Web-browser Extensions for eCommerce Businesses: Key Impact and Opportunity Analysis

Powered by

Opens a new window

---

In practice, the traditional “funnel” model for generating revenue has led to four common key performance indicators (KPIs) for eCommerce merchants:

• Bounce Rate: Number of eCommerce website visitors who leave the site without actively engaging with one or more items.
• Add to Cart Rate: Percentage of visitors who add one or more items to their online shopping cart.
• Cart Abandonment Rate: Percentage of online shopping carts abandoned Before completing a purchase.
• Conversion Rate: Percentage of visitors who complete a purchase

In this research report, Aberdeen describes and quantifies the hidden, negative business impact of increasingly common web browser extensions on these critical aspects of eCommerce performance as well as the value of solutions designed to reduce these risks.

---

eCommerce merchants use four common KPIs to help manage their financial success. Aberdeen describes and quantifies the hidden, negative business impact of increasingly common web browser extensions eCommerce performance.

Context: Understanding KPIs for eCommerce Merchants

For eCommerce merchants, sustainable financial success depends in large part on their visibility and mastery over a traditional “funnel” model for generating revenue:

• Awareness: Attract potential buyers to visit the merchant’s website
• Interest: Provide compelling ways for site visitors to identify and actively engage with items of interest to them
• Start Checkout: Entice visitors to add items to their online shopping carts 
• Complete Purchase: Encourage visitors to complete (as opposed to abandon) their online purchases

For some merchants, the total business picture can be a bit more complex. For example: Buyers may research items online, but prefers to visit brick-and-mortar stores for a final, physical evaluation and in-person purchase. In these scenarios, the top-performing merchants have adopted an “omni-channel ”approach to track buyer activities across websites, mobile apps, brick-and-mortar stores, catalog, direct mail, and so on—with all channels working from a common database of products, prices, and promotions. The Pandemic of 2020 has only heightened the importance of online purchasing, however, in combination with innovative new approaches to contactless product delivery.

Even so, in practice the traditional funnel model for generating revenue has led to four common key performance indicators (KPIs) for eCommerce merchants: Bounce Rate, Add to Cart Rate, Cart Abandonment Rate, and Conversion Rate. See Table 1, which includes a generalized example of these KPIs that reflects typical results —across all sectors of eCommerce —over the last five calendar quarters.

Four Common KPIs for eCommerce Merchants – Bounce Rate, Add to Cart Rate, Cart Abandonment Rate, Conversion Rate

The appropriateness of the traditional funnel model becomes even more clear when these KPIs are shown in context and at scale (Figure 1).

eCommerce (All Sectors) KPIs, in Context and At Scale

As shown in Figure 1  the funnel narrows sharply at each step:

• About two thirds (67.5%) of visitors to eCommerce websites actively engage with product views of one or more items but the other one third (32.5%) of visitors “bounce” from the site immediately, without taking any further actions.
• Of those who actively engage with one or more items on the site nearly 9 out of 10 (87.4%) ultimately do not add anything to their online shopping cart which results in about 8.5% of all site  visitors adding one or more items to their cart.
• Of those who do create online shopping carts, about 70% end up abandoning them without making a purchase which results in about 2.6% of all site visitors ultimately generating revenue.

By inspection, it’s easy to appreciate that anything which increases the Bounce Rate, decreases the Add to Cart Rate, or increases the Cart Abandonment Rate will have a negative impact on one of the eCommerce merchant’s key business objectives: Increasing the Conversion Rate, i.e. growing the volume of online orders.

The Hidden Impact of Web Browser Extensions on eCommerce Merchant KPIs

Increasingly common web browser extensions are prime examples of the kind of negative business impact on eCommerce merchant KPIs discussed above. Generically, web browser extensions are small software programs (built with technologies such as HTML, CSS, and JavaScript) that are designed to add specific functionality to standard Web browser capabilities.

In the context of this report, an illustrative “Solutions Landscape” of 20 Representative web browser extensions for eCommerce —based on data gleaned from the Google Chrome Web Store, as of July 2020 — is shown in Table 2. It’s a crowded space, which shows signs of consolidating:

• The top two extensions account for about two -thirds of  total users 
• The top three extensions account for about 75% of total users
• The top 20% of extensions account for >80% of total users
• The top 25% of extensions account for >90% of total users 

Data adapted from Google Chrome Web Store, Aberdeen, July 2020

Based on the total number of online shoppers in the United States, browser market share, and browsers most likely to be used in eCommerce, Aberdeen estimates that between 13% to 20% of all online shoppers have currently installed a web browser extension for eCommerce such as those listed in Table 2. Given their primary focus —generally, to save the users money on their online purchases— it’s reasonable to anticipate considerable growth in user adoption.

