Compete Blog: Target vs. Wal-Mart – Online Conversion Battle Heats Up
By Debra Miller
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Compete Blog. Compete Inc. is a web analytics company that focuses on understanding how consumers use the internet.
Last month, Wal-Mart attracted 32.1 million visitors to its website versus 27.2 million online visitors for Target. Of those, 47 percent looked at a product at Wal-Mart.com compared to 31 percent of Target visitors. However, among shoppers who viewed a product, Target had a higher shopping cart interaction rate and conversion rate.
Despite the slight lead in conversions, more Target customers abandon their carts than Wal-Mart shoppers. Forty-seven percent of shoppers who begin checking out at Target do not complete their purchases, where as 35 percent of shoppers at Wal-Mart abandon their carts.
In general, Target leads in purchase rate and Wal-Mart boasts a smaller shopping cart abandonment rate. But how do more loyal consumers shop online?
Retailer credit card holders represent some of the most loyal, and valuable, customers. Among shoppers who accessed their credit card accounts, conversion rate for Wal-Mart shoppers edges ahead of Target to a 14 percent rate compared to Target’s 13 percent. Wal-Mart shopping cart abandonment does not change much, averaging 33 percent of shoppers versus 35 percent. Target’s abandonment rate, however, drops from 47 percent to 38 percent, narrowing the gap to just above Wal-Mart’s rate. It’s no surprise that competition is extremely fierce between these two rivals and I expect things to heat up even more as retailers gear up for back-to-school and the holiday season.
Discussion Questions: Why do you think target.com is gaining a higher cart interaction and conversion rate than walmart.com? Are you surprised at the significant cart abandonment rates (47 percent at Target, 35 percent at Wal-Mart)? What does the overall data say about the type of shopper visiting walmart.com versus target.com?
I’m not surprised by the results indicating that Target.com has a higher cart interaction than Walmart.com. Target’s online shopper is probably more the trendy shopper than Walmart’s more masses of customers that are online to generally explore variety and prices. Yet, I’m also not surprised that Target has a higher abandonment rate for almost the very same reasons, albeit seemingly ironic. However, the Walmart.com shopper is more the destination shopper, ready to press the key to buy the merchandise.
I am not surprised that Target leads Walmart in transactions. Target’s weekly circular is a draw to online shoppers. A large number of website visitors are checking prices and cross-shopping stores. Many of them check the web before deciding which brick and mortar store to visit.
As with many websites, consumers abandon shopping carts. The primary reason for this has been shipping charges. That’s why many online retailers have opted for free shipping, some with minimum purchase.
No surprise here. Better products and better after-service translate to the bottom line. I also agree that Target customers are more tech savvy than the average Walmart customer.
Aside from pricing and merchandise issues, let me bring up another possibility–is one site simply easier or less frustrating for consumers to navigate and check out than the other?
The discussion question asks what the data says about the shoppers. What Walmart and Target should note is that the data does not tell them about their shoppers. It’s up to the retailers to uncover that for themselves.
My website effectiveness research has brought me to the conclusion that there are four factors that influence conversion at a website: 1. Motivation for the visit; 2. Consumers’ expectations; 3. Content; 4. Navigation and design.
Many retailers are relying on search engine optimization to bring consumers to their site and don’t pay enough attention to the shoppers’ experience at the site. This is the focus of website optimization. Web analytics can paint a picture of visits, clicks and transactions, but they don’t help to get to the “why” of the matter. This is the insight needed in order to have more effective websites.
Marketers should realize they need to attract attention, generate involvement and then persuade at the website. This discussion article suggests retailers and others with websites would rather rely on dashboards with click-through information than rolling up their sleeves and dealing with the actual customer experience.
Research (with eye tracking) can be extremely helpful in uncovering what happens once shoppers get to the site. How does the website draw them in? Where does it lead them? Visitors expect the site to be intuitive and they go down the path of least resistance. If they perceive that path to be laden with barriers (actually it might be one barrier) they will be turned off and leave their cart behind. The article does not talk about the consumer segments attracted to the Target website and the Walmart website. Why should these consumers be expected to function identically on the websites, if the websites are not identical?
