Ah yes, the never ending battle of shipping fees. With more and more online merchants experimenting with free shipping, and, in turn, more and more consumers coming to expect some type of free shipping option, is free shipping now a consumer e-commerce requirement? The answer is complex.
First, let’s take a look at the statistics. In the first quarter of 2014, 58% of e-commerce transactions in the U.S. received free shipping as part of the order. Compare that to the same period one year earlier, just 48% of transactions came with free shipping. In 2013, 66% of online shoppers said free shipping was “very important” to them when making a purchase online, according to a poll from the National Retail Association. The 2013 UPS Pulse of the Online Shopper, which shed some light onto online shopping behaviors, found that 3 out of 4 shoppers add items to their cart in order to qualify for free shipping when the offer is available (the perfect opportunity for an upsell!). In fact, the average order value increases, on average, by 30% when free shipping is included at checkout. In addition, numerous studies have shown that shipping and handling fees account for the majority of abandoned carts.
You have the facts. Now what? Well, it appears the free shipping trend is not going away anytime soon (you can thank Amazon Prime for that). However, you do have options. First, determine if free shipping is even a viable option for your business from a cost perspective. Next, figure out if it’s worth it. Find out what your competitors are doing. Setup shopping cart analytics to see where users are leaving. Survey your customers to see what drives their purchasing decisions.
Ready to jump into free shipping? A/B test your shipping offering. Try offering free shipping on just a selection of your catalog or for a limited time. Minimize the cost by building it into the price of the product. Start small to see how your customers react and see if your business can truly handle it. Then, slowly expand from there.
The Bottom Line
Your e-commerce shipping strategy can have a significant impact on your key e-commerce metrics. Getting the strategy right is very important. At Accorin, we’ve helped dozens of e-commerce clients define their shipping strategy. Need some help? We’d love to hear from you.