t know about making white space clickable. Certainly in any kind of menu making that whole row clickable to the appropriate category might make sense. But you can only design so much, and if people are clicking on white space, they may not really be looking to go anywhere. 

Anne: Certainly you want to make your images clickable. 

Stefan: Absolutely. Images have to be clickable. One other thing before we move off this page is something we’ve noticed about how people engage with search. You sort of see an example here in these text links on the left-hand side. Typically, we find that people aren’t very into advanced search. They don’t use the different capabilities of the internal search engines, but we have seen some success in using text links on category pages. For instance, breaking down all the possible digital camera results by pixel density, by brand – that kind of thing. So, kind of taking some of those advanced search capabilities and putting them into menu form. 

Anne: OK, so people will use ordinary search, but they won’t use that advanced search and then, sort of like text-linked marketing or pay-per-click. Text links work. People read text. Why don’t we move onto the next page – page seven, which is all about internal search. This one fascinated me. It makes intuitive sense when you think about it, that if someone comes to your store, if they use the search function and if they use that search box, it appears here they are more than twice as likely to convert into buying something than if they don’t use the search box. Now, of course, Stefan, your team actually went out and looked at 100 different ecommerce sites and examined how many of them had the search box very prominently placed. And you found that it was nearly 100%? 

Stefan: It was pretty close to 100%, which is unusual because even in something as well known as the importance of search, every best practice tends to have its, you know, 20% of the people who do something else, and so this just tells you about how important retailers are finding the internal search box. They get it, and 96% have search boxes above the fold. The remaining 4% has search, but it’s simply not as prominent. 

Anne: OK, so you have to move that above the fold if you are in the 4% that don’t have it up there. But the other thing that I’m wondering about is how can you then take it and make it more effective? I shop ecommerce a lot. I buy nearly every single item of apparel that I own via ecommerce. I buy a lot of other stuff by ecommerce. I just bought my wedding invitations by ecommerce. Everything is ecommerce for me, and I am really frustrated a lot of the time with the search results. I’ll type in something that I think is perfectly clear, and, of course, the search result will come back and it will say, “Query string not found,” or “No results for this.” Zero. It’ll say zero. It’s kind of this blank white page with standard navigation, but that’s a negative term, and … it’s almost the equivalent of a 404 page, file not found. And I’m wondering whether marketers could do a better job of that “Search term not found,” “Search term doesn’t work,” zero results page, if you could use that page a little more effectively to, perhaps, market something at the very least or give text links to things, some suggestions for someplace to go. The other thing I know that we’ve done are quite a few case studies on search results layout. This seems to be if you’re going to be upgrading your site, the layout of your internal search results page seems to be one of the absolutely most critical places to put some redesign and energy into and to put some A/B testing energy into You’re going to want to test how many images, if you have multiple images show up, people will have anywhere from 10 to 20 thumbnails show up with different products that folks can choose from to move onto the product page of their choice. If you’re going to have multiple merchandise images, how many should you have? How much text should be next to them? Do you just have hot links or should you have buttons next to them? Should you have prices on them or not? Should you be able to click on that image and have it be bigger? All different angles you can get there. The one piece of data we do have is, of course, is just like regular search, most consumers do not go to page two of your search results internally. So, if they don’t see what they want pretty much in the first three or four images or items they see in your internal site search results, they give up. They either go back to your home page and start searching again or they say, “Oh, forget it,” and go to another site. So, how are you arranging which of the search results show up first? Is it just by price? Is it by what SKU is the newest SKU? Is it by the seller? Is it by the most related to the thing they entered? There are a lot of different ways of doing that. Saying, “How am I going to display these search results,” absolutely A/B test and then say, “How am I going to figure out which merchandise item, which SKU is going to show up first?” Also, last but not least, if you have multiple SKUs that are all with the same image, and, actually I just ran across this when I was shopping for shoes the other day, and there were several SKUs that all had the exact same photograph, and so there I am, I got search results and it looked like five of the same thing, and I said, “Oh, well, there’s no variety here. I can’t find what I want,” and I left. Only later, I realized they were actually showing five different things, but they all happen to be showing the same image. You want to make sure that this isn’t happening. So I think there’s a lot of experimentation and best practices around internal site search results that can improve conversions like crazy. If you are doing this stuff, let us know. I’d love to write marketing studies about it. 

