Free Shipping Delivers Online Customers
E-tailers will find they have to give something away to keep customers and research suggests dropping the shipping charges.
Online retailers that are already hoping for another big holiday season may want to heed these two words, “free shipping.” Jupiter Research (a unit of this site’s corporate parent) found that 89 percent of the respondents to its annual Retail Consumer Survey Report indicated that free delivery and handling was the promotion most likely to encourage their online purchases.
Moreover, the research found that 51 percent of online buyers opted for retail store purchases just to escape shipping and handling charges, and 49 percent reduced their purchases at certain online stores because of unexpectedly high or hidden shipping charges. Jupiter suggests that e-tailers should capitalize on consumers’ willingness to delay immediate gratification by offering free shipping promotions or other reasonable incentives.
The 2003 study categorized online shoppers based on how much they spent online in the past 12 months, and their responses to how strongly they agree with the statement, “I always buy from online stores that have been good to me in the past, even when offered discounts from competing online stores.”
The results on spending were almost evenly split at the $250 mark – 48 percent of the 1,952 respondents spent less and 52 percent spent more.
Further analysis helped segment the respondents into the following consumer groups: 11 percent were low spending, low retainable “Zippos;” 15 percent were low spending “Plodders” with average retainability; 22 percent were “Potentials” – low spending, high retainability; 9 percent were high spending, low retainable “Dealers;” 14 percent were high spending “Midways” with average retainability; and “Re$pectfuls” represented the largest category at 29 percent, and they were high spending with high retainability.
“Certain buyers exhibit positive ‘retainability’ traits,” said Jupiter Research senior analyst Robert Leathern. “Retailers who can find these customer segments and offer these customers good (even if not necessarily the best) prices, an easy-to-use Web site experience and great customer service will have the opportunity to profitably retain them,” he continued.
Interestingly, while “Zippos” don’t represent significant online revenue, they utilize several cross-channel information tools and other non-purchasing functionality at online retail sites – at levels exceeding some higher-spending or more retainable groups. More than half (56 percent) search for an offline location; 40 percent download a store coupon; 37 percent contact customer service; 35 percent sign up for e-newsletters; 29 percent read articles; 9 percent apply for a store credit card; and 7 percent register for a loyalty program online.
Despite being highly proactive and comfortable online, Leathern doesn’t target Zippos as an especially convertible group because they are price-focused and deal-driven. “It might be that they only look to the Internet for deep discounts but may well purchase high-margin products in offline channels,” notes Leathern. He adds that their research behavior means they are potentially valuable to multi-channel companies.
The annual report also found that the most popular online shopping categories are books (39 percent made purchased within the past 12 months); CDs, tapes and albums (36 percent); and apparel (34 percent). Also, one-third of survey respondents reportedly made impulse purchases to take advantage of a promotion.
