The psychology behind free shipping
- 61% online shoppers prefer to shop with a retailer that offers free shipping than one that doesn’t. — Forrester Research (2007)
- 43% of shoppers abandon their shopping carts because of unexpectedly high shipping charges. — PayPal, comScore (2008)
- 60% claim free shipping is a reason they are more likely to shop online. — Harris Interactive (2008)
- 90% believe free shipping offers would entice them to spend more online. — The Conference Board (2008)
There are a few theories as to why shoppers flock to web purveyors offering free shipping. According to GetElastic.com, the first explanation lies in the desire to win.
“The ability to compare prices, find the lowest prices, skip parking lots and lineups — there’s a payoff vs. shopping in a store,” GetElastic editors explain. “The shipping charge negates that advantage – it effectively raises the total price paid and is like a ‘convenience tax.’ A dollar discount is easy enough to find in-store, so finding one online doesn’t justify the shipping cost.”
In these situations (and most other situations, for that matter), customers have a hunch that retailers can budge on the price. Shipping, on the other hand, is a fixed cost. When the retailer pays for it, the customer essentially wins. Furthermore, the customer still believes that they have come out on top, even if the retailer raised the price of the product (unbeknownst to the consumer) to cover the cost of shipping.
The second theory finds its roots in perceived value.
In a separate post by GetElastic.com, research revealed that dollar discounts devalue a product while free shipping retains the perceived value.
It’s important to remember, however, that regardless of previous findings, customers are finicky. Discover what best fits your demographic’s needs by doing a couple of test runs. Then stick with what equates to increased sales. No matter the end result, you can feel confident that your shipping policy is what makes your customers happiest. And isn’t the customer always right, anyway?
To stay on top of eCommerce trends and technologies, subscribe to the NetSphere Strategies blog. We promise to keep you in the loop in terms of what can keep your customers coming back for more.