Case Study: Negotiation Tool Helps Drive Conversions for Sears Hometown and Outlet Stores

PROBLEM: Sears Hometown and Outlet Stores (SHOS), a spinoff business of former parent Sears Holdings Corp, sought to minimize abandoned carts on its website.

SOLUTION: Implemented an online negotiating platform to help it close more sales.

RESULTS: Since going live with the negotiation tool in March 2013, SHOS has seen increased conversion rates and higher average order values from users of its negotiation tool vs. regular site visitors. In fact, an A/B test revealed that users of the tool provided a nearly 30 percent lift in conversion rate compared to nonusers.

Approximately $4 trillion worth of merchandise will be abandoned in online shopping carts this year, according to a recent Business Insider Intelligence report.

Sears Hometown and Outlet Stores (SHOS), a seller of home appliances, hardware and tools, is recouping some of those lost sales by letting customers bid on how much they're willing to pay for an item.

Using software from Netotiate, a provider of real-time negotiation solutions for merchants, SHOS is converting a higher percentage of its site visitors — and they're spending more, on average, too. Here's how the tool works: when shoppers spend a certain amount of time (usually around 15 seconds to 20 seconds) on the page immediately after the product detail page but before adding an item to their cart, they're presented with a pop-up message that allows them to make an offer on the product. Their offer is accepted, rejected or countered — all in real time. If their offer is accepted, the product is added to their cart with the markdown already applied at checkout.

"It's almost like a Priceline feature," says Donnie Franzen, head of e-commerce for SHOS. "Our primary goal for this tool is to improve conversion rates and increase average order value. People like to feel like they're getting a good deal."

Discounts, But Not Giving Away the Store
SHOS sets the threshold limits for what it's willing to accept for any product bids — e.g., 5 percent off the retail price on all refrigerators. Those threshold levels change on a weekly basis, and SHOS can set them at the item, category and vertical level.

"We're able to manage how little or how much we want to give away," says Franzen. "And the satisfaction we've seen from customers using Netotiate has been great. It's all word-of-mouth driven — customers wanting to tell others about their positive experience on our site."