Why don’t we move on to page eight, and here is the good stuff: Performance of site test metrics. Remember earlier when we said earlier if you’re spending the majority of your budget on Web redesign or you have a big slice of your budget into your Web site, what should you be investing in for this year? Well, this chart shows you. Stefan, can you talk us through it?

Stefan: Absolutely, and just as a side note, we did an awful lot of research into different Web sites aspects, and this chart is just the tip of the iceberg. Going off what you were just saying about internal search and its foibles, you can see that marketers agree with you. Fifty percent, the second-highest percentage after shopping cart, are saying that this is the most effective testing they’ve done has been tweaks to those internal search results pages. I think we really are going to see a lot of change in the next couple of years as so many companies which came into search as quickly as they could to be ready are now going into a second or third generation of their internal search engine. Beyond that, of course, we see that shopping path carts perform well. We know that in the last holiday season, even though most ecommerce sites have been around for a while, virtually all online shoppers reported some kind of usability problem that they encountered with the site. And most of those usability problems tend to be around the checkout process. Obviously, that is the last place where you want users to encounter any problems or delays. We go into some of the practical tests and fixes in the report. The most basic ones that ecommerce marketers are always mentioning to us is examining each step, from clicking on the checkout button through the confirmation of purchase. We’ve got every step in that and examined very closely whether it needs to be there. Very often, the X factor is the email registration or registering for a site. A lot of sites have found it worthwhile to put that registration process before the purchase, but, of course, that does increase the abandonment rate. Others have found it makes more sense to put it after the purchase. There are enough marketers in both camps that I don’t want to call it a best practice, but at a certain level it does make sense to take out anything that isn’t absolutely vital to that specific sale. Of course, if you know that the customer lifetime value of those people who become registered members is substantially higher than the average, then it’s time to look at it the other way. 

Anne: That’s great, Stefan. You’ve got to test it. That is always the real answer. The thing that I find most interesting about this page aside from, “Whoopee, internal search results sites really do matter,” I guess the really fancy stuff -- multivariate testing and 3-D product displays and zoom and video and stuff -- actually only 36% of the marketers who tried them said that they were very effective. And we’re not saying multivariate testing isn’t a great thing. In fact, we’ve seen some incredible case studies for landing pages and multivariate testing. It works extremely well when you’re trying to market one item, someone’s landing on that one page and you’re focusing on that one activity. We’ve also seen multivariate testing fairly work with email. And I’ve done some case studies on product display tools, and 3-D can help and video can help and nifty ways of looking at the product can help. But when it comes down to it, look on the one above. Copy test. Copy writing is still going to be very effective if you just tweak a few words of copy that could be worth it. So, before you’re rushing out to spend money on the 3-D and the multivariate testing, have you really tested your copy to make sure it’s as good as it can be? That’s amazing to me. Frankly because if you’ve got a good copywriter in house, that costs you nothing. This is not necessarily bells and whistles that are helping convert people. It’s good solid marketing craftsmanship, and I think that’s a lesson we all need to learn. It isn’t about necessarily the cool technology; it’s just great marketing. 

Stefan: One thing in defense of multivariate testing is that 96% do find it at least somewhat effective, and I think in part that might be because any kind of multivariate testing tends to be a process, where if you look at the overall impact of continuous testing on, say, a landing page or a category page – over a couple of years, you’d see some substantial impact, but individual tests may have a more modest impact. But we definitely see that people find it effective, maybe not to the extent that we expected.

