Mission Aborted: Why Do Consumers Abandon Their Online Shopping Carts?

1. Presented by Angeline Close to the American Marketing Association, San Diego, August 8-11, 2008 Mission Aborted: Why Do Consumers Abandon Their Online Shopping Carts? Monika Kukar-Kinney, University of Richmond Angeline Close, University of Nevada Las Vegas Heather Reineke, University of Richmond

2. Motivation to Abandon e-Cart • Have you placed an item(s) in your e-cart, but then didn’t buy it then and there? • If so, you are in good company! 88% of e-shoppers have abandoned their online cart in the past & abandon from one third to over a half of the time (Oliver and Shor 2003; Forrester Research 2005) • E-cart abandonment=huge issue for e-tailers: temporary or permanent customer loss; lack of conversion to sales; channel switching • Crucial to examine motivations for e-cart abandonment in order to understand e-buyer (non) behavior, increase conversion rates and improve multi-channel management

3. E-Cart Abandonment Defined • Abandonment: “to give up, discontinue, withdraw from”, or “to leave, or desert” (Random House Dictionary 2007). • We define electronic cart abandonment (ECA) as the situation in which consumers place item(s) in their online shopping cart without making a purchase of any item(s) during that online shopping session. • For ECA to occur, the shopper must have placed one or more items in their cart before abandoning the purchase (signaling interest or intent).

4. Purpose of Present Research • Identify driving forces behind the virtual cart use and the inhibitors to purchasing items in the shopping cart • Explain why such abandonment occurs • Develop suggestions for e-tailers for creating more consumer friendly sites, leading to amplified conversion rates from online shopping to online buying

5. E-Commerce Literature • Motivations: Goal-directed behavior (Moe 2003); purposeful ongoing search (Bloch, Sharrell and Ridgway 1986); shopping for fun (Wolfinbarger and Gilly 2001) • Total cost -> low price seeking (Magill 2005; Maxwell and Maxwell 2001; Nelson, Cohen and Rasmusen 2007) • Privacy and security in online shopping (Horrigan 2008; Miyazaki and Fernandez 2001; Zhou, Dai and Zhang 2007) • Convenience in online shopping (Chiang and Dholakia 2003; Horrigan 2008; Seiders, Berry and Gresham 2000)  length of purchase process, Webpage loading times (Bernard 2003)

6. Theoretical Background • We adapt Theory of Buyer Behavior (Howard and Sheth 1969) to modern “e-era”  “e-non-buyer behavior” E-Search. Browsing through pages of one or more websites. E-Consideration. Placing an item(s) of interest into their cart. As a wish list, a way to bookmark, or out of curiosity. Based on information, experience, and choice criteria, may use cart to taper options to a consideration set. E-Evaluation. Viewing the shopping cart and/or start checkout. Shoppers analyze the items in their consideration set based on unique purchase criteria (Nedungadi 1990) and evaluate alternatives, goal-satisfying properties & accessibility (Shocker, Ben-Akiva, Boccara, and Nedungadi 1991). E-Purchase Decision. Behavorial commitment to buy (pay for) the online item(s) or a decision against buying them during a specific online transaction. When consumers begin to enter personal or financial information online, they demonstrate a commitment and intent to purchase the items in their cart.

7. Theoretical Background • Five categories of inhibitory situations (stage of buyer behavior): Social Influences (e-search) Online shopping not available (e.g., on a gift registry); Family/friends influence not to buy online; Lack of entertainment/boredom Lack of Availability (e-search) Of the product; To online access; To the e-tail site; Of shipping to the geographic area; Of online sales of product category to the region (e.g., wine) High Price (e-consideration, e-evaluation) Price of item; S&H Shopper’s Financial Status (e-evaluation, e-purchase) No access to accepted payment methods (e.g., Paypal, e-checks) Limited availability of funds in preferred online payment account Time Pressure (e-purchase) Delivery too slow, The online purchase process too slow, Webpage loading time too slow

8. Extending Inhibitory Situations Yet, the e-commerce era brings new inhibitors to the Theory of (non) e-buyer behavior: Thus, we extend the framework to include 2 new inhibitory situations at the e-purchase stage: Privacy & Security Issues (e-purchase) • With the Internet in general • With specific e-tail sites • Privacy of specific purchases • Privacy of personal information • Security of financial information Technology Glitches & Issues (e-purchase) • The Internet service provider, computer, or printer does not work • The website does not work (e.g., down for maintenance) • The payment system does not work • The online sale or promotion code does not work

9. Theory of (Non) Buyer Behavior: Explaining Key Drivers of Online Shopping Cart Abandonment Concern with costs Entertainment Privacy/Security Webpage loading time Organizational tool Wait for sale Purchase process length E-search E-consideration E-evaluation E-purchase Online Shopping Cart Abandonment

10. Determinants of E-Cart Abandonment

11. Methods • Survey of online shoppers • Three studies: • Study 1: Student sample; Northeastern U.S.; paper-and-pencil administration; single-item measure of cart abandonment (% of times you abandon cart after having placed something in it during the session); N = 168 • Study 2: Student-collected sample; Southwestern U.S., online administration; N = 218 • Study 3: General, non-student U.S. population from 44 states, recruited through ZoomPanel; online administration; N = 255 • Measure of determinants of cart abandonment adapted from prior research or developed in present research • Measure of shopping cart developed here: • Single-item measure of cart abandonment (% of times you abandon cart after having placed something in it during the session) used in Studies 1-3 • Multiple-item (4 items) measure employed in Studies 2-3

15. The Conceptual Model and Synthesized Results (Studies 1 – 3)

16. Implications for Consumer-Based Retailing and E-tailing Key drivers Using the cart for reasons other than immediate purchase: • Organizational use of cart: • Cart is used as a place to store the desired items, a wish list, tool to track prices for possible future purchase • Items in the cart provide e-tailers with psychographic information, and are indicative of customers’ interests and consideration sets • May serve as a measure of possible future purchase intent • Positively associated with one’s intent to purchase items from a land-based store (Study 2: ρ=.19; Study 3: ρ=.31; p-values<.01)

17. Implications for Consumer-Based Retailing and E-tailing Key drivers Using the cart for reasons other than immediate purchase: • Using the cart for entertainment: • Enables consumers to satisfy impulses without potentially negative consequences • Allows consumers with limited resources to experience the thrill of shopping • Even without purchase, may lead to positive experiences and word-of-mouth

18. Implications for Consumer-Based Retailing and E-tailing Other important drivers: • Concern with cost, waiting for a lower price: Opportunity to make the sale by sending a reminder or a promotion message • Privacy and security concerns: positive relationship is Study 1, negative in Studies 2 and 3; risk aversion of older population Least important: • Irritation with slow Webpage loading times wide access to broadband (Fox 2008; Magill 2005)

19. Theoretical Implications • Theoretical model of determinants of consumer online cart abandonment developed • Key predictors identified through examining total standardized effects (factors other than immediate purchase intent: entertainment, organization) • Extending Howard and Sheth’s (1969) foundation by identifying the inhibitors to online buying process

20. Limitations and Future Research • Self-reported behavior  actual behavior: click-stream data, experimental studies • Research limited to the U.S. population  cross-cultural studies; varying risk perceptions • Need to know more about other motivations for shopping cart use, such as goal-directed behaviors and situational determinants (e.g. online promotions) • Gender effects across product categories