Abandoned Shopping Carts — even in the real world!
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Abandoned shopping carts are not rare in online stores.
As customers browse the shopping pages of an online store website, they decide which items they wish to buy and add these to their shopping carts. When they are done shopping, they click the “Proceed to Check Out” button. Studies have shown that anywhere between 40 and 55% of customers quit the site at this stage when they learn that they will have to disclose their credit card details. This is one situation of abandoned shopping carts.
There are other situations where people might have abandoned their shopping carts when the websites informed them that their shopping cart was empty even though they got a positive confirmation each time they added an item into it. I have personally experienced this in a few online stores including fabmall.com. This happens due to technical problems affecting the stability and robustness of the website. Presumably, these problems are fundamental and not solvable, because I continued to face them even when I shopped there last month.
We are now hearing about abandoned shopping carts even in brick-and-mortar supermarkets!
Hypercity, a newly opened hypermarket in Mumbai, India, sells a wide variety of products ranging from food, stationery, personal hygiene, consumer durables, electronics and computer accessories. They recently reported that they have some visitors who visit the shop regularly, stack several items into their shopping carts but abandon the shopping carts before reaching the check-out counters. Hypercity says that it devotes a lot of time of its staff to round up such abandoned shopping carts and re-arrange the items back into the respective shelves.
The common reason given by retailers for this behavior is “aspirational retail therapy”, where the customer wishes to buy all these items but cannot afford to, so s/he achieves some level of satisfaction by moving around the store and placing the items into her / his shopping cart.
There could be another reason for abandoned shopping carts: Despite their relatively large sizes, most stores are short on merchandise. While many of these stores (e.g. Hypercity, Shopper’s Stop) are comparable in size to their overseas counterparts, they don’t have the comparable range of products. There are still several items in India that are available for businesses but are not sold in retail e.g. cash box, leather notepads, and until recently, envelopes with self-sealing tabs.
Computer and electronics is another big category. In Pune, India, which is where I live, many leading supermarkets claim to sell a wide range of PDAs. But, when you actually visit the stores, they barely have one or two models in stock and only brochures for the rest. As a result, many knowledgeable visitors are disappointed and return empty-handed. This is effectively the equivalent of abandoned shopping carts.
When you probe deeper, the supermarket’s staff will tell you that if you place an order, they will get the item for you. This traditional “agent” mindset is not going to work in a supermarket setting which attracts people primarily for its ability to provide a touch-and- feel shopping experience, which is not possible in an online store. A retailer has to stack shelves with goods — only then can he hope to make a sale and avoid abandoned shopping carts. Surprisingly I have noticed this happening not only with relatively high value items like PDAs but also with small-value items like USB pen drives and DVD drives. If retailers cannot afford the working capital for buying goods upfront and stocking them, they are better off not paying the high rents for their retail outlets located in glitzy malls and hypermarkets. (To be fair to retailers, the range of mobile phones and digital cameras stocked in stores are satisfactory in most parts of India — retailers cannot be blamed for any cases of abandoned shopping carts).
Reading about the highly ambitious plans of Mukesh Ambani’s Reliance Industries to set up thousands of supermarkets countrywide, it appears that their plans to launch private label / house brands is key for ensuring that the shelves are stocked adequately. In many western countries, leading retailers have successfully exploited house brands priced at 40 to 60% below the market leader for stocking up their shelves and for increasing footfalls and revenues. For example, Wal-Mart has its iLo house brand and Best Buy has recently launched its house brand called Insignia. Germany’s ALDI has been very successful with its YES house brand. So much so that YES is quoted as one of the reasons for Wal-Mart recently opting to pull out from Germany altogether.
As they become more commonplace, customers will realize that house brands are essentially un-branded and have nothing to talk for them except low prices and a giant retailer’s backing. At this stage, customers will start demanding quality certifications from objective rating agencies in order to help them compare such products with the leading brands. Stiftung Warentest is one such agency. Based out of Germany, it rates products and services in diverse categories like food, personal hygiene, housing, automobiles, garden supplies, and so on. Both leading brands and house brands of leading retailers submit their products to Stiftung Warentest for testing and certification. Digital cameras, packaged tours, toilet paper and home loans — these are some of the products and services for which Stiftung Warentest has recently published test reports in its German language website (http://www.stiftung-warentest.de).
Whichever way one looks at it, you can’t help getting the feeling that there are exciting times ahead for the retail sector in India! Be it in brick-and-mortar stores or in the cyberworld, both retailers and customers are looking forward to fewer abandoned shopping carts.
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