We’ve all done it. Wandered on to certain online shopping sites, found what we wanted, popped it in our shopping carts and then got to the checkout, only to discover the cost of shipping is nearly as much as the item itself.
At which point, the item was, of course, swiftly removed from the shopping cart and the site exited at high speed in sheer disgust, right?
Most people have or will shop online at some point in their lives and, if the horror story above sounds familiar to you, then you're not alone.
Research from the University of Pennsylvania revealed that free shipping in some form is a hugely successful conversion booster. On the other hand, the research also showed that a lack of free shipping is a conversion killer.
It’s an issue that online store owners are facing on a daily basis in their fight to win the upper hand against competitors, gain the sale and achieve the Mecca that is the returning customer.
And it’s, without doubt, what has led successful businesses such as Zappos make use of such a widely loved incentive and one that’s known to work well, sometimes even getting the customer to shell out more on their visit.
But what kind is the better one to use? To offer free shipping, no matter what you spend, or to impose a threshold where you must make a minimum spend to qualify for that free shipping?
In putting these theories into practice, ecommerce site NuFace did a study on adding a free shipping threshold and it increased its orders by 90%..
They certainly did well in their aim to boost their appeal in making sales of their product and it did increased their sales. And all they did was to place a “free shipping over $75” slogan above the Shop NuFace button - an intelligent move, which took into account where the target customer would be looking on the page and place the incentive about it.
An online survey of 1,000 consumers which was conducted by the e-tailing group found that free shipping topped the list of online tactics that would influence a customer to engage with a brand or make a purchase on a social networking site.
But, there’s certainly a fine line to walk, as shipping can come at a costly price. So, to foot the bill for it has to bring its own returns. These costs can be absorbed by setting a threshold, but what level do you set to cover your costs, while ensuring that it’s low enough to appeal?
The answer lies in the type of product you are selling and the audience that you are selling to.
If it’s a product that is relatively low cost and can be bought pretty much anywhere, this is where you should impose a threshold to ensure you cover your shipping costs. It should also encourage people to buy more to get to that threshold.
Bow & Drape one of the successful stores, because of its unique way of selling.
However, if the product you are selling is unique or in high demand, then you would be able to increase the selling cost to cover the cost of shipping. Examples of sites which offer something unique are ones such as Bow and Drape and The Grommet. However, interestingly enough, the latter online store has taken a similar approach to NuFace in putting a shipping threshold above the Shop button to entice customers to buy - and buy more while they’re at it.
In a similar way to the unique product market, if the item is expensive, this means the greater profit margin, so the easier it is to in the price and entice people to buy because you are offering free shipping.
The free shipping is always free because of the price is so damn expensive
So, in conclusion, when it comes to shipping costs, reducing or removing them altogether is without doubt one of the best ways to convert visitors to customers. But the secret lies in getting it right for the product and the person who is buying it. Store owners must test what works best for their visitors, products and store as there’s no proven rule for everyone.
To find out more about how you could optimise conversions in your online store, get in touch with us today.