On the psychology of “free shipping” offers



“Free shipping for orders over XX$”
“Order before XX.XX and get free shipping!”
“Free delivery to anywhere in the world!”

We have all stumbled on statements like that while shopping online. But what is the optimum value offer that would make your potential customers choose you from among thousands? Can free shipping be a win-win situation?

Shipping charges kill conversion

According to rjmetrics.com, 60% of ecommerce companies cite conditional free shipping as their most effective marketing tool. The reason why this works, they claim, is that shoppers still tend to compare shopping online with shopping in a brick-and-mortar store with no additional costs for shopping. Hence, betting on offering free shipping (although factored into the price already) eliminates that upper hand and gives the customers more “choice” for their dollar. You can read more on that from RJMetrics blog post here.

More research into the topic points us in the direction of pretty interesting figures – according to Forrester Research, 61% of online shoppers prefer to shop with a retailer that offers free shipping than one that doesn’t. According to Paypal and comScore, 43% of shoppers abandon their shopping carts because of unexpectedly high shipping charges and 60% claim free shipping is a reason they are more likely to shop online (Harris Interactive).

According to Bala Ganesh, Senior Director of Marketing at UPS, the global shipping behemoth: “free gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.” Highlighted in an article on Longitude nearly 64% of online transactions come with free shipping, according to studies by comScore. The full study is available here.

Free shipping converts more than you think

Also, some helpful insight into the topic can be found in Dan Grays’ article on increasing online sales with free shipping. The article points us to a study by Retention Science which claims that free shipping offers convert twice as often as price discounts, even in cases where price discounts would save the customer more money than free shipping does.

To determine whether free shipping would be profitable for your ecommerce business, get some insight from this article in Symantec blog. The article also points you in the direction of a simple spreadsheet to determine your breakeven among other key characteristics. The link is included in the article!

We’ll come back to the topic of shipping in our future blog posts, but until then – happy number crunching!

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