Report: E-Holiday Glitches Could Cost $15B

E-tailers stand to lose up to $14.7 billion (US$) in sales this holiday season unless improvements are made in the overall online shopping experience, according to a new report by consulting firm Creative Good.

Based on testing at eight major e-tailers, “The Holiday 2000 Online Shopping Report” concluded that nearly half of all e-commerce customers trying to make a holiday gift purchase will leave Web sites without placing an order and without contacting customer service. The e-tailers tested were: Gap.com, LandsEnd.com, Amazon.com, Barnes & Noble.com, BestBuy.com, Buy.com, eToys and KBKids.com.

“If sites can simply make the buying experience easier, they stand to gain huge increases in revenue and a larger customer base who will return to shop after the holiday season is over,” said Creative Good analyst Amir Rehman.

Rehman added, “The sites that cannot convert shoppers to buyers this holiday season are likely to shut down in 2001.”

Silent Losses

To measure so-called silent losses — those instances where consumers go to a site intending to make a purchase, but leave before completing the process — Creative Good conducted tests designed to determine what percentage of shoppers actually consummate their purchase.

The survey found that 43 percent of shoppers go to a site intending to buy, only to abandon the process due to frustration. Many of them flee to brick-and-mortar stores.

After abandoning a shopping cart, one customer in Creative Good’s tests said, “I’m just going to go to the store and buy it. I don’t know what I want to do at this point.”

Reasons cited by customers for abandoning their online shopping plans included not being able to find what they were looking for, not being able to order the quantity that they wanted, problems understanding the checkout, and slow-loading pages.

Foiled at the Checkout

Problems with the checkout process accounted for over 40 percent of all failed sales, according to the report. Customers had found products they wanted to buy, added them to their shopping cart, and were ready to pay for their purchase, but the checkout procedure caused them to abandon their shopping cart.

Failures during checkout were attributed to confusion over separate paths for new and returning customers, difficulty creating an account, and ineffective error messages.

Although the survey found that many sites had ineffective checkout processes, it did laud several sites. For instance, both Barnes & Noble.com and Amazon were praised for making it easy for customers to differentiate between the new and returning customer paths. eToys was credited with having “clear and prominent checkout error messages.”

Improving the Experience

As part of study, the company developed and tested a prototype of several sections of the BestBuy.com site. The report noted that BestBuy.com was not aware of the testing and was not a participant.

In developing the prototype site, Creative Good used feedback from testing on BestBuy.com’s existing site to improve the areas of the site that confused customers. Some of the improvements made included making the front page load faster, clarifying the categories so that consumers were aware of the spectrum of products offered, and streamlining the checkout process.

What Creative Good’s analysts found was that during testing of the existing BestBuy.com site, fewer than 30 percent of consumers completed their purchase. However, during testing of the prototype site, over 80 percent of customers completed their purchase.

Calculating Losses

To calculate potential losses this holiday season, Creative Good assumed that the Gartner Group’s worldwide online sales prediction of $19.5 billion represented the 57 percent of sales that were actually completed. Based on those figures, the study concluded that total holiday sales had the potential of reaching $34.2 billion if every failed sale were consummated, leading to the study’s conclusion that sales of $14.7 billion are likely to be lost.

Other research firms have predicted lower amounts in the total expected holiday sales. The Yankee Group is forecasting that Americans will spend $9 billion online during the fourth quarter, a 70 percent increase over last year’s holiday spending of $5.2 billion.

A slightly higher prediction of $11.6 billion, an increase of 66 percent over last year’s $77 billion in holiday sales, was made by Jupiter Communications (now Jupiter Research).

For its part, eMarketer is predicting that U.S. online holiday spending will reach $12.5 billion, an increase of 71 percent from 1999’s total of $7.3 billion.

Creative Good is based in New York and San Francisco. The company’s clients include Sabre, American Express, and Gateway.