The relationship between "conversion rate" and "cart abandonment" is complex and can lead to confusion regarding the actual revenue potential of a given retailer. "Conversion rate" is the ratio of browsers to buyers. "Cart abandonment" is the number of buyers who fail to make a completed purchase after making some demonstrated attempt to do so.

Conversion rate can be a misleading statistic when studied in isolation. A conversion rate of 3% or less is reported to be the industry average. One of my clients routinely had a 10% conversion rate or better. Yet, I was still very unhappy with this site's performance. My analysis revealed that only the most dedicated and determined shoppers found the store portion of the site from the parent company's corporate site (which is where most people started).

I would much rather see a conversion rate 3% of 100,000 users than 10% of 10,000 users. Unfortunately, the issue here is one of preceived channel conflict. The client does not want to anger their brick and mortar retailers by making the e-commerce link too prominent on their corporate web site. But that is a subject for another report.

Looking at conversion rate in conjunction with cart abandonment provides a better metric for judging the revenue potential of an on-line retailer. Cart abandonment helps to examine the "silent losses" that can account for significant revenue opportunities.

We used a very stringent metric when defining abandonment. We only counted an attempt as "an abandonment" when the user had made a move toward checkout. This is a controversial issue among e-commerce professionals, but our tests indicated that many people put things into carts without ever intending to checkout. For example, many users will put an item in their cart and proceed to checkout simply to check the shipping costs (which are often unavailable any other way). Since the sites we evaluated did allow a shipping cost calculation from the shopping cart, we only looked at what we called "qualified buyers" who abandoned on their shopping carts (i.e., those that proceeded to checkout).

This type of analysis was the most influential factor in helping me convince the upper management that we needed to address this situation. Using the standard financial reporting available and some stringent log analysis and other data mining, I came up with the following summary. I have removed the client names for confidentiality.

Both of these clients used identical e-commerce systems so the process was almost exactly the same for users of both sites.