Can shipping costs affect online sales?

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’ decision 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%-50% 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.

Shoppers overwhelming said free shipping would increase their likelihood to purchase online.  That means that footing the shipping bill could result in thousands, if not millions, of dollars in new sales for e-retailers.  I recognize that eliminating shipping costs all together is not feasible for retailers, but they should not underestimate the power of a free shipping promotion.  Below are a few highlights from the study:

  • 93% of respondents indicated that free shipping on orders would encourage them to purchase more products online.
  • 2 out of 3 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
  • 67% of online researchers stated that they purchase items in a store instead of online in order to avoid shipping costs.
  • 65% of respondents indicated that they choose the "˜in store pick up’ option, when available, for the same reason.

About Debra Miller Arbesman:
Debra Miller Arbesman is senior associate, retailer and consumer products at Compete, a Kantar Media company that helps brands improve their marketing based on the online behavior of millions of consumers.