More and more online retailers are offering free shipping, and customers are turning to these stores to make their purchases, seduced by the idea of something being free.
Stores are not just being nice; it’s a tactic, and a necessary one these days, said David Lewis, author of “The Brain Sell: When Science Meets Shopping.”
“It has been estimated that 68 percent of all Internet customers abandon full trolleys before checking out,” Lewis said.
The causes: poorly designed websites, lower-priced items at other sites or unexpected additional charges such as tax or shipping.
“The easier a transaction, the less cognitive effort has to be invested in making the purchase, the greater the likelihood of a sale,” Lewis said. “Offering free delivery encourages the clicking of the ‘buy’ button, especially when another supplier is offering identical products with this included.”
Retailers are also competing against stores offering online options, free shipping and free returns.
A recent survey by Deloitte, which provides financial services to nearly 75 percent of the Fortune 500 retailers, found that 71 percent of shoppers expect free online shipping, and 47 percent expect free returns.
Online retailers are able to offer free shipping and other lower-cost items because they have lower margins, said Marshal Cohen, chief retail analyst at New York-based NPD Group. They don’t have to pay rent, they tend to have fewer employees, and they don’t have to pay insurance on the store.
When shopping at stores like Zappos, an online retailer specializing in shoes that promotes its free shipping and free return policies, many people order shoes in multiple sizes so they can try them on, see which size fits and then return the rest, which increases the overhead on those types of stores because they have to pay for multiple shipping costs to sell a single pair of shoes.
“It’s almost as if you have to recognize that that’s part of doing business from the consumer’s perspective, and it’s built into the margin of the retailer,” Cohen said.
On their end, consumers often say that they are more willing to shop at online retailers because it saves them the time it takes to go to a store — especially if the stores offer free shipping. They may even add extra items to their cart if a store offers free shipping as long as they meet a minimum dollar amount.
Collin Morgan, owner of the money-saving blog Hip2Save.com, said that she will often make a decision not to purchase an item when she reaches the checkout page and realizes that the shipping cost is more than the cost of the items she is buying.
On the other hand, Morgan said, though she is always looking for ways to cut costs, she has added items to her cart in order to score free shipping.
“Crocs.com typically offers free shipping with any purchase over $24.99, or else you have to pay shipping of $4.99,” Morgan said. “I remember a time when I had a pair of shoes in my cart for around $20, so instead of paying for the shipping charge, I added some socks to my cart to get my total above that $24.99 mark.”
Although Morgan has done this because she gets an item basically for free instead of spending the money on shipping, she warned that before making purchases, shoppers should read all the fine print about their options so they make the right decisions instead of just adding on items so that they can get the free delivery.
“I think most shoppers nowadays are pretty savvy and are aware of the delivery tricks,” Morgan said. “However, I would caution everyone to take the extra time to read the fine print before making an online purchase to ensure that you do understand the delivery time, delivery charges and return policy.”
Source: MCT Information Services