Realistic Expectations about Conversion

In a discussion about ecommerce conversion rates, someone dragged out a list of statistics on shopping cart abandonment.    The list included various research studies on the topic, and cited rates of 55% to 72% around an average of 67.45% - which is a little surprising because that figure hasn't changed much in nearly twenty years.  

I recall hearing 70% back in 1995, at which time ecommerce was new and it was generally assumed that the number would plummet once consumers became comfortable enough with the security of Web sites to provide a credit card number online.   But in the present age, most members of the Silent generation, for whom the Internet was something new and scary, have largely exited the market and even the Baby Boomers are becoming less relevant in many consumer goods categories.   So I don't expect that fear of electronic bogeymen is the reason that conversion rates online are so dramatically low.

Instead, I speculate that there is a much less emotional and much more insidious problem: that of customers who shop multiple places before they purchase.   I expect that even as comfort with the online medium has increased, so has shopping behavior.  Given the recent financial crisis, and also given the steadily eroding consumer purchasing power over the last two decades (annual pay increases have been less than consumer inflation, so people have more dollars but less spending power), people are living leaner and investing more time in comparison shopping and deliberating optional purchases.

Consider a different statistic: the number of Web sites that a shopper typically visits before making a purchase.   If I recall correctly, this has generally hovered around seven though the range is much greater depending on the nature and cost of the specific product in question.   So even if a site gets an immediate purchase from a statistically average number of consumers, it would mean that only one in seven of individuals who visit will purchase ... a maximum conversion rate of 14.3% and a corresponding abandonment rate of 85.7%.

Admittedly, this figure would be the web site abandonment rate, and not merely the shopping cart abandonment rate.  The latter should be lower because it excludes visitors who bounced out of the site before interacting to the point where a cart was created at all.   So it's not strictly an apples-to-apples comparison, but should suffice for a theoretical musing such as this one.

A different statistic also shows that customers visit a web site an average of 3.5 times before making a purchase - and while I haven't seen a breakdown by product type or cost, I would expect there is also a broad range around that average as well.  But taking it as given, that would mean the even if every potential customer would eventually purchase from a site, its per-visit conversion rate would be 28.6% and its abandonment rate for a single session would therefore be 71.4%

Putting the two statistics together, what if we assume that 14.3% of customers will purchase from a given retailer - but each of those customers will visit the site 3.5 times before purchasing?   The result is that the site will have a 4.1% conversion rate and a whopping 95.9% abandonment rate.   And looking at some of the research into ecommerce in general, that is well within the calculated range for web site conversion.

But more importantly, a look at these facts should quell the tone of panic over the low online conversion rates for ecommerce sites.  Considering the shopping behavior of consumers, it seems to make perfect sense, and a firm with a 67.45% abandonment rate (32.55% conversion rate) would be doing amazingly well.