Online Retailers Turn to New Shopping Carts to Drive Sales
Some e-commerce Web sites are rolling out new software that streamlines and speeds up the checkout process as they try to convince more people to finish their online purchases.
The technology puts the entire process -- from changing the color of a shirt in a virtual shopping basket to entering credit-card information -- on a single page. There's no need to click back and forth between Web pages or reenter data when the order is changed.
A handful of retailers are rolling out the technology in hopes that the sleek, simple design will reduce the number of Internet shoppers who put items in their carts but don't complete their orders. Such "abandoned" shopping carts are the bane of online retailers; Forrester Research estimates that 53% of people who put items in their online carts leave without buying anything. The cost of the new technology can run into the hundreds of thousands of dollars, but for online retailers, the stakes are high: For every dollar spent on e-commerce sites, $4.10 is left in abandoned carts, according to a recent study by DoubleClick Inc., an online advertising firm.
Abandonment Issues
There are a variety of reasons that so many people quit online purchases, but a large number of Internet shoppers get frustrated with complicated and lengthy checkout processes, says Forrester e-commerce analyst Carrie Johnson. Others cancel their orders when they are "shocked" by shipping costs at the end of the checkout, she adds.
Proponents of the new shopping carts say they can alleviate many of these issues by keeping shoppers from jumping from screen to screen in the final stages of a purchase. In many ways, the new checkout screens look like actual Web pages. But the high-tech carts are actually small software programs, written using animation software called Flash that is more commonly used to design online ads and videos. Customers can update their carts, which pop up when items are added, without leaving the page they are shopping on. The software also suggests related products that can be easily added to the order. The final price -- with tax and shipping costs -- is dynamically updated as customers make changes to the cart. Once a customer decides to checkout, they are taken to a single, interactive screen to provide billing and shipping information.
Today, "the quality of the digital experience most [online shoppers] have is pretty poor," says David Mendels, senior vice president at Macromedia Inc., the company behind Flash. But an increasing number of Internet sites are using Flash and programs like it to develop applications that let shoppers customize products or simplify the checkout process.
Easy Check Out
One of the first retailers rolling out the technology is TJX Companies Inc., which will offer the Flash-based cart on Web sites for its T.J. Maxx and HomeGoods chains. The Framingham, Mass., company was late to online retailing -- its Web store opened in September -- but it hopes the high-tech checkout will help it compete with established online rivals.
"This technology is very much in keeping with our sense of wanting to make it convenient for customers to shop our stores," says Sherry Lang, TJX's vice president of public relations. "Even in our stores, we have a bank of cash registers so customers are able to check out very easily." The company is rolling out the new online checkout procedure in stages, and it should be available for all customers by the end of the month.
Another retailer that is adopting the new technology is PC Connection Inc. of Merrimack, N.H. The company, which resells computers, printers and software to small businesses, gets roughly 10% of its $1.3 billion in annual sales from its Web site. Yet, roughly 46% of online purchases at PC Connection's site are abandoned, says Robert Wilkins, the company's executive vice president.
"The biggest thing for us is the conversion rate. If we can just move the needle up a little bit it takes care of [the new system's cost]," Mr. Wilkins says. He declines to say how much the company paid for the technology. PC Connection plans to launch a Flash-based cart for its consumer site this month. Early next year, it will offer an enhanced version for its small-business customers that allows them to chat with sales people and negotiate price discounts within the cart.
Amazon.com Inc., for its part, declined to comment on the new shopping carts. The e-commerce giant patented its own speedy checkout technology, called 1-Click, in 1999. The system allows customers to buy an item quickly, using stored billing information and shipping preferences.
Flash-based carts allow retailers to offer functions not generally available with current sites, which use the basic HTML Web-programming language. For example, items can be added, edited or removed at any point in the checkout process, without navigating away from the checkout screen. Billing and other information is checked as it is entered to prevent customers from moving forward without valid data.
Ralph Folz, chief executive of Molecular Inc., the Internet design firm in Watertown, Mass., that developed the new checkout system for TJX and PC Connection, says it takes about eight weeks and costs about $250,000 to customize the software for an existing e-commerce site. Web shoppers with dial-up Internet connections or those that don't have the free Flash software needed to load the shopping carts are automatically redirected to a traditional HTML checkout process.
Easy Check In
Another company, TravelClick Inc., of Schaumburg, Ill., has created similar technology for hotel operators. Its software, called OneScreen, lets a visitor book a reservation on a single Web page with three interactive panels to select dates, pick a room type and enter billing info.
By collecting all the information on a single screen, the system helps customers avoid entering lots of information just to discover later in the process the room they want isn't available.
"We enable a consumer to look at rates, dates and rooms and alter any one of those combinations without moving off that screen," says Ray Cohen, TravelClick's president and co-chief executive. "On traditional hotel sites, you have to go all the way down a path and have to go back and start it again to make a change. It's cumbersome and doesn't facilitate shopping."
The technology, which TravelClick acquired from a startup earlier this year, is already being used by independent and luxury hotels, including the Watergate in Washington, D.C., and the Broadmoor resort in Colorado Springs, Colo. Mr. Cohen says the software makes it easier for travelers to calculate the cost of upgraded rooms, which has boosted the average daily rates at the hotels using the system. The Broadmoor, meanwhile, estimates it has reduced the amount of time it takes to book a room online to less than one minute from more than three minutes.