I think the retailers may be doing what they wish their consumers would not do. The retailers may just be going down the path of least resistance themselves, using web analytics instead of examining the user experience at the websites.
I find it very difficult to provide any rational reason for success of one variable over another comparing just Walmart and Target.
This is simply too small a sampling of retailers to draw any reasonably sound conclusions.
I would like to see this same analysis widened to include other significant retailers (e.g. Lowe’s) as well as department stores (e.g. J.C.Penney) and true online retailers (e.g. Amazon, et al).
Target attracts a different shopper segment, that’s interested in fashion and decorating, but looking for the best value for money in these fast changing areas. They are drawn to see what is available that is new and now, and want to make sure the pricing compares favorably. If they can get something a little nicer or trendier, it’s a done deal. As they search the circulars and then the site, they trust that the quality and service will continue to meet expectations.
Target tend to be more educated and more active online than Walmart customers. In addition, Walmart customers tend to be more price-driven than Target customers, reflecting the differences in their brand positioning.
Given these inherent differences, you would expect Walmart to have more visitors (price-driven comparison shoppers), while Target would have a higher level of conversion, reflecting their value-driven customers and brand positioning.
The higher level of cart abandonment, however, suggests that Target’s online product assortment may be a bit too generic, or the prices too high, leading customers to abandon when they see the final price tag.
Other reasons for cart abandonment have to do with customer experience online, multiple steps to complete sales, etc. Target may face some of those, but the most likely scenario has to do with a somewhat generic assortment and higher than expected pricing. To succeed, Target must feature their distinctive products to support the necessary pricing.
While these statistics are interesting, I’ll call out that completing sales on walmart.com is way down the list of the retailer’s priorities based on the presentation that PK Van Deloo, Walmart.com’s Senior Marketing Director gave here in Bentonville last month (see our complete coverage at www.nmbblog.com).
In the presentation, he listed walmart.com’s top four philosophies as: 1. Fulfill walmart’s overriding mission “Save money. Live better.” 2. Drive visits with value 3. Influence store sales and 4. One brand, one customer, in multiple channels.
From there, he outlined walmart.com’s top three initiatives which were: 1. Site-to-store 2. Customer ratings and reviews and 3. “Find in store” searches.
Clearly, Walmart sees walmart.com as a connection point that completes the loop for shoppers, not as a stand-alone sales channel and they are particularly focused on research. According to Walmart, 76% of Walmart shoppers conduct research on walmart.com before making a purchase and, with the top two researched categories being home and living (31.5%) and personal electronics (27%), Walmart is providing information that would seem to translate into high-ticket store purchases (hence the market share gains, and others’ pains, in these categories).
Site-to-store is a major focus since Walmart knows that half of its Site-to-store orders come from customers who made their first visit to dot com and two-thirds of those who pick up Site-to-store orders go on to spend an additional $60 while in the store.
Walmart.com also provides much more information and content than Target.com currently does and, while that may not translate into online sales, it does pump up the engagement numbers. Walmart.com is the #2 site for average time spent (next to iTunes) and the average time spent on walmart.com is 15 minutes per visitor vs. 9 minutes and 54 seconds for target.com and 9 minutes for sears.com.
Nowhere in the presentation deck or in Mr. Van Deloo’s talk track was “Drive conversion rates;” however, “Delivering impact while she’s making choices” figured prominently!
I went through both websites before answering this question and did not really find a significant difference in the experiences.
Let’s answer the second question first. I still believe the big advantage retail stores have over the Internet is that they promise instant gratification. The consumer can touch and carry home the product they want to buy. That is why many abandon the shopping cart, because they never intended to buy online in the first place. They were just using the website as a way to compare products and determine price.
