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.
If this past holiday's trend is any indication, consumers love free shipping. But to what extent do shipping costs actually factor into a consumer's decision to purchase online? A fair amount, according to the most recent Compete Online Shopper survey.
A main finding of the study is that shipping costs not only weigh heavily on consumers' decisions to purchase products online, but it also impacts consumer satisfaction. E-commerce is all about convenience and price; additional shipping costs contradict both of these features. For small purchases, an extra $5 shipping charge could amount to a 20 percent to 50 percent premium, which is bound to leave a sour taste in any consumer's mouth. But while charging for shipping is seen as a negative, there is an upside to this standard practice -- free shipping can win you big points with consumers.
Below are a few highlights from the study:
- Ninety-three percent of respondents indicated that free shipping
on orders would encourage them to purchase more products online.
- Two out of three shoppers said they would buy more online if returns
were free.
- When asked about their most recent shopping experience, overall customer
satisfaction was 10 percentage points lower for those who paid for shipping
compared to those who had free shipping.
- High shipping costs were rated as the number one reason why consumers
were not satisfied with their online shopping experience.
- Sixty-seven percent of online researchers stated that they purchase
items in a store instead of online in order to avoid shipping costs.
- Sixty-five percent of respondents indicated that they choose the
'in store pick up' option, when available, for the same reason.
Discussion Questions: Have free shipping deals become almost a prerequisite for e-commerce? What's the best way retailers can alleviate consumers' concerns around these expenses?