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IM Your Way To E-Commerce Riches

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Posted December 5, 2001 By Bob Woods     Feedback

How can e-commerce retailers convert those who abandon their shopping carts into buyers? The answer, according to Basex Research, is online presence and instant-messaging services.

Abandoned shopping "carts" abound in cyberspace. More often than not, online shoppers aren't shoppers at all -- they're more like catalog browsers who have no inducement to buy beyond the information that's statically presented to them.

Plus, let's face it: Online shopping just isn't that much fun.

What's the magic bullet that e-commerce companies can use to turn virtual tire-kickers into buyers? A new report from research and consulting firm Basex claims that e-tailers can lower shopping-cart abandonment rates by 20% and increase their sales by $20 billion per year by using presence services and instant messaging (IM).

The $20 billion figure comes from the estimated value of merchandise left in those abandoned virtual carts, Basex said in its report, a copy of which was obtained by InstantMessagingPlanet.

Basex said that the rate of shopping-cart abandonment approaches upwards of 50%. A study released earlier this month from BizRate.com and The NPD Group, however, shows that 75 percent of online consumers have abandoned shopping carts in the past three months. When asked why they abandoned the cart, 31 percent of respondents claimed they simply changed their minds. Another 24 percent decided the shipping and handling costs were too expensive.

According to a report by Datamonitor, 69.4 percent of all potential online transactions in 2001 were abandoned. Some of the most popular reasons that online buyers cited for abandoning their shopping carts were slow processing speed of their purchase orders, concerns over security and high shipping and handling costs.

Of that 69.4 percent, though, 8.1 percent of transactions were lost because retailers failed to offer consumers a method to have queries answered while they were shopping.

Basex, meantime, cited four reasons as to why so many carts are abandoned:

  • Lack of surprise: In online shopping, the customer purchases only what is on his or her shopping list
  • Lack of interaction: No other shoppers exist for a customer in the online world. The customer can't talk to, get advise from, or pick up non-verbal clues from other people on what to buy
  • Clinical shopping experience: With no one to greet or speak with customers, online shopping tends to be a cold experience
  • Technological and usability issues: Many sites crash or have confusing layouts, both of which discourage shoppers.

While presence and IM services can't directly address the last point, they can greatly help the first three, Basex said. The report called such services "the next step in the evolution of B2C e-commerce."

The report defines the concept of presence as "the ability to locate and then interact with another person (or multiple people) in real-time." In other words, instant messaging.

E-tailers can incorporate presence/IM to create that brick-and-mortar experience. For example, a user can be browsing an online bookstore's reviews of photography books, when a window pops up showing that a photography expert is browsing the same page and wants to talk to you. Of course, an online shopper would be able to "opt-in" to such a service, Basex said.

Shoppers can be converted to buyers as a result of presence/IM services, the research firm said. This would mostly happen when two or more people are looking at buying the same item, when one customer who has "product experience" advises or mentors a buyer, or when two or more customers buying related items help out each other.

In terms of presence/IM providers, Basex says no clear leader exists in a market the research firm calls a "developing" one. Some of the players, as cited by Basex, include:

  • Akonix : Akonix software, which is designed for browser-based community interaction, can be "easily" integrated into any e-commerce setting. Basix cited Akonix as a "prime example of one company that has successfully integrated seamless-presence capabilities into (its) software."

  • Fatbubble: Fatbubble allows its users to see what other users on their "buddy list" are currently visiting. Those pages are then listing according to their place in the Open Source Directory (to the best of the directory's ability). This functionality could be ported to the e-commerce environment, Basex said.

  • Lotus/IBM: Lotus Sametime is an enterprise-strength presence, messaging and conferencing system. Lotus can easily integrate Sametime into shopping applications, since it has already done it for its knowledge-management and portal services.

The report points out one caveat, though, in implementing presence/IM with an e-commerce Web site. The e-tailer would not have any control over what is said on their Web site, Basex said. Conversations between customers could become subversive, either against the product or the e-tailer. Or a site's competitor could try to steal customers. "But the benefits outweigh the risks; not adding presence to the e-commerce experience is comparable to building a brick-and-mortar store in which the customers cannot talk to each other," Basex said in its report.

So what happens to the e-tailers who don't add presence/IM to their sites? Basex said they'll lose out to companies that implement such services within their e-stores. Any costs of implementing presence, meantime, is "minimal" in comparison to the lost revenue from abandoned carts and lost spontaneous sales, the company also said.

At least e-tailers don't have to worry about their virtual carts dinging up real-life cars.

The report Online Presence: Business Begins "Here" is now available at a discount from our AllNetResearch Web site.

NOTE: Content from CyberAtlas contributed to this report.

Bob Woods is the managing editor of InstantMessagingPlanet.com.

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