The sad truth about electronic commerce is that although a Web site may receive millions of visitors, only about 3% actually buy anything. Consequently, the Holy Grail of e-commerce is figuring out how to turn the browsing 97% into buyers. Online retailers are making some progress in that regard: The order-conversion rate increased from 1.8% to 3.2% in 1999, according to an April 2000 study by the Boston Consulting Group and shop.org.
Analysts attribute that rise to improved Web-site design and consumers' increasing comfort with Internet shopping. But there's still a lot of room for improvement. About 65% of online shopping carts are abandoned before the purchase, representing significant lost sales, the study said.
The solution is not to offer pop-up discounts or promotions to every Web-site visitor. Some of those visitors are mere tire kickers and have no intention of buying, and some will buy even without an extra incentive. Two marketing professors have developed an online buyer-conversion model that distinguishes between committed browsers and potential buyers — a capability that has important ramifications for how retail Web traffic is managed.