Some facts about e-commerce are less obvious than others. Many newer e-commerce operators would be surprised, for instance, that how to charge for shipping is one of the most important questions for an e-commerce store. It can be the difference, in fact, between an e-commerce site that is profitable and one that is not. Conversion Rate (the rate at which a website turns site visitors into paying customers) depends on many things, but shipping policy is one of the most important to get right.
Presented with unexpected costs
“Presented with unexpected costs” – this was the number one reason that respondents to a Statistica survey gave for cart abandonment. 56% of respondents abandoned their cart because of unexpected costs. Since “unexpected costs” is just another way of saying “shipping costs” for most e-commerce checkout processes, let’s focus on those.
When it comes to shipping cost, from the perspective of the customer, less is always better. If you can offer free shipping on every product in your store and factor that cost into your prices, do it. You’ll be happier because your sales will increase (drastically in most cases). Your customer will be happier because there is one less thing to think about. And every e-commerce platform that we work with these days has a reasonably easy method for implementing free shipping.
As another option to free shipping on everything, consider charging free shipping for orders that are over a certain minimum threshold ($50, for example), and charge a flat rate ($7.95, for example) for anything under the free shipping threshold. The important thing in this scenario is to be certain that the customer knows that free shipping is available for just a few dollars more. We can confirm for you that our customers who do this see their average order value increase. Deloitte did some research that confirms this also. They found that 40% of shoppers are willing to add more products to meet the free shipping threshold. So this is a classic win-win for e-commerce operator and customer.
But what if I just can’t offer free shipping?
OK. You understand the benefits of free shipping and / or threshold free shipping with a flat rate alternative, but for your organization, it is a no go. Freight cost is most of the cost of the transaction, or you just don’t believe the hype about free shipping. What to do? Give your customers a few choices. We recommend the real-time shipping quote services from UPS or Fedex. We can implement these solutions on all of the e-commerce platforms that we work with, and they put the control in the customer’s hands.
Free shipping is one of several factors that affect conversion rate on your e-commerce website. Be sure to check back as we delve into some of the other big hitters in coming blog posts.