Desperate online sellers feel the pain of closing the deal

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Target, the US retailer, recently sent me a rather plaintive email: “Come back and check out”, it said, with the tagline “Almost yours” displayed over a picture of a table lamp I had looked at days earlier.

This attempt to cajole me into buying arrived amid a flood of other “personalised” emails from websites I had previously visited. Some touted discounts; others promised to make holiday shopping easier with curated selections.

The flood represents the increasing desperation of companies hit by flattening online sales now most economies have reopened post-lockdowns. After jumping from 11 to 16 per cent of all US retail sales at the height of the pandemic, online purchases have now settled below 15 per cent. Travel spending has returned to 2019 levels but growth has moderated.

Companies looking to boost revenue can either attract more visitors to their websites, or convince more of them to stick around and buy. The first option isn’t looking great. Tougher privacy controls, particularly on Apple smartphones, have made online advertising more difficult to target. Not only that but many consumer companies, struggling with tighter budgets, have had to husband their online advertising dollars, as slowing sales at Google and Snap, among others, attest.

An email from Target, the US retailer, urges the writer to return to the website to buy a lamp she had previously looked at

On top of that, higher energy and housing costs mean consumers in many markets are less likely to be out shopping at all. EY surveyed 21,000 people in 27 countries this autumn and found that two-thirds described themselves as more “aware and cautious” about their spending. Nearly 40 per cent also said they planned to buy less food and fewer physical products for Christmas.

That helps explain why overall page views at 250 global retail brand websites tracked by Kibo are down more than 7 per cent year on year. In continental Europe the drop is double that.

Enhancing the consumer experience will not be a picnic either. Most website visitors don’t buy anything: just 2.6 per cent of visits “converted” into a purchase in the second quarter of 2022. Some companies have turned to heavy discounting. US online prices dropped for the third month running in November and are now down 1.9 per cent year on year, according to Adobe. Driven by Black Friday sales, falling prices for electronics and computers more than compensated for rising grocery and pet product costs.

But that strategy is murder on margins. Lasting gains are more likely to come from revamping the online experience. Hilton is having good success with putting icons at the top of its website that allow customers to search quickly for options such as pet-friendly hotels or connecting rooms.

About 30 per cent of customers who click on “EV charging station” end up reserving a room, six times the travel industry norm. Next up in 2023: personalising those icons for repeat customers. “When you’re searching for something as complex as a hotel room, we want to make sure it’s as easy as possible,” says the hotel chain’s Mike Gathright.

But steering a customer to the right item is not the same as closing the deal. If the buying process has too many options and too many forms to fill out, fickle customers will vanish before pulling the trigger. One of the many reasons Amazon was such an ecommerce juggernaut in the 2000s was its “One-Click” buying option, which was under patent protection until 2017.

Now others have more room to innovate. Shopify offers an easy checkout option to businesses that use its software to power their websites. Its share price, which tanked after the economy reopened, has started to recover a bit.

Rokt is using machine learning to personalise the transaction process in ways that boost merchant revenue. Essentially, they help websites tailor what they show at the point of purchase. A regular customer won’t be asked repeatedly to sign up for package tracking or marketing emails. But one who often uses rental cars will see a selection when they buy an airline ticket.

“What a lot of organisations do is show you everything they offer every time because they want to get just one more thing in the cart,” says Elizabeth Buchanan, chief commercial officer. “We spend all our R&D making sure that it doesn’t feel like a dumb ad.”

So far, Rokt has avoided the broader fall in ecommerce valuations: it raised money in a secondary transaction last week that valued it at $2.4bn, up from $1.95bn last December.

When I went back to Target to look for the lamp, the link didn’t work. But elsewhere I sped through the process of booking a flight and hotel for my January ski holiday. Was it me or the websites?

Follow Brooke Masters with myFT and on Twitter

Letter in response to this column:

Your columnist should’ve used us to close the deal / From Rosie Bailey, Founder and Chief Executive, Nibble, London W4, UK

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