This is why web browser extensions represent a largely hidden (and mostly likely a rapidly growing) problem for eCommerce merchants — their negative business impact is not only on the Number of orders (Conversion Rate), but also on the profitability of orders (Average Order Value). See Table 3 for examples and for the corresponding positive impact of proactive protection and management.

Turning Problems into Opportunities

Quantifying the Value of Solutions Designed For Protection and Proactive Management of Web Browser Extensions in eCommerce

Expanding on the previous discussion, Aberdeen’s research has found that the Conversion Rate for eCommerce merchants (across all sectors)over the last five quarters ranges from 1.88% to 3.38% (median: 2.65%).

To quantify the value of implementing a solution designed to protect Against the negative Business impact of web browser extensions described in Table 3,Aberdeen developed a straightforward Monte Carlo analysis based on the following modest assumptions for improvement In  eCommerce KPIs:

• Reduction in Bounce Rate (most likely: 10%)
  
• Reduction in Engagement Abandonment Rate (mostly likely:5%) — which translates to an increase in Add to Cart Rate
• Reduction in Cart Abandonment Rate (most likely: 15%) 

Monte Carlo Models are a proven, widely – used approach to quantitative Analysis, and can provide useful insights to help make better-informed business decisions scenarios with inherent variability/uncertainty. Computations involving eCommerce merchant KPIs can be carried out for many scenarios (e.g., ten thousand), each of which uses a random value from the estimated ranges and shapes for the inputs — as opposed to a single calculation based on a single, static value such as “the average Cart Abandonment Rate is 70%”.

The results of these computations are likewise not a single, static value —but are in the form of a range of possible values, along with the associated likelihoods. From this, we can readily describe both how likely and how much business impact, i.e. the risk, as risk is properly defined.

For eCommerce merchants (across all sectors), Aberdeen’s analysis shows that implementation of a solution designed to protect against the negative business impact of web browser extensions results in An increase in Both the number and profitability of online orders:

• Conversion Rate increases from Between 1.88% And 3.38%(median: 2.65%)to between 4.35% and 7.20% (median: 5.87%), as shown in Figure 2
• Average Order Value increases by between 2.85% and 3.95% (median: 3.41%), as shown in Figure 3

The increase in Average Order Value is particularly noteworthy in the Context of the overall profitability of eCommerce merchants. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) —commonly expressed as a percentage of top-line website revenue — is a widely used measure of overall profitability. Over the last five quarters, the annualized EBITDA for eCommerce merchants ranged from 10.44% To 12.45%.

In other words: The estimated increase of 2.85% to 3.95% in Average Order Value represents a significant bump to the current profitability for eCommerce merchants.

Drilldown on Selected eCommerce Market Segments

To gain additional insights into the business impact of web browser extensions on eCommerce KPIs, Aberdeen conducted one-on-one interviews with multiple merchants from each of the following eCommerce market segments:

• Electronics (e.g., TVs, laptops, digital cameras, drones, wireless earbuds )
• Fashion and beauty (e.g., apparel, cosmetics, perfumes)
• Home goods / home improvement (e.g., furniture, appliances ,décor)
• Kitchen (e.g., cookware, utensils, dinnerware)
• General merchandise (combination of items from any of the above market segments)

The results, summarized in Table 4, highlight the differences in current Conversion Rates and Average Order Values between market segments — as well as the respective opportunities to increase both the number and profitability of online orders with a solution for protection and proactive management of web browser extensions, as described in detail above for eCommerce as a whole.

Summary and Key Takeaways

Web browser extensions represent a hidden negative business impact on critical aspects of eCommerce merchant performance. From the perspective of the eCommerce merchant, Aberdeen’s research and analysis describes and quantifies this impact — as well as the value of solutions designed to reduce these risks.

For eCommerce merchants (across all sectors):

• The Conversion Rate increases from between 1.88% and 3.38% (median: 2.65%) to between 4.35% and 7.20% (median: 5.87%)
• The Average Order Value increases by between 2.85% and 3.95% (median: 3.41%) — as compared to EBITDA of between 10.44% and 12.45%
• An estimated 13% to 20% of all online shoppers Have A web browser extension for eCommerce currently installed—With a high likelihood of considerable growth in user adoption going forward.

In Aberdeen’s view, eCommerce merchants should give high priority to understanding the impact of web browser extensions on their key performance indicators, and to evaluating solutions designed to mitigate these risks.

---

Aberdeen Strategy & ResearchOpens a new window , a division of Spiceworks Ziff DavisOpens a new window , with over three decades of experience in independent, credible market research, helps illuminate market realities and inform business strategies. Our fact-based, unbiased, and outcome-centric research approach provides insights on technology, customer management, and business operations, to inspire critical thinking and ignite data-driven business actions.