3 New Year's Resolutions Every E-Commerce Store Owner Should Be Making
Calvin and HobbesWith the new year comes new year's resolutions. Most of us tend to make them for ourselves or for our family (lose weight, read more, spend more time together!), but don't forget about your business!
We've put together a few ideas for resolutions that every e-commerce store owner, both big and small, should be making as we ring in 2012.
PUSH SEASONAL PROMOTIONS HARDER ALL YEAR ROUND
While the Christmas holiday season is the one that store owners universally tend to focus on the most, don't forget that there are many more holidays throughout the year that you could also be turning your attention to! For instance, there are bank holidays all year round--from MLK to President’s day to Labor Day. Rather than just taking the day off and having a BBQ and a couple brews, you may also want to offer promotions and sales. For most people, bank holidays usually mean a day off of work which implicitly means that work is usually going be a little less productive the day before a holiday.
LESS IS MORE
When faced with a multitude of choices, customers surveyed are typically more “satisfied” with many options available, but on average buy 20% less frequently. In a world of ever increasing options, the overwhelming need to assess the quality, cost, effectiveness and benefit of 40 items as opposed to 4 can lead to indifference and thus inaction. Make your customers choices easy by providing them with a limited number of options. If you have 20 different types of laptop bags in your inventory, show customers 5 and switch the combination up every few months. The trick is to find a balance that won't overwhelm the customer with so many options that they can’t make a decision.
Here’s the paradox. People will always say that they love having options –-even if, in truth, those options result in indifference. My argument is that as a shop keeper, it’s your job to inform people about what they really need. Customers might actually come back more frequently if you update your inventory from time to time in order to check out what’s new.
EXPERIMENT WITH TAXES AND SHIPPING
Make the customer experience as easy and painless as possible. Customers are surprisingly sensitive to tax and shipping costs, especially when they’re added on right at the end of the checkout process. Adding on these costs at the last minute generally leads to higher cart abandonment and lower conversion rates. A study we performed on a random sampling of stores showed that cart abandonment decreased by over 30% once the store moved from a paid shipping to free shipping model.
Although the success of free shipping doesn’t work for low margin businesses (office supply stores for instance), many stores find a way around this by offering free shipping at a certain price threshold. Staples, Banana Republic, Amazon and many other brand name retailers will offer free shipping at a minimum order of $25, $50 or $100.
Sometimes customers will even buy things they don’t need just to hit the free shipping threshold so their money isn’t “wasted” on shipping fees (I’m definitely guilty of this).
A trend commonly followed in Asia but surprisingly infrequently done in the US, is building in taxes to their prices. At a popular department store chain in Asia, I purchased an item which was $100. I was pleasantly surprised when the cashier simply asked me for $100, not $108.88. I politely asked – what’s the tax rate. She said she didn’t know. After doing a little digging, I learned that store had ingeniously included taxes in all their prices. They simply marked up the prices to a round dollar amount so that the taxes were already included. As a matter of fact their cash drawers didn’t even have change in them since all the items in the store were round dollar amounts. An added benefit was the reduced frequency of subtraction errors on multi-item or discounted purchases. It’s certainly easier to do the mental math on a 30% discount off $200 rather than $199.99, even though it’s pretty much the same thing. Likewise it’s a lot easier to add 3 $50+$40+100 than it is to add $49.99+$39.99+$99.99 (+8.875% tax).
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