Understanding the psychology of free online shipping

[mandy]

The phrase "free shipping" is like a siren song to many who shop on the Internet.

For whatever reason, a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10, says Wharton marketing professor David Bell. Bell noticed this phenomenon a few years ago while doing research for an online grocery store, and the observation prompted him to look more closely at the ways Internet retailers use shipping charges--or the lack thereof--as a promotional tool.

The result is a model that can help managers set shipping fees in ways that both appeal to customers and drive them to buy in quantities that can be efficiently processed...

full article: http://news.com.com/2030-1069_3-6063440.html?part=rss&tag=6063440&subj=news

[mandy]

A related article:

When it comes to online purchases, no two words are more likely to require a calculator than "free shipping."

As with music and frequent flyer miles, consumers like their shipping free. But when they do the math, they realize that free shipping is often an oxymoron. Somebody has to pay for all of those Styrofoam peanuts.

According to a recent survey by online retailer trade group Shop.org, 75 percent of online shoppers said that free shipping was important to their decision-making process. At the same time, many online retailers have upped the ante on free shipping by requiring higher price thresholds and other conditions...

full article: http://www.theunion.com/article/20061223/NEWS/112230158

[thentavius]

I have a feeling many shoppers loose money when they add "just a little more," in order to meet the requirement.

For example, a site which offers free shipping on a $50 cart may be tempting enough to someone who was originally only going to buy $30 worth of products, to add the difference in order to qualify.

When I shop, I keep track of which sites always offer free shipping at certain amounts (or who have specials). I then save up and buy everything I need from that place all at once, in order to truly benefit from the free shipping. For example, Dick Blick.com (art supplies) offers free shipping on $200 or more. I wait until I need $200 worth of art materials, then the free shipping is an added perk.

Planning a purchase can take advantage of free shipping offers. Spontaneous item-adding to meet a free shipping minimum is akin to the impulse aisle near a grocery store checkout. You're faced with additional items at the end, and you grab some even if you're on a budget.

When it comes to sites where the shipping is always free, the consumer is likely paying the difference via the cost of the items. Shipping isn't really free in the end--but it's handy marketing.

Some places also offer a version of free shipping, along with paid shipping. DeepDiscountDvd is a good example. Anything can be shipped for free. If you need the item faster than, say, a month, you'd better pay for shipping.

As a buyer, I DO pay attention (and use) free shipping offers. As a seller, in the past I've run temporary sales on shipping to boost orders (it usually works). On the new site, we're offering free shipping on orders of $100 or more. The site hasn't been open or functional long enough to know if it's going to help sales yet. We'll see.