Which is brings us back to the first question. Walmart has built a reputation as the low-priced retailer, so many of their visitors are trying to determine a “base price.” It is not that Walmart is discouraging shoppers or that Target is doing something better on their website, it is merely the fact that more people who visit Walmart never intended to buy anything in the first place. They were only using it for reference.
Too many times we marketers think think Walmart and Kmart shoppers are the same…this research is pointing to differences. Hmmm…maybe it is Target Marketing and Customer Segmentation? Any of us with a business or marketing degree remember this.
It will be interesting to see future studies here. I would think Target believes their “target” audience is different. Why not…don’t they want more loyal customers and less trading between Walmart and Target?
I was one of those people on the Target site. There were some items I was looking at and one of them said the sale price would be provided at checkout so I went through the process to see the sale price, then decided I didn’t want the item, and abandoned the cart. I checked Walmart too but they didn’t have what I wanted so I checked Amazon.com and purchased it there.
At the risk of being labeled a spoilsport, the data–far from showing dramatic differences between the two retailers–actually shows they are almost identical in the category of “completed purchase” (and isn’t that what ultimately matters?) Considering the two sites draw a similar number of visitors, I would say the two are in a virtual tie transaction-wise…certainly much more so than with their total (offline and online) sales; but maybe this shouldn’t be surprising: WM sells a lot of stuff that one probably wouldn’t buy online (a 44 oz bottle of “Woolite” anyone?) so the total volumes probably don’t translate well into internet sales.
I am not sure what relevance cart interaction has, except perhaps as a leading indicator for cart abandonment. Were I Target, the statistic I would be focused on is the almost 50% abandonment rate at checkout, as compared to the 37% for Walmart. That is a statistically significant difference, and worthy of analysis.
The data on credit card users shows that credit card holders act similarly on both sites. Which in and of itself, by isolating a subgroup of consumers, implies that there is very little to distinguish the operating performance between the two competitors. Apparently, from the data, NON credit card users abandon carts MUCH more often at Target than they do Walmart. Why? Perhaps because Walmart offers PayPal and Bill Me Later as options during checkout? Perhaps because Walmart offers Site to Store as a free shipping alternative? With Target, it’s either online, or available in-store. Although I can’t prove it, it appears as if a much higher percentage of the Target items are online exclusives as compared to Walmart…which actually has NO online exclusives when Ship to Store is factored into the equation.
Overall, both conversion rates have shown considerable improvement over the past five years. Very few retailers with the SKU count and product range these two offer have better conversion. Perhaps, at some point, conversion is related to other factors than ease of navigation, type of payment offered, and type of shipping. Just a thought.
Let’s not forget that a SIGNIFICANT amount of Walmart shoppers don’t even have a bank account, let alone a credit or debit card. Shopping online without one of those is difficult if not impossible.
Target attracts a higher average demographic also (although Walmart has made strides in that department lately), and those in the higher demographic are generally more interested in convenience and less concerned about shipping charges.
The bottom line is that Target’s customers are more savvy and affluent which means they do more shopping online in general. Abandoned carts are price comparison shoppers checking prices. I don’t think there has ever been a more competitive or brutal environment when it comes to prices especially with the advent of iPhone comparisons by consumers in store. Twitter and Linkedin are providing more avenues and will only become more accepted as time goes on.
This is an interesting snapshot, but so many variables for such a small variance. The macro issue can be the ease of navigation and shopping relative to the purchase intent. As to non-quantifiable comments, as these sites are so heavily used for (1) comparative shopping, (2) total costs versus item costs (Shipping and Handling) and (3) net cost benefit of going to store…the potential consumer has to go an extra step into the shopping cart to get their true rates by mailing type/zone. That action being completed, they now can make a purchase online, check others or drive to the store. Walmart has more locations and works very hard to direct the dot com purchases to stores. This may explain some of these dynamics–assuming the navigation/selection is similar.
Last issue is their core consumer in-store versus online and these can, and do, vary significantly within the Target/WM profile by category.
Bottom-line: watch drawing too deep a conclusion on this one…they both are miles ahead on their understanding of this brick/click integrated strategy.