Shopping Cart Abandonment – Even In Brick-and-Mortar Stores!

7 August 2006

Abandoned shopping carts are common 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 category 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’re now hearing about abandoned shopping trolleys in brick-and-mortar stores!

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. The company recently reported that it has 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.

This is a highly self-serving reason – not unlike security, regulations and everything except themselves given by etailers for online shopping cart abandonment.

While I’m not ruling out this factor, I submit that there are bigger and stronger reasons for abandoned shopping trolleys in the physical world.

Lack of stock is one such factor.

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 square footage to their overseas counterparts, they don’t have a comparable “assortment”, which is retail industry speak for product range. There are several items in India that are available in B2B but not sold in retail trade (aka B2C) e.g. computers and accessories, cash box, leather notepads, envelopes with self-sealing tabs, etc.

Let me elaborate by taking the first 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, you’ll find that they have only one or two models in stock and only get brochures for the rest. As a result, many power buyers are disappointed and return empty-handed.

This is the physical world equivalent of online shopping cart abandonment.

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 “commission agent” mindset will not 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, they’re probably 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 in these two product categories).

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 and trolleys.

UPDATE DATED 23 SEPTEMBER 2019:

Ten years after I wrote the original post, shopping cart abandonment in brick-and-mortar stores seems to have gone up!

Nowadays, customers are abandoning shopping trolleys in supermarkets to get back at retailers who, they feel, have slighted them with wrong parking fees and other minor infractions! You can find an example of this from UK in the following tweet.

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