How Important is Free Shipping?

A recent survey by AlixPartners, a global business consulting firm for corporate financials and operations, asked customers why they abandon their online shopping carts. The second most mentioned reason that customers sighted was feeling the delivery cost was too high.

free shipping

The study also found that 75 percent of customers shopped from home last year. Of those shoppers, 95 percent said that shipping cost affected their purchase decision either greatly or somewhat.

Another study by Usability Sciences, a provider of usability testing and research for websites, consumer electronics, software and hardware products, found that customers who were offered free shipping placed an average of 3.7 items in shopping carts, with their totals averaging $142, while customers not offered free shipping placed 3.4 items in their cart at a price of $118.

In layman’s terms, the average online sale associated with free shipping was about $4 more than that of sales that occurred without free shipping.

Obviously cost of shipping matters to customers, but so does timing. Eighty-six percent of customers surveyed said that they would feel alright waiting four to seven days for delivery of an item if they received free shipping. Therefore, shipping has to not only be free but also timely in order to translate into more sales.

What does all this mean to retailers? Offering free shipping is a surefire way to increase online sales. Sure, customers may consider searching for an item locally if shipping costs too much. However, retailers can practically count on capturing the sale if they offer free shipping.

Retailers must evaluate the cost per order of delivering items for free, and decide if that cost exceeds the difference in the average sale. If offering free shipping simply offsets the average sale, the good will built by making the offer of free shipping may be worth the small difference in dollars.

Just make sure that your distribution channels can handle the increased online sales that will come with free shipping – don’t forget what customers have said about timeliness. Also, products should be boxed accurately and should arrive at the customer’s home in new condition to sustain the increase in sales.