How Does Shipping Impact Online Retail Sales?

Posted on: November 24, 2017 Posted by: circleus Comments: 0

How Does Shipping Impact Online Retail Sales?

When you do online shopping, what are some reasons you might abandon your shopping cart? Baymard Institute recently published an article that presents reasons for abandonments during checkout.

 

As the numbers listed above, Extra costs (shipping, tax, fees) are the top of the list. Nowadays, Ecommerce continues to grow both domestically and internationally, with shipping still being an important part of it.

As you can see, unexpected shipping costs is obstacle to your online sales.

Why customers would like to pay extra money to wait days for their products while they can just drive 10 miles and get the same thing in an hour? However, if customer can have the same products delivered to them with no extra shipping cost, that means no waste of precious time and gas, why would they say no?

Here are some facts of how shipping affects online sales:

1. Does free shipping truly work? Yes.

After research, Circle finds out that during holiday, the most popular promotion is free shipping. 39% of retailers say free shipping is their top holiday promotion. Another survey shows that 64% say free shipping is the most effective promotion.

 

2. Shoppers buy more to qualify for free shipping. Another word, free shipping increase revenues.

Think about this: how many times have you been shopping online for something that cost you just $25? The little notice pops up that says “add $5 to your order to qualify for FREE shipping,” and how tempted are you? Probably very tempted. You can buy something else you might need and save $10 on shipping.

3. Customers are willing to wait additional days to be able to join a free shipping offer.

A survey from AlixPartners mentions that 50% of shoppers are willing to wait up to one week as long as they receive free shipping. This means, you can ship your products via the cheapest shipping option. So, offering customers free shipping can be profitable.

4. A majority of shoppers would like improved shipping options.

We mentioned above that a lot customers are willing to wait longer time when offered free shipping. However, the other 50% prefers a quicker shipment. This totally makes sense especially when you look at holiday shopping. Think about this scenario: Your best friend’s birthday is around the corner and the gift needs to be delivered tomorrow, so you would definitely spend extra to ensure the gift got delivered on time. If there is no second day delivery available, your customers might go to other places to buy. Don’t forget to add on other shipping option to keep your customers. Ground, overnight, 2nd day and 3rd day services available via UPS, FedEx and USPS with built in deep discount.

5. International free shipping matters a lot.

Although your store is on U.S. marketplaces or yourself is based in U.S., your customers can be from anywhere in the world. There are millions of people who want to buy your products that requires international shipping. But paying for expensive shipping and customs? Customers will say no. Shipping internationally at a lower rate, or even free, can be difficult and costly. But imaging how ahead of the competition you would be if you were able to do it? Save up to 80% on international shipping with UPS, FedEx, and USPS.

 

Wrapping It Up

Shipping costs are one of the top factors determining whether or not people make a purchase from you online store or others’.

In next post, Circle will prepare several tips on how to set up your free shipping strategies, how to reduce your shipping cost and increase efficiency.

Comment below to share your thoughts about offering free shipping.

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