The Impact of Shipping Methods and Policies on Conversions

Shipping methods and policies can have significant, measurable effects on ecommerce conversions. Design and site architecture tend to get more attention. But if you only change one thing about your ecommerce business, shipping could be the game changer.

Here are the top methods to drive conversions with the right shipping methods.

Free Shipping

Free shipping is one of the most effective ways to bump conversions. People really like free shipping, and it’s increasingly regarded as normal to offer it as stores get wise to how effective it is.

Free shipping sits at the point where our love of free things intersects with our dislike of additional charges. Psychologically, if we’re not expecting to pay for shipping (as online shoppers increasingly aren’t), we’ll experience shipping fees as a loss, and we all know how loss-averse customers are. If we’re offered free shipping, we’ll experience it as added value.

Free shipping eliminates one of the biggest hurdles in the ecommerce payment process. Asking people to pay is the hardest part of sales: without free shipping, you get customers over that hurdle – then immediately ask them to pay again. And you lose up to half of them doing it!

How to Implement Free Shipping

Time limit: Free shipping time limits are really effective. Offer a countdown to buy and qualify for free shipping: urgency is a powerful tool to trigger conversions by overcoming buyer procrastination.

Purchase cutoff: More than three quarters of shoppers have added items to their cart to qualify for free shipping. Lots of stores use a free shipping cutoff: Amazon offers free delivery on orders over $35 or small items, while JCrew uses intermittent free shipping on orders over a certain amount as a limited-time, urgency-triggering promo:

How to Implement Free Shipping
Free all the time: Bundling free shipping with everything all the time can be expensive, but it’s what customers say they want: most would prefer free shipping to a discount that’s actually worth more. There are ways to spread the hit, essentially by building shipping costs into product pricing. If there’s no way for you to do this try offering a flat shipping rate, or selectively bundling shipping costs with your least price-sensitive products while leaving the others unaffected. And remember free shipping drives conversions, so it should pay for itself in increased sales revenue

Shipping Time

Customers are extremely sensitive to shipping time, even when shipping is free. Shorter shipping times are perceived as a good, below a calendar week which is seen by most customers as a baseline.

Shipping time is perceived by customers as waiting, and as humans we are seriously averse to waiting. So offering shorter shipping times as a premium good has been done ever since there were two classes of postage stamp. E-tailers can leverage this to drive conversions.

  • 63% of consumers say it’s important that e-tailers provide estimated delivery times – the earlier the better in the checkout process.
  • 67% of shoppers want to be offered an expedited shipping service for an additional fee, but only about 16% of them will use it; 78% will use the standard shipping model.
  • 43% of shoppers have abandoned carts because of excessive delivery time.
  • 50% of online shoppers think tracking services ‘essential’ – and 71% prefer email notifications.

Shipping time intersects with free shipping: people will willingly wait longer for free shipping, but some will willingly pay extra for faster shipping. And even when they don’t plan to use it, customers want to be offered expedited shipping. They also massively prefer tracked shipping with notifications.

How to Leverage Shipping Time

Options: Customers like to be given choices. ASOS do this very well:

How to Leverage Shipping Time
Detail is important, and so is clearly stated value. ASOS win at this by showing exactly what each shipping option means to the customer, with crucial information bolded, and everything laid out simply.

Urgency: How can you make shipping times more urgent? By making them more concrete. Amazon does this well. Making the delivery date specific – ‘want it Monday, August 31?’ makes two-day delivery immediate, stating the benefit rather than the feature. Adding a countdown timer to qualify for two-day shipping drives urgency further.

Urgent shipping timesClarity: Customers prefer being told shipping options in detail, as early as possible and very clearly. Finding out they’ll have to wait ten days or more for their item could trigger abandonment! Popular methods of providing clarity are:

  • Flat rate shipping. Charging one flat rate for all shipping reduces friction and can be bundled with product prices the same way as free shipping, while letting you use free and expedited shipping as two contrasted ways of delivering additional shipping value.
  • Real time carrier times and rates. Link customers directly into carriers’ own offerings, generating trust and giving customers as much control as possible.

Tracking: Customers like tracking. Waiting for something indeterminate feels longer than waiting for something definite, so to provide a better customer experience offer detailed tracking, preferably via email. If you want to move to one of the high-accuracy granular tracking services now available that allow customers to track the van their product is in and offer half-hour delivery windows, be aware that the wrinkles haven’t been ironed out yet: early-adopt at your peril, but we’ll all be using those services soon.

Carrier

Choosing the right carrier can make a world of difference to your shipping. People often strongly identify certain carriers with reliability and will perceive your association with that carrier as a reflection of your own trustworthiness. Knowing exactly who will be handling their packages gives customers an extra layer of control too.

