Why free shipping could boost your sales…
When you shop for a product online, how do you choose what to buy? What influences your decision? Is it where it’s made? How it’s made? Who made it and why? While all these elements can come into play, particularly when buying from independent makers, recent research is pointing to free delivery as the determining factor for online shoppers.
If you’re running your own small-scale craft business that might not sound relevant, after all you’re not trying to compete with Amazon (or their tiny margins!). But it really is. The psychology behind the findings applies to all shoppers – and you can apply the lessons the larger retailers have learned to your own shop.
So what do you need to know about free delivery and why it matters?
Most customers now expect free shipping
Earlier this year Royal Mail published its Delivery Matters 2015 survey. They questioned 1,500 shoppers who had purchased items online in the last three months and found that half of online shoppers always expect free delivery. They also found that 4 out of 10 shoppers would go elsewhere if they were charged for postage.
Free delivery has become an increasingly common sight across retailers online, to a point where Andrew Brittain says “consumers are beginning to expect free shipping as a right”. Research published on Econsultancy backs this up – it showed that 83% of shoppers were more likely to use a site that offered free shipping.
A fascinating split test Andrew Brittain mentions backs up these findings. In the test, Product A was offered for sale online for a price of £10, with a £3 delivery charge. Product B was exactly the same but priced at £14 with free delivery (ie £1 more expensive, in total). When the results of the test came in, they showed that Product B had a higher conversion rate.
What you need to know: a product with free delivery sells better – even if it is more expensive!
People feel they are wasting their money on postage
One of the reasons people look for free shipping is that they resent paying for something they perceive as having no value – there is no tangible product so it doesn’t feel like they are getting anything for their money. As Jocelyn Kirby explains: “There is a level of psychology behind the free shipping offering that triggers the ‘bargain-hunter’ in all of us… There’s something about the shipping fee that makes buyers feel like they are wasting their money. After all, what do they get for their £3, £4 or £5?”
Andrew Brittain agrees: “The love of free shipping on e-commerce sites isn’t necessarily a logical one – when you consider the costs involved in driving and parking to buy the same product in a shop, a delivery cost of a few pounds is probably not much different, but the barrier is a psychological one more than a financial one.”
What you need to know: by making postage free, you remove a psychological barrier to the sale.
The single biggest reason shoppers abandon their carts is delivery charges
Retailers often talk about shopping cart abandonment rates. This is the rate at which shoppers drop out after adding something to their online shopping basket. Average shopping cart abandonment rates are currently around 68% (in the sector as a whole, not specifically on Folksy). That means that although someone might add a product to their basket, 2 out of 3 people don’t go through with their order.
Of the 1,500 people surveyed by Royal Mail, 44% said they had abandoned an order because they weren’t happy with the delivery charges. This was the single-biggest reason given for abandoning an order.
What you need to know: when people change their mind about buying an item, it’s most likely to be because they feel postage costs are too high.
Free shipping is less important on high-value or urgent orders
A UPS report found that the importance of free postage “declines dramatically” on high-value items or when the buyer needs the item urgently – for example, a last-minute present. In these cases, how quickly you can deliver an item – and whether it can be tracked – has a significant impact on whether or not a shopper goes through with their order.
In the Royal Mail survey, 77% of online shoppers said tracking would make them feel more confident about online shopping, and 64% said it was important to have clear delivery information before they placed an order.
What you need to know: offering tracked express delivery on higher value items or as an added option (particularly at busy times of the year like Christmas) can help customers feel more confident about ordering
Put the lessons into practice
How can you apply these lessons in your Folksy shop?
1. Work out if you can afford to offer free delivery (at least within the UK) on your items. Take into account your postage and packaging costs.
2. If free shipping doesn’t leave you with a big enough profit margin, consider increasing the cost of your product to incorporate postage and packaging costs.
3. If you are worried this makes your product too expensive, can you increase the price slightly to cover some of the postage and packing costs? (So in reality you split the cost of free postage with the buyer.)
4. Even if it’s not possible on all your items, can you offer free delivery on additional purchases in your shop, to encourage shoppers to buy more than one item. (See this post for more details on how to set your additional postage costs.)
5. If free shipping is not viable at all, make your delivery information crystal clear in your product description. Emphasise how you are sending an item, and how quickly it will be despatched.
6. Offer 24-hour delivery or Express Tracked delivery as a paid-for extra, especially at busy times of the year.
7. Test these options in your shop to see if they have a significant effect on your sales. Remember to highlight your free delivery offers in your listings – you can even tag an item ‘free delivery’ or ‘free shipping’ to help it show up in search results.