Anne: Cool. Now, this next slide on page number nine speaks to what you were talking about, which is the abandonment rate. Frankly, I was a little surprised by this data. I think I’ve heard a lot of marketers anecdotally, glibly tell me, “Oh, our abandonment rate is only 20%. We’re pretty sure that 80% of the people who try to buy tend to get all the way through our cart.” And I’ve kind of always assumed that the abandonment rate is about 20% until I saw this data. Can you explain what the average abandonment rate is, Stefan?

Stefan: Sure, well, the average is much closer to 60%. What we find about abandonment is that a large percentage of it – maybe 40% -- abandonment is that you’re probably not going to be able to affect. Those are folks who are checking the shipping price. They’re not ready to buy. They’re using the checkout tool as a research tool essentially. But in between there and someone who bought are those people who abandoned and might not have. Those are the golden few that folks are really trying to get at. What we did was we compared the average reported abandonment rate for companies that were using different tactics, different ways of approaching the Web site. What’s interesting is that both using extensive shopping cart design and function tests, or persona-based design and accommodation of site usability – that both of those types of testing brought that average abandonment rate down about 10%. We found that those two groups had a very high degree of overlap, so it’s unlikely that doing both of them as opposed to one or the other is going to have a 20% positive impact on your abandonment rate. 

Anne: But even a 10% impact, that’s 10% more sales. That’s a huge lift.

Stefan: It’s absolutely huge and absolutely essential. If I had to start a retail site and was looking, I would start with usability testing. It’s fast and it’s relatively cheap in comparison to some of the others. One of the usability experts in the book mentioned that no usability test will fail in giving you at least three solid actionable actions, and that’s all you can ask out of a test. 

Anne: So a usability test would be sitting someone down like your mom, having them go through checkout on your site without telling them everything … and seeing where they waiver, seeing what confuses them and getting some ideas from that.

Stefan: That’s right. A usability test can start with five people, and as long as they’re not in the company or don’t have a vested interest and they use ecommerce from time to time, they’re appropriate. The other interesting data from this was about single screen checkout. That’s really a collection of technology. There are different ways of approaching the problem of people clicking from the product page into the cart and getting distracted. Once they’re in line, what are they going to buy? The single screen checkout technology allows a dynamic checkout process to exist on the same page with the product. So as you surf through the site, adding and subtracting products to your shopping cart, those items are displayed there for you. Some of the systems actually display a little thumbnail image of the different products in the cart. 

Anne: Is there a particular site that you’d say, “Hey, go look at that” for a good example of this? 

Stefan: Well, here’s the tricky part. Everybody’s in testing, so when I note that there’s a limited sample, that’s true. I believe that TJ Maxx is the best known company with some version of this. But it’s important to note that our sample for this is really very low. This is intriguing data, intriguing enough that we wanted to include it, but this is not 1,100 marketers using it. It’s much smaller than that.

Anne: OK. There are two things we’ve done case studies on that have helped reduce abandonment rate, and the first is doing somewhat of a one-page checkout. CafePress, who if you don’t know them, you probably should be going and looking at them. They actually are the shopping cart that powers hundreds of thousands of smaller Web sites. They not only power the shopping, but they also power the merchandising and the fulfillment. Let’s say you are running a Dilbert fan site, you can sell the Dilbert T-shirts, and CafePress will actually print the darned things up and ship them and just give you a cut on the back end. Or if you’ve invented your own cartoon, you can make your own T-shirts, and CafePress will actually make them and ship them. Anyway, they process more than a million orders a month, so that’s quite a heavy load of ecommerce coming in, and they have less than a 20% abandonment rate. They have a very small abandonment rate. They did a lot of shopping cart testing about 18 months ago and came up with a cart that actually when you’re checking out as you answer the questions, the checkout page itself – I believe it’s Java driven – changes so you don’t have to click to another page to find something. It’s definitely worth going and checking out, taking some screen shots and showing them to your development group. The other idea that a lot of the bigger and more savvy, in particular the pure-play Internet retailers, are doing is, of course, the abandonment email program. This is a dynamically generated autoresponder. It is personalized. What happens is when someone abandons the shopping cart, they got partway through the process so at least you know who they are and hopefully have an email and an opt-in, you can actually ping them with a personalized email that can be an hour later, it can be a day later, it can be a week later, just to say, “Hey, your cart is waiting for you,” or “Five percent off if you continue checking out now.” You can test all different sorts of things with these abandonment emails. I know that some marketers are testing a two-stage program where they’ll do one within a day or two letting them know the cart is waiting for them and, perhaps, giving them a special offer. And then they also ping them if they still haven’t bought about 30 days later to say, “Your cart is about to be wiped out, it’s not going to be in the database anymore, it’s not going to be saved anymore so this is your last chance to come by and buy things.” And that seems to work fairly well, too. I like that email. Not every email service can do it, and I’ve actually been warned behind the scenes that some of the email service providers who say they can do it can’t quite do it, so you really do have to ask, “Can they power a dynamically generated personalized automated email.” It’s a mouthful, but it’s worth talking to them about that. 

