Every business today is now a tech company, regardless of the product or service they offer. While Tesla is a tech company that manufactures automobiles, one may argue that Footlocker is also a tech company that happens to sell sneakers. In light of this, A 2023 commissioned study conducted by Forrester Consulting on behalf of Catchpoint on the true cost of Internet disruptions to eCommerce companies should send shivers down the spine of not just eCommerce businesses, but every company with an online presence. Let's delve into the research and explore why the consequences of Internet disruptions are alarming, highlighting the crucial implications for website performance monitoring.
The costly truth
According to the study, 88% of surveyed eCommerce decision-makers estimated their companies had lost over $100,000 due to disruptions in the month leading up to the research. This translates to annual losses of $1.2 million. What's more alarming is that 51% of respondents reported losing over $500,000 in just the previous month alone.
The study establishes a clear correlation between Internet disruptions and revenue loss in the eCommerce sector. When a website goes down, sales suffer. However, the research also highlights additional factors that contribute to the high cost of disruptions for eCommerce businesses.
Tolerance for disruptions is at an all-time low
Customers now expect flawless digital experiences, and any disruption can lead to lost sales and revenue. The study reveals that 74% of respondents reported that customers have little tolerance for disrupted experiences, while 71% stated that employees expect the same frictionless digital experiences as customers.
“Whether it’s a search function, inventory database, or e-commerce platform that is slow or unavailable, consumers want flawless experiences and are ready to go elsewhere if those expectations are not met,” states the study.
Internet disruptions also contribute to increased customer churn, with 65% of respondents stating that even minor disruptions can cause customers to halt their purchase cycle. This is particularly detrimental to eCommerce businesses as acquiring new customers is costlier than retaining existing ones.
The Implications for Web Performance Optimization
The study’s findings align with recent website experience and performance data, highlighting the significance of speed and resilience in web performance. In a landscape where tolerance for disruptions is at an all-time low, research by Google reveals that 53% of visits are likely to be abandoned if pages take longer than 3 seconds to load.
Unfortunately, data from Akamai's Real User Monitoring (RUM) in G7 countries paints a concerning picture. At the 75th percentile, page load times are already exceeding the three-second threshold, with countries like France (5.6 seconds), Japan (5.0 seconds), and GB (6.6 seconds) experiencing longer loading times. These numbers clearly demonstrate the urgency for improvement, as exceeding the threshold is detrimental to user experience.
Another key metric, the Largest Contentful Paint (LCP), further emphasizes the importance of performance. Google's research sets the threshold for a good LCP at 2.5 seconds. However, Akamai's RUM data shows that LCP times at the 75th percentile are already around three seconds.
Limited Visibility and Monitoring
Given the fact that tolerance for disruptions is at an all-time low, you would expect that monitoring performance to identify and fix disruptions quickly should be a top priority. According to the Forrester study, this is an area companies are struggling with.
When asked, “Which of the following best describes Internet Performance Monitoring efforts at your company right now?” only 29% of respondents’ companies said they monitor Internet performance across the whole Internet Stack and enterprise. Forrester considers this a significant issue, stating, “Given the importance of Internet performance and the impact disruptions have on business success, this number should be closer to 100%.”
Internet Performance Monitoring (IPM) is critical to business success
What tools can eCommerce companies use to mitigate the risks of disruptions? Sixty-one percent of respondents agreed they needed tools to quickly anticipate, detect, and fix Internet performance problems. Forrester strongly recommends investing in Internet Performance Monitoring (IPM) to gain complete visibility into the Internet Stack and the ability to identify issues before they impact the business. “Companies that don’t invest in IPM are vulnerable to huge financial losses as service disruptions drive away customers and employees,” says the study.
Underscoring the value of IPM, 75% of respondents said IPM would deliver a “large” or “significant” increase in revenue.
The benefits of an IPM powered Website Experience Solution
“The survey findings make a strong case for IPM, quantifying the consequences of not closely monitoring all aspects of a customer’s experience and addressing issues before they happen,” said Howard Beader, Vice President of Product Marketing at Catchpoint.
Real-world examples only prove to back up the study’s conclusion that IPM is crucial to business success. Leveraging Catchpoint WebPageTest, Shopify engineers were able to help phone accessory retailer Case-Mate reduce their LCP by 6 whole seconds. Carpe also experienced remarkable results after analyzing their page rendering stats using Catchpoint WebPageTest. By achieving a 52% boost in the Largest Contentful Paint (LCP), they saw a significant 5% increase in conversion rates, 10% growth in traffic, and an impressive 15% boost in revenue.
A shoe retailer once worried solely about slow cash registers and long queues. But in 2023, their concerns have shifted to Internet disruptions and bottlenecks throughout their entire Internet stack. With Catchpoint’s IPM powered Website Experience Solution, you’ll avoid the loss of revenue and reputational damage that comes with poor web performance by monitoring your site's speed, usability, and resilience in real browsers, devices, and locations worldwide. The only question is, can you afford to monitor any less?
- To learn more about the impact of Internet disruptions on eCommerce companies and how IPM can help mitigate these risks, download the full study by Forrester Consulting.
- Watch a recording of the launch webinar with guest speaker, Vice President, Principal Analyst at Forrester, Sucharita Kodali.
- To find out more about our Website Experience Solution, download the solution brief.