This is the second post in a four-part series on why your cart abandonment rate is so high happens and how to combat it:
- Cart Abandonment & The 3 Reasons It Happens
- How (Free) Shipping Affects Your Cart Abandonment Rate (You are here)
- Reduce Shopping Cart Abandonment for New Visitors
- Shopping Cart Abandonment From Comparison Shoppers
A High Cart Abandonment Rate Is Largely Due To Unexpected Shipping Costs
Think about it.
It’s pretty obvious why this is the most problematic.
Tricking your customer into adding stuff to their cart only to blindside them with taxes, fees and charges at checkout is not a good way of generating sales.
Every set of eyeballs that hits your site costs money so you’re drawing people into your site, only to lose them at checkout if you don’t grease the wheels as much as possible.
Your conversion rate falls and your customers acquisitions costs rise.
How to fix it?
Simple! Be up-front with your fees and charges. Include them in the price if you can. More importantly…
Offer free shipping.
Don’t believe me?
Why You Should Offer Free Shipping
ComScore conducted a study in 2011 that showed 61% of customers were at least ‘somewhat likely’ to abandon their carts if free shipping was not offered:
comScore also ran a study in 2011 that found 36% of online shoppers won’t make a purchase unless free shipping is offered. A further 42% stated it was ‘somewhat important’ to them, and that they actively sought out free shipping.
Moreover, they also carried out a study of ‘Free Shipping Day’ over 2011 and 2012. Monday, December 17 of 2012 saw $1.01 billion spent online in the USA, a 76% growth over the same day the year before but on par with Free Shipping Day in 2011 which fell on December 15.
In short? Free shipping means more sales.
Still not convinced?
Sheplers, who provide high-quality ‘cowboy’ gear, trialled free shipping in states that didn’t convert as well as others. This case study outlines some of the details but from a fairly high level. Basically, they tested out a range of reduced or free-shipping offers based on timing, distance from warehouse, distance from competing stores etc.
After just 4 days, they were able to report a 57% increase to the top line. 57%!
Ok, they’ve got to deduct shipping costs from that but in this case they saw a 20% increase to net revenues and a 48% increase of new customer conversion.
Now, free shipping might not work for every single e-commerce store out there, another comScore survey reported nearly 33% of online merchants didn’t see an increase in profits.
The point is you absolutely HAVE to test this! That same study found an increase in profits for 46% of online merchants.
10 Ways To Offer Free Shipping
If you’re STILL worried about how it might negatively affect your bottom line, think about the different ways you can offer it to your customers:
- Free shipping for everyone e.g. Zappos
- Free shipping for premium members e.g. Amazon Prime
- Free shipping for loyalty program members e.g. free shipping for the most loyal repeat customers
- Free shipping for a minimum purchase value (encourages larger orders and reduces risk for you) – see note below about the UPS study
- Free shipping for certain items e.g. higher-margin items
- Free shipping at certain times of the year e.g. Mother’s Day, Valentine’s Day, Cyber Monday
- Free shipping on special days e.g. ‘slow’ days for total volume
- Free shipping to local collection points
- Free shipping on return items – this is a big way of mitigating buyer risk for clothes and shoes for example
- Free shipping to areas that don’t convert as well e.g. Sheplers
Two other options you can try include:
- Baking it into your prices (not technically free, but avoids hidden fees at checkout)
- Flat-rate shipping (be careful with this as it might cost you on larger orders or reduce conversion on smaller orders)
Free shipping with a minimum purchase is a particularly interesting and easy bonus to introduce on your store. Particularly as UPS ran a study with Harris Interactive that showed 39% of customers would spend more to hit a free shipping threshold.
Have I mentioned Zappos yet?
Tony Hsieh makes no secret that they spend all of their marketing budget on amazing customer service and…free shipping.
If you’ve got the customer as far as checkout, make sure they complete!
Be upfront with your fees and offer free shipping if at all possible.
Bonus Point: Don’t overlook international visitors who might struggle to find your products in their home country. Stating clearly that you ship internationally, charging a user in their native currency, even telling them how to pay in their native currency using Paypal, and offering a fair (or even better FREE) international shipping policy could drastically increase your revenue.
Hey, It’s not just American who are spending online!
In my next post, I’ll tackle the next biggest problem: users who aren’t ready to buy from you.
If you run an e-commerce store, I’d love to know your thoughts on free shipping. Just leave me a comment below.