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Study: Web Buyers Like Free Shipping

7 Nov, 2002 By: Joan Villa

A new study reveals that etailers such as Amazon.com and Buy.com who have eliminated shipping and handling charges are on the right track with consumers during this holiday season.

In a recent Jupiter Media Metrix consumer survey, shoppers said discounts for shipping and handling were more likely to entice them to buy online than any other promotion. However, retailers will be challenged to satisfy those shipping-conscious consumers this holiday, since a late Thanksgiving means there are fewer shopping days before Christmas, according to senior analyst Ken Cassar of Jupiter Media Metrix.

“Given a choice, [online shoppers] would prefer to wait longer for their orders to arrive than increase the size of their orders or pick them up at a local store,” Cassar said. However, “shipping and handling are very real costs that must be absorbed by retailers if not by consumers.”

To get free shipping, the majority of online shoppers -- 53 percent -- said they'd wait longer for their order, while only 18 percent said they'd prefer to pick up their purchase in a local store. Just 6 percent said they'd rather spend more, or bump up their orders, to qualify for a free shipping offer.

This holiday will be particularly challenging, Cassar concluded, because etailers may have to cut into margins to accommodate shoppers who insist on free shipping in a selling season between Thanksgiving and Christmas that is six days shorter than last year.

“If you look at retailers in the books, music, video category, they could consider consumer flexibility and ship via media mail, which takes longer but is substantially cheaper. But with the condensed holiday selling season, retailers may not have the flexibility to do that,” he explained. “They may be forced to forego shipping-and-handling offers or pick up the incremental cost themselves.”

Nonetheless, Jupiter is forecasting a 17 percent growth in online sales for November and December, which surpasses the much smaller year-over-year increases expected this holiday in brick-and-mortar outlets, “but pales in comparison to the 29 percent growth we saw last year,” Cassar said.

Experienced Web users who have not previously shopped online will comprise most of the season's sales growth, he predicted, followed by a much smaller increase from new Web users.

“Last year, we think 31 percent of online users bought online, and this year we think that number will be closer to 39 percent,” he explained.

However, shipping charges will still be a hot issue even for experienced shoppers, Cassar said. After analyzing 10 years of behavioral data, he concluded that a strong dislike of shipping charges is not a function of being new to the Web.

“The longer someone's been shopping online, it's more likely the shipping and handling charges are a source of frustration,” he noted. “That leads me to believe that consumers' reluctance to pay shipping and handling will only grow over time.”

In the survey of 2,874 online shoppers conducted in September, 60 percent of respondents said they would purchase $25 worth of books in order to get free shipping, but only 32 percent agreed to boost orders to $50. Only 18 percent would buy $75 and 14 percent would jump to $100 in exchange for free shipping.

On the other hand, 86 percent of consumers said they would wait for their order five days to get free shipping, sliding to 76 percent for 10 days, 62 percent for 15 days and 41 percent for 20 days.

“While consumers value the immediacy that buying in a brick-and-mortar store offers … once they have accepted that they will not be able to walk away with the item immediately after purchasing it, they become quite forgiving,” Cassar wrote in the report.

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