While e-commerce sales have been growing, year-to-year declines in conversion and add-to-cart rates are continuing. Retailers need to pay greater attention to personalization and relevant product recommendations to combat these declines and ensure that they remain successful.
Except for a brief increase during the 2014 holiday season, these two key performance metrics have been dropping steadily year over year, according to Monetate's most recent global e-commerce quarterly report. The data is based on more than 7 billion online shopping experiences.
For example, conversion rates dropped from 2.51 percent in the first quarter of 2014 to 2.32 percent in the first quarter of 2015, Monetate said in a statement. Except for stronger performances from tablets among devices, and from social media traffic, conversion rates have declined overall during the last five quarters. Meanwhile, average order values dropped slightly from $125.15 in the first quarter of 2014 to $122.65 in the first quarter of 2015.
|Conversion Rates, courtesy of Monetate|
In addition, the average bounce rate is up almost 6 percentage points to 35.25 percent in the most recent year, compared to the previous year. This change isn't tied to smartphones or tablets, but rather to desktop shoppers who are less willing to give retailers a second chance. Bounce rates on desktops increased from 27.6 percent in 2014's first quarter to 35.39 percent during the same period in 2015.
All this indicates that online shoppers are browsing more, but buying less, Brett Bair, senior director of digital marketing insights at Monetate, told FierceRetailIT.
On the positive side, he pointed out that online shopping sessions are up from 2.09 product views per session in the first quarter of 2014 to 2.28 product views per session in the same quarter of 2015. Revenue also is up. But, "companies are having a harder time converting their customers," he said.
Relevant product recommendations are the key to driving e-commerce performance. "Even though retailers continue to invest in updating their websites and mobile apps to adapt to the ever-changing preferences of today's modern consumer, this data signals that merchandising efforts—that is, product recommendations—are failing to align with shoppers' expectations. They are tempting consumers enough to click and browse, but not enough to buy," Bair said.
Achieving success in areas like average order value, bounce rate and conversion rate is within reach of most retailers. "The solution to improving performance with merchandising tactics and product recommendations isn't just recommending products to visitors, it's making relevant recommendations within a variety of contexts, and using all the data retailers have to make decisions about the products that are shown," Bair said. "This means retailers need to combine personalization strategies and merchandising tactics to create online shopping experiences that consumers expect."
Shoppers today know what they are looking for and want to find it fast, he said. Retailers should make product discovery easier for customers, use product recommendations to promote complementary items and accessories, and eliminate surprises and problems for customers by showing stock availability.
First-time visitors can be targeted with recommendations based on that person's search terms or their path to your site. "This provides benefits to the retailer while also making it more contextually relevant, which satisfies your customer. For returning customers, use historical on-site data to make better recommendations," he said.
Personalization is another factor to be considered in product recommendations. "We think of personalization as changing any part of the buying journey to reflect preferences you already know about the visitor," Bair said. "As the landscape for retailers continues to change at an unprecedented pace, one truth will remain consistent: Consumers will want more personalized experiences and retailers will need to deliver on that in order to stay relevant."
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