Customers like free shipping promotions more than product discounts

[mandy]

Ms. Evans of Jupiter Research said that customers like free shipping promotions more than product discounts that save them considerably more money. “We don’t do a lot of the math,” Ms. Evans said of consumers. “Most people don’t really want to take the time.”

Overstock.com has found other, somewhat puzzling, behavior among its customers. The company has for years offered $2.95 shipping fees on all sales. But according to Patrick Byrne, Overstock’s chief executive, the site will occasionally drop the fee to $1, “and suddenly people start ordering $400 bookcases and beds,” he said. “The average order size goes up unbelievably.”...

As for why consumers generally respond to shipping promotions more avidly than discounts, Mr. Byrne said it was not necessarily an irrational behavior.

“In a world of complicated shipping offers, there’s a cost to figuring out what the actual shipping fee is,” he said. “It might be rational to only consider a flat fee or free shipping.”...

full article: http://www.nytimes.com/2007/10/08/techno....html?_r=1&ex=1349582400&en=44f2500ce9254abf&ei=5088&partner=rssnyt&emc=rss&oref=slogin