Why E-Commerce Sites of All Sizes Still Drive Away Business

Last Updated Aug 15, 2011 8:25 AM EDT

Whether you call it e-commerce or e-tailing, selling online is big business. According to comScore, U.S. retail e-commerce was up last quarter to $37.5 billion, up 14 percent over the previous year. But that's actually bad news. That's because most e-commerce businesses are terrible -- TERRIBLE -- at setting their sites up in a way to really maximize customer revenue. According to experts and some analyses, the e-tailers actually drive business away.

For example, Cory Doctorow writes at boingboing about sites requiring customers to register before they buy and how much money this can cost them in a year, according to a 2009 article on e-commerce site design by Jared Spool:

Spool is recounting the story of an unnamed large ecommerce retailer who had one of those forms that made you register before you could buy anything, and to remember your login and password before you could shop there again. Removing this form, and allowing the option of saving your details with a login and password at the end of the transaction, increased the retailer's sales by $300,000,000 in the first year.
Doctorow goes on to note four other important points that go well beyond requiring site registration:
  • The insight is "something that anyone who shops widely online already knows."
  • Companies could make a lot of money if they paid attention and implemented the insight.
  • The insight is commonly known in writings on e-commerce.
  • Too many companies simply ignore it.
The amount of business lost can be dramatic. Website commerce consultancy SeeWhy regularly monitors 1,500 e-commerce sites, the majority of them consumer-oriented businesses in the U.S. with annual revenues ranging from $2 million to several billion dollars. According to the firm, shopping cart abandonment is more than 75 percent.

What's fascinating are the top reasons for abandonment:

  1. Shipping and handling costs were too high -- 44%
  2. I was not ready to purchase the product -- 41%
  3. I wanted to compare prices on other sites -- 27%
  4. Product price was higher than I was willing to pay -- 25%
  5. Just wanted to save products in my cart for later consideration -- 24%
Anyone who has shopped online knows these. The problem is that companies, in hopes of nailing down as much business as possible (and who can blame them?) drive consumers into a shopping end game, gambling that some people on the fence will end up purchasing.

Maybe that works to some degree, but with 75 percent bailing out, you have to wonder whether these companies only get the sales they would have otherwise had while eliminating the possibility of the additional sales they might otherwise get. They don't provide the information that the consumer needs to make a purchase decision.

What's sad is that hiding the information only hurts e-commerce companies in the long run. If a price or shipping cost is too high, consumers won't be deterred from leaving -- obviously -- when they finally see it in the shopping cart. By not making the information easily accessible, the companies build distrust with customers and make it more difficult to track whatever is deterring customers and then try to find ways to counter it.


Image: morgueFile user lazy_lobster, site standard license.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.