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📝 Intro

Ecommerce buyers abandon a cart with a product in it between 69.1% (fashion retailers) and 81.1% (travel) of the time, on average (data from Baymard Institute, 2020). 

This is known as “cart abandonment”.

Overall, it amounted to $4.6 trillion in lost sales in 2019.

The most commonly used strategy to ‘save’ these sales is retargeting. This can be done via email, app notifications, SMSs, or even ads.

But when is the most effective time to remind people about their missed purchase?

Most advice that can be found on the topic (e.g. Neil Patel) recommends immediate retargeting (“strike while the iron is hot”, the logic goes).

This is wrong and based on flawed data.

The apparent lift in sales ‘caused’ by retargeting early would happen anyway because that is when people are more likely to return to their purchase anyway (e.g. after a coffee break).

Instead, if you retarget too early, you will hurt your sales.

Let’s take a look.

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Wait 1-3 days before retargeting people with an abandoned cart

Impacted metrics: Customer acquisition
Channels: Ecommerce | Retargeting
For: B2C
Tip type: Existing research (October 2020)

📈 Recommendation

Retarget people with a reminder 1 to 3 days after they abandoned their ecommerce carts. This will increase sales.

If you retarget too early, it will backfire and hurt your sales.

Important: this does not apply if you are offering pricing promotions or using scarcity (e.g. ‘only 2 days left’) in your retargeting. If you are using discounts, be careful not to ‘train’ your customers to just wait for one.

🎓 Effects

• When people abandon one or more products in an ecommerce shopping cart, they are most likely to return to complete their purchase in the hours or few days after abandoning it. After that, they rapidly forget about it.

• Retargeting people to remind them of their purchase can make them more likely to return and complete their purchase. If done right.

• Experiments with two different ecommerce retailers found that:

  • Retargeting customers too early (less than 1 hour) annoys them and makes them less likely to complete their purchase, compared to if they hadn’t been reminded.

  • Retargeting customers after 24 to 72 hours makes them more likely to complete their purchase.

(Effect of retargeting on sales after cart abandonment for a Japanese fashion retailer. The baseline of 0 is six hours after abandonment with no retargeting - Click to zoom in)

(Effects of retargeting on sales for a Chinese maternal and infant product retailer using SMSs - Click to zoom in)

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🧠 Why it works

• We get annoyed by retailers that retarget us too soon. This is especially the case if we are already planning on returning to buy the product(s) soon.

• As a reaction, we’re less likely to buy from them and might even be less likely to buy from them in the future.

• On the other hand, our memory of having started a purchase rapidly decays after a few days. After one week, it all but disappears.

• So if a retailer reminds us while we still remember why we wanted to make our purchase (and haven’t forgotten about it completely), we’re likely to go back and finish buying.

✋ Limitations

• The retargeting messages used in the study did not offer any discounts, special offers, or use scarcity tactics (they simply reminded people of the product(s) in their cart). Therefore, the effect likely doesn’t apply to retargeting that comes with promotions or “buy it before it sells out”. The downside of using promotions for retargeting is that people can easily learn that they should abandon a cart and wait for a discount, resulting in lost revenues.

• The researchers did not consider a retargeting time window of more than a week because based on previous research people’s memory is likely to be totally lost by then and is known to be hard to recover. Retargeting after one week or more is likely to be ineffective (unless it’s with price promotions).

• The study is likely to only apply to low to mid-priced items, not very high-priced items (e.g. people probably won’t forget a car in their ecommerce cart. At least not one that they actually intended to buy).

• The timing of retargeting is often relative to what you are selling. For example, someone buying a piece of DIY furniture might need longer because they need to take measurements first. Test the exact timings that work for you if you have doubts.

🏢 Companies using this

• U.S. retailer Macy’s uses SMSs to retarget people who have shortlisted products but haven't bought.

• Booking.com, Taobao, and Target use their apps to send reminder notifications within minutes after people abandon their carts (note: this may have changed, since retargeting methods tend to be updated often).

• Companies such as Carts Guru offer software to help small-medium ecommerce sellers retarget potential customers who abandon their carts.

⚡ Steps to implement

• Encourage your (potential) customers to log in or create an account with you so you can send them reminders and promotions. For example:

  • Make it easy to sign in using Google, Facebook, etc.

  • Consider offering a one-off discount or gift for creating an account

• When a logged-in user abandons a cart, track what they intended to buy and when they abandoned.

• Send them a reminder with the content of their cart 1 to 3 days after they abandoned the cart. You can test sending a second or even a third reminder after that, but keep in mind that it may hurt their impressions of you and make them hesitant to return next time.

• You can use multiple channels (e.g. email, SMS, app).

• If you like, you can test sending a discount after one or two reminders if the user hasn’t purchased yet to see if it lifts sales in a profitable manner. Try to vary this often so customers don’t get used to it and abandon their carts on purpose to wait for a discount.

🔍 Study type

Field experiments (on over 64,000 customers from different companies and channels: email, a messaging app [Line, equivalent to Whatsapp in Japan], and SMSs). Japan and China

📖 Research

Li, J., Luo, X., Lu, X., & Moriguchi, T. (October 2020). The double-edged effects of e-commerce cart retargeting: does retargeting too early backfire?. Journal of Marketing.

[Link to paper]

🏫 Affiliations

Nanjing University; Fox School of Business, Temple University; Fudan University; and Waseda University. China, United States, and Japan

Remember: This research could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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