From Wall Street Journal--
Online Shopping’s Hot Product: Free Shipping
That’s a main finding of United Parcel Service Inc.UPS -1.58%’s 2014 “Pulse of the Online Shopper” survey conducted by comScore. A whopping 93% of shoppers have taken some type of action while shopping online in order to qualify for free shipping. Those actions range from adding more items to a cart (58%) to choosing the slowest transit time (50%) to searching for a promo code (47%).
More than 80% of customers are willing to wait an extra two days in return for free shipping, the survey shows. A third will wait more than five extra days.
“I think the key thing that we see is that the cost of delivery still trumps the timing of the delivery. As long as it’s cheap and hopefully free, people are willing to wait for those deliveries,” says Bala Ganesh, UPS’s retail director.
The cost of shipping is also a major factor in whether the customer completes their purchase. Fifty-eight percent of customers have abandoned their shopping carts because shipping costs were more than expected, and half have done so because they didn’t qualify for free shipping.
Delivery company executives and analysts typically dismiss the notion that e-commerce will generate demand for same-day and overnight shipping, and the new survey adds fuel to their fire. While same-day delivery does provide instant gratification, most customers just aren’t willing to pay the price. And same-day delivery is usually significantly more expensive – especially outside the biggest cities – a cost that most retailers are unlikely to eat. Still, tech companies like Uber, Google and Amazon are all experimenting with their own versions of extra-fast delivery services.
UPS’s annual U.S. online shopper study, which surveyed 5,800 people who make at least two online purchases in a typical three-month period, asks about new topics every year. But one question it repeats is whether shoppers have returned an item. While 51% said they had in 2012, that number jumped to 62% in 2014. And nearly 70% say that free returns are key to a positive return experience.
“Mobile tech has a ways to go before it can meet all the requirements of the savvy shopper,” Mr. Ganesh adds. “They haven’t optimized the mobile experience yet.”
And 41% say they still like to make the actual purchase in store, compared with 44% at a desktop or laptop, the survey found. “It just goes to show that the store isn’t going away, and it’s still a big piece of the puzzle,” Mr. Ganesh says.
Bringing the draw of free shipping full circle, more than a third of customers had also chosen to ship their items to store in order to avoid paying for shipping. This is doubly beneficial, because bringing a customer into the store results in the likelihood they may pick up a few additional items, Mr. Ganesh says.
While customer satisfaction in the online shopping experience has stayed roughly the same, the bar keeps getting higher for expectations. Factors including the ease of returns, live chat capabilities and personalization in the checkout process all now count.
“It’s getting more competitive,” he says.