Leverage carrier choice

Carriers differ markedly in the way they approach their provisions.

What do the options look like?

USPS: Use set pricing for all their services, so what you see is what you get. A good choice if your products are mostly small – it’s far and away the cheapest option for items under 13 ounces in the USA. See their business shipping kit request form here. Customers can track their order on the USPS website. However, USPS has a bad reputation for reliability with consumers – the ‘lazy USPS guy’ who leaves the ‘you were out when we called’ note without even knocking is not a myth, sadly, and many packages used to arrive in pretty poor shape too. The company has made big improvements over the last four years but will your customers believe that?

FedEx: Their expedited 2-day service can be pricey but ground shipping rates compare well with USPS on larger items. You can qualify for online discounts simply by setting up an account. FedEx apply a range of surcharges depending on location, fuel costs and other factors, including residential delivery and Saturday delivery. That means it’s harder to offer flat-rate shipping, and you can wind up paying far more than the basic price to get your products to your customers on time. If you ship high volumes daily this is less of a problem. To find out more, visit FedEx Small Business Center.

DHL: Also use a surcharge system. Customers can track their order on the company website. One of the most innovative carriers – it’s working on an app to deliver to parked cars! – has a strong international presence so if you deliver to Europe and China, German-based DHL are definitely worth a look.

UPS: The biggest carrier in ecommerce. Very good ground shipping rates for packages around the 2lb mark help explain that – free shipping on midsize items is easier to arrange on those terms. They use a surcharge system just like everyone except USPS and there’s no free package pickup service. The other key to their success is that they take delivery reliability extremely seriously and seldom deliver inaccurately or late. To get a good result from UPS it’s essential to ‘build’ your own rates via the company’s Account Manager based on your delivery volume. To find out more, check out UPS Small Business Solutions.

Strategies:

  • Offer customers real-time carrier rates to demonstrate transparency and empower the consumer. The downside? Too many options cause ‘paralysis by analysis’ and consumers click away, abandoning the cart!
  • Select one carrier and get the best out of that carrier, building their pricing into yours ‘invisibly’ and offering free shipping for most products.
  • Use an app like ShipRobot, ShipStation or Shippo to handle shipping for you.

Returns

ReturnsReturns are important for online shoppers who can’t touch the products they’re buying. For those who worry their product might be delivered damaged or inaccurately, or who feel less secure because they’re not dealing directly with an individual person, it’s an additional layer of security.

  • 82% of ecommerce customers want to know returns will be easy.
  • Free returns can result in a 357% increase in consumer spending.
  • 20% of all items bought online are returned – and in 65% or more cases it’s the merchant or carrier’s fault, not the customer’s.
  • 41% of shoppers will make an impulse purchase if free returns are offered.
  • 48% of returned purchases are returned free.
  • 92% of online shoppers will shop again at a store with an easy returns policy.

Returns are clearly important to consumers. Why? They’re buying products they can’t touch and they have to rely on your measurements, your pictures and your product descriptions to know what they’re paying for. That creates insecurity – and people don’t want to buy from a store that ‘will let them fail,’ in the words of Dr Amanda Bower, professor of business administration and marketing at Washington and Lee University.

Speaking to NBC News, Dr Bower explains: ‘Consumers are not weighing fair versus unfair. They’re thinking, “It costs me $7 to get it here, $7 to get it back to you, I’ve just paid $14 for the privilege of finding out your stuff doesn’t work for me. And I don’t want to do that again.”’

How to leverage returns

The most effective returns policy is also the simplest: offer free, any-reason returns within 28 days. Opting for free returns, as we’ve seen, shoots consumer spending through the roof. Gains far outweigh expenses. There’s a psychological factor too: before the customer buys, the idea of committing to purchase is psychologically daunting.

The Takeaway

Free shipping and free returns are the best investments you can make in shipping for conversions. Keep all the information about shipping – time, carrier, tracking, price – clear at every step to increase conversions.

Make that purchase commitment-free, by offering free returns, and the customer is more likely to buy. But once they have the product, will they return it? “Probably not,” says Shopify’s Mark MacDonald, “they’re already committed.”

Image Source: (1, 2, 3, 4)

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2 thoughts on “The Impact of Shipping Methods and Policies on Conversions

  1. Great article, I’m working on some ecommerce sites at the moment and will be taking a look at implementing some sound advice found on this page.

    • Hi Robert. Many thanks for the feedback, we’re glad to hear you found our article on shipping methods and policies useful. To find out when we publish new articles for our ecommerce blog, just click the ‘follow blog’ button on the sidebar. We hope to see you back again soon.

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