Back in 1998, when we set up India’s first ecommerce service at rediff.com, there were two weak links in the process – payment and shipping. Payment was one, because at that time, very few Indians had credit (or debit) cards, and fewer used them. The second was fulfillment in a country lacking a strong delivery infrastructure.
Fast forward 15 years to 2013, and shipping is still an issue for online shopping worldwide, though for different reasons. As online shopping has evolved, the issue is less about reliability and more about shipping options, costs and how shipping costs are presented to users. A recent Econsultancy study (http://econsultancy.com/us/reports/e-commerce-best-practice-compendium) found that three in four online shoppers would abandon a purchase because of high delivery charges, and almost as many because of hidden charges. Another report by Forrester (http://www.forrester.com/home#/Understanding+Shopping+Cart+Abandonment) also found that, in addition to high shipping costs, users abandoned shopping carts because they felt that shipping prices were calculated too late in the checkout process.
What can a retailer do to lessen the impact of shipping on online shopping cart abandonment? While free shipping may seem like the obvious answer, most retailers cannot just absorb shipping costs to offer free shipping. Retailers have come up with a variety of shipping offers to make shipping more palatable for their customers:
- Free shipping – no strings attached: Customers tend to buy more, and more often when there are no shipping costs, but free shipping is the exception rather than the norm. Retailers like L.L Bean offer free shipping without any minimums to increase business (http://bucks.blogs.nytimes.com/2011/03/30/will-other-retailers-adopt-l-l-beans-free-shipping/)
- Free shipping as a loyalty benefit: Target offers their REDcard customers free shipping on their site, while Staples offers all their loyalty program members free shipping.
- Free shipping with a minimum purchase: Amazon’s threshold for free ground shipping is $25, while orders below that have variable shipping costs.
- Flat-fee shipping: Any order below $99 at Macy’s ships for $9.95, no matter how small or large
- Order total based shipping: SierraTradingPost’s shipping rates are based on order totals
- Shipping membership programs: Customers pay an annual fee to become members of programs like Amazon Prime and Shoprunner to receive free expedited shipping year long online.
- Promotional free shipping: Retailers offer time-limited promotions offering free shipping. For the past five years, hundreds of retailers across the US participate in a one-day free shipping promotion in December, with promised delivery by Christmas Eve.
No matter the shipping strategy, retailers still need to meet customer expectations related to how shipping options and costs are presented online. Here are seven tactics retailers can use to reduce the impact of shipping on shopping cart abandonment and get the last mile right:
- Make it easy for customers to find shipping costs and policies. In conducting usability tests on retail sites, users express frustration when they have to search for shipping costs and information. One negative example is Shutterfly, where shipping information is buried three or more clicks within the help section. To avoid annoying users, prominently display shipping offers as shown in the L.L. Bean example below, so users are mentally prepped as they start their online shopping session.
- Present shipping costs early. Display standard shipping costs alongside the product price or first shopping cart page, along with any offers (“free shipping over $25”). Ebay offers a shipping calculator to help customers find out how much that 99-cent item will end up costing, before they bid on it. For retailers offering free shipping with a minimum spend, displaying shipping costs early can also lead to customers automatically buying additional items to cross the threshold.
- Be transparent about any other fees. Some retailers tag on a handling fee, service charge, or convenience fee in addition to the shipping costs. Customers feel cheated if these are piled on without a clear explanation upfront as to why those fees are being charged. One way around it is to bundle those fees with the shipping costs, so the customer only has to deal with a single line item. But if that is not an option, offer customers an explanation or a link to get additional information. In the negative example below, Fandango shows the convenience fee, but no information about why that fee is being charged. When confronted with such charges, customers are prone to stop and find out why that fee is being charged, or if the fee is high, look for an alternative.
- Offer enhanced shipping options. Address customers’ need for immediacy with same-day or next day shipping options. This can sometimes be a deciding factor, especially when it is a ticket out of the doghouse for a last minute gift for an anniversary or a birthday (as I can personally attest as a road-warrior)!
- Display estimated delivery timeframe. Showing an estimated delivery date in the shopping cart helps build customer confidence and allows them to select an expedited shipping option if necessary. Shipping with online tracking gives customers the comfort of knowing where their order is and when they can expect to receive it. These become even more important for customers dealing with smaller or lesser know retailers.
Reduce barriers to buying online with free returns. This is a differentiator and confidence builder when dealing with products that customers are used to seeing, feeling, touching, and trying out before buying. In these categories (like shoes, apparel or jewelry), close-up pictures and videos are no substitute to trying it on for fit or comfort, and allowing customers to return without a penalty increase their comfort level with buying it online. Take it from someone who’s bought kid’s shoes from Zappo’s instead of other online stores, since I can always return ill-fitting pairs for free.
- Multi-channel shipping and returns. Multi-channel retailers should offer customers the option to buy online with in-store pickup or ship-to-store, for quicker pickup or no-cost shipping. Giving customers the option to return by mail or in-store also gives customers control over how they would like to return unwanted items without any penalty. My favorite example is getting in on a special on a tree trimmer online before boarding a flight from a client site. I picked it up on my way home a few hours later, when the special had sold out in-store, and could trim the trees before the guests visited!
Shipping is a weak link in the online shopping process, but these tactics can help retailers reduce shipping’s impact on shopping cart abandonment. The first five options are easy enough for any online retailer – big or small – to do, whilst the last two are usually possible for bigger retailers. However, all these tactics will go a long way towards improving the customer experience and getting customers to click the “Place Order” button.