Now, why don’t we move onto the next slide, and that is page 10. What is motivating consumers? This is interesting in particular because so many of them like the shopping comparison sites, which practically no one is investing any money in on the merchant side. Stefan, can you describe where we got this data from?

Stefan: This is from our cooperative survey of 1,120 consumers who have responded that they did some online shopping during the holidays, and it’s a very representative sample using the Greenfield Online sample set, so we feel pretty good about this data. What’s really interesting is the overlap of people who use shopping comparison sites and those people who say that they had a strong impact on their holiday purchase is almost a 100% match. In other words, while a lot of people did searches, only 37% said they were influenced by one physically. 

Anne: You mean regular search like on Google or Yahoo?

Stefan: Yes. Meanwhile, almost everyone who did a comparison shopping search is saying, “Yes, it affected my purchase.”

Anne: In other words, they’re further down the sales cycle if they’re choosing to use that particular shopping site, which would imply they’re more valuable as a shopper. On one hand, they’re more likely to convert. On the other hand, could they be less loyal? 

Stefan: There is interesting data about that because we also asked people whether they’re the kind of shopper that likes to use specific sites …

Anne: Or are they just a dollars-off shopper?

Stefan: Yes, it’s actually a fairly high correlation between people – and this is surprising – people who use shopping comparison sites and still say, “Yes, there are still sites that are my favorite and I’m pretty loyal to them.” There is some question there, but I think that what it suggests is that people are using the shopping comparison sites to quickly scan price, but they’re still going to go for known brands most of the time. 

Anne: So, they’re further down the sales cycle and they may not be using it just to save money. They may be using it just because they think of it as a shopping search engine, which is, indeed, what it is. 

Stefan: That’s right. We asked them about red flags in using the comparison sites. And those who use the engines regularly actually are more likely to be suspicious of prices that were “too low.” Very frequently you’ll see prices that are more than 10-15% percent away from the average, and shopping comparison site users are definitely wary of those. Sometimes it’s just a company trying to get volume in a specific product category. But unless you are a known Web site, there is some danger in having prices that actually scare people away because they’re so low. 

Anne: Right, so if you’re a famous name brand you can get away with this serious discounting, but if you’re a brand that no one has ever heard of, they still may not click on you.

Stefan: That’s right. Some of the other factors were Web site design having a significant impact ... 

Anne: So, it’s all about the landing page. 

Stefan: It’s all about the landing page. In the retail world, people talk about the atmosphere of a store. I think that really does apply online. The lessons may be very different. Simplicity, cleanliness, high functionality of the design, but people definitely take notice. They very quickly form an opinion of a Web site. Colors, flashing banners – they don’t like those either. Well, not all colors, but flashing banners, too many ads are definitely a red flag for comparison shopping.

