1 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 Presented by Angeline Close to the American Marketing Association, San Diego, August 8-11, 2008

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 Organizational tool Wait for sale E-considerationE-evaluationE-purchase Online Shopping Cart Abandonment Concern with costs Privacy/Security Webpage loading time Purchase process length Entertainment E-search

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

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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