Fox School of Business professor analyzes when retailers and companies should retarget customers after they abandon their online shopping carts
PHILADELPHIA, Dec. 7, 2020 — Most online shoppers tend to be a bit indecisive. They’ll place an item in the shopping cart, but for one reason or another, they never complete the transaction.
Perhaps the shipping was too expensive or perhaps the shopper had second thoughts. Abandoning the cart before completing a purchase is quite common as according to 41 different studies, the average online shopping cart abandonment rate is 69.57% across all industries.
“What’s interesting here is that the potential customer specifically puts items into a shopping cart, and there must be a reason as to why he or she is putting it there. This is not a general customer. It’s someone who has a specific interest in the product, which is why retailers and companies are going to such great lengths to try to convert these transactions,” says Xueming Luo, the Charles Gilliland Chair Professor of Marketing, Strategy and Management Information Systems in the Fox School of Business at Temple University.
Once a shopper abandons a cart, it’s not long before they are bombarded with retargeting ads. This can come by way of web browsing, email, text message or social media, but one thing is consistent across all the channels: the ads almost always come fast and furious.
“The industry standard has been to strike when the iron is hot. Companies tend to believe that the earlier you can do retargeting, the better. So oftentimes, when a potential customer will close a website, one hour later, the company will send a message,” Luo says. “But we’ve found that that’s not exactly the best strategy.”
Together with colleagues from Nanjing University and the Waseda University Graduate School of Commerce, Luo authored “The double-edged effects of e-commerce cart retargeting: Does too early retargeting backfire?,” which was recently accepted for publication in the Journal of Marketing.
As part of the study, Luo and his colleagues delivered retargeting ads to 40,500 customers via email and app channels across different hourly blocks once the customers abandoned their carts. They also delivered retargeting ads to an additional 23,900 different customers via text messaging services.
In both cases, the results were the same. Customers who received a retargeting ad within 30 minutes to one hour are less likely to make a purchase. Ads that were delivered that early also triggered feelings of annoyance.
The study showed that the best timing for retargeting ads to be delivered is between one to three days. According to Luo, this range gives customers enough time to want their memories to be rekindled, but it is also not long enough for them to completely forget about the products.
The research is especially applicable this holiday season, as online sales are predicted to reach a record $184 billion due to the pandemic.
“Now, more than ever, e-commerce is big business, and that will continue to be the case through the holiday season,” Luo says. “That’s why retargeting is now bigger than ever. If you do it too quickly, you can alienate the customer, but if you do it in a week or month, that would be too late. The sweet spot is right between one to three days, and that’s something retailers can keep in mind as they look to increase sales over the holidays.”
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