Anne: Let’s move on. Page 11, what’s in a welcome message. I … was on the committee that judged our annual Email Marketing Awards, and one of the things that really surprised me the most about the Email Marketing Awards was that I hadn’t expected so many entries in the welcome message category. We were just flooded with folks who are testing all sorts of really interesting tactics for their autoresponder that goes out when somebody first opts into a list. It seems that that very simple transactional “You have been subscribed to this list” is out the door, and especially in ecommerce folks are doing very neat stuff. This is the sample we see in the upper left corner, which is from Dutch Gardens, and that is a welcome message. “Thank you for subscribing to our list. Now get free shipping.” People are testing that, and the data that I saw from all the entries was really outstanding. This is just a very high impact tactic to test. It looks like here from this data that unlike awards nominees, the average ecommerce marketer is not taking advantage of the power of the welcome message.

Stefan: That’s absolutely right. To be clear, we used the very first email from a marketer as the basis for this comparison. A lot of marketers do use a dry confirmation message and then follow that up relatively quickly with a different kind of message, a more salesy, marketing-oriented message, but the fact is that is not the welcome message. It’s that very first email that typically sees the highest open rates of any of the major categories of email. So it may not matter that your second email is a brilliantly designed, wonderful retail experience because it’s that first message that people are more likely to open. In looking at it, we found the vast majority wasn’t taking any real advantage of it. Most disturbingly, 26% didn’t send any sort of initial confirmation within 48 hours.

Anne: So your researchers just went to these retailers’ sites and signed up their email address, and they got nothing? 

Stefan: They didn’t receive a confirmation. They did eventually receive emails from virtually all of them. But in some cases, they were simply put into the email queue for the next mailing.

Anne: They were just slammed into the regular house file. 

Stefan: Exactly, which is a definite worst practice because those recent subscribers typically open and click on email messages substantially more, as would be expected. They’re there for a reason, and while you’ve got their interest, it really pays to take advantage of them, so in this slide we see that a very tiny percentage – 2% -- actually had a specific product, sales, etc.

Anne: So, I guess that 2% all entered our contest, and I would like to see that number go up next year. It is just pitiful. The nice thing is that this is such a nice, high responding effort, and it’s not like it’s going to cost you any more money. You’re probably already sending the message, just whoomp it up a little bit. At the very least add an offer or a premium or, “Here’s some useful links.” There’s all sorts of great things you can do in a welcome message. And test. And then it’s just automatic, going out every day all day.

That ends our Ecommerce Benchmark Guide presentation. To sum up, our top tips included really investigating whether or not the shopping comparison search sites are going to be a good deal now that a lot of them are allowing bidding on a SKU basis and now that there is data showing that the customers using them tend to convert a little bit higher and may be more loyal than you suspect. We also suggest paying a great deal more attention to your search results page and testing out copy on product pages. In addition, testing the navigation elements on your site’s design instead of having huge long committee discussions about what should go in the middle of the page, at the bottom of the page, at the right side of the page. It’s really about top navigation and the left navigation that do matter in the end. I know that we’ve all known this, but we all end up in the same committee meetings anyway. And, of course, examine your email program to make sure that you really are sending, first of all, some kind of offer in your welcome message. And then, second, perhaps testing some kind of shopping cart abandonment email. Stefan, any final takeaways from you?

Stefan: Just to not forget about email. I think in the last 18 months there has been so much pressure to become expert search marketers for everyone that email may have been ignored. And if you think back to that slide on what affected consumers purchasing in the 2005 holiday season, email still wins by a nose – 38 to 37.

Anne: If you’re interested in learning more about the Ecommerce Benchmark Guide, we do have a free PDF download. Just go to our store -- it’s -- and click on the free stuff tab at the top right-hand corner and you’ll find a PDF download with the executive summary from this Guide, which includes six more charts from the Guide that are new in addition to this presentation, and it also has the table of contents. 

Thank you to everyone who helped us with our case studies and who took our survey so that we would have data from 1,100 ecommerce marketers’ real-life data in this report. Thank you so much.
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