1234567Virtual currencies are a very big topic in today’s world, and everyone in the business want to participate and be a part of that conversation.
1234567According to Sara Selldahl‘s article “Virtual Currencies and the Functionality of Money” Traditionally, money is associated with three different functions: as a medium of exchange, a unit of account, and a store of value. These functionalities are applicable for both physical money and virtual currencies as well (12 Nov, 2012). In most cases, virtual currencies are not created to replace the national currencies, but rather as a part of a business strategy.
1234567On Thursday, Oct 24th Craig Alberino joined us in our E-Commerce class as a guest speaker on billing systems. He started his career in the early 1990s as a management consultant. He has helped companies implement innovative strategies that produce transformative business success. Now, Craig is an entrepreneur and an investor in big markets. He is the founding partner of Ingk Labs and a board member at Payz.
1234567Payz is an electronic wallet that enables merchants to easily accept payments of all types, including credit card, ACH, and cash via a Payz account. It is an “electronic wallet” that is preloaded by a consumer with monetary value. Through cross-merchant data analytics & branded loyalty programs, merchants lower shopping cart abandonment and see an increase in transactions.
1234567Craig pointed out some really interesting findings on some of the challenges in today’s challenging E-Commerce ecosystem. One challenge he pointed out is that 80% of revenues come from 20% of your customers, and most companies do not know whom those customers are. This is an issue, I think, can be turned into a big opportunity.
1234567As it has been said thousands of times in marketing articles “the cost of acquiring a new customer is much higher than the cost of retaining an existing one”. Hence, marketing budget allocated to the none-profitable customers should be shifted to those 20%. A no brainer suggestion, I know. But it takes so much effort to go through any dataset and perform data crunching and mining to understand, truly, how much each person has in his/her basket, and how often do they fill it. Understanding these customers’ metrics allows companies to spend their marketing budget in the most efficient and effective manner and leverage their 20%.
1234567Another problem that was addressed in Craig’s presentation is that 88% of online shoppers abandon their carts. Why do we add items in our Amazon cart and not convert immediately? What is the reason? Cart abandonment causes $267 Million in losses daily in the United States, and surprisingly these rates are not improving with time, they are dropping!
1234567Looking at myself as a customer several causes comes into place for shopping cart abandonment. Some of the most basic are whether or not the site is provided with an instant paying method like PayPal. If not, and the credit card information page popped up, I usually postpone the conversion that eventually leads to cart abandonment.
1234567I came across an interesting article written by Tommy Walker titled “Shopping Cart Abandonment: Why it Happens & How To Recover Basket Of Money“. In his article he posted a study conducted by WorldPay that reveals the reasons behind Cart Abandonment, which might be worth sharing in class. Following is a chart that illustrates the reasons:
1234567As shown, the number one reason is unexpected cost. Although costs are placed online on items, the cost meant here are shipping costs. Bigger companies have spoiled those customers that are visiting your site, and if you don’t have some form of “free shipping” offer, the risk of cart abandonment increases.
1234567Back in 2011, comScore reported nearly half of all online online purchases had some sort of “free shipping” offer. That same 2011 report noted that 61% of consumers said they are “somewhat likely” to cancel their order if free shipping is not offered.
1234567In an extensive study from SeeWhy they analyzed the behaviour of over 600,000 people and a quarter of a million online transactions. The study found out that 99% of first time visitors will not buy on the first visit, but 75% of them had an intent of returning.
1234567The third and the fourth reasons on WorldPay‘s chart were that the customer found a better price, and the price was too expensive.
1234567Comparing prices nowadays is literally seconds away. Merchants must realise that, and offer incentives to their loyal 20% buyers.ex: 5% off your shipping, get fast shipping for the price of standard shipping. Merchants should also send emails to those who abandoned their carts. According to SeeWhy only 16% of online merchants sent shopping cart abandonment emails. This must be leveraged. Abandoned carts are not abandoned customer, don’t treat customers upon their what-seems-to-be behaviour, treat them on what was the purpose behind that behaviour, and what their true intent when adding those items.