Shipping charges effect on customers buying

[janeread]

This is not a technical question, but a more general question about how various shipping strategies affect what customers do:

e.g.

If you have free shipping, do the extra orders outweigh the cost?

If you have free shipping over a certain amount, do people really buy more?

If you have a set charge per order, but sell things of varying weight, does that work out well for you?

Has anyone tried having a set charge per order and varying what that is? Is there a resistance to buy if the charge is over a certain amount?

Lots of questions! Hope I get lots of answers about other people's experiences.

Jane

[george]

http://community.actinic.com/showthread.php?t=15771

[TraceyHand]

I read that whole thread early last week when I started my whole "shipping charges" re-assessment (that was your fault too, G)
LOL

There are a lot of useful opinions on that thread actually.

[leehack]

I'm a regular surfer and online buyer as well as being a designer and i would have to say that my firm belief at the moment is that free shipping is a massive plus to any site. If any business can offer this without screwing themselves into the ground, i think it should be done - period.

A happy medium is to also provide free shipping after they spend a certain amount, which is second on the ladder for me. A simple way of looking at this is - Do an analysis and find out what your average order is, add £15 to this amount and make this the free shipping level.

I believe in general that the majority of people would rather pay £13 for something, than £10 + £3 shipping. Comparing shipping costs and therefore abandoned carts are things i like to stop as much as possible. Advertise in your header that there is free shipping on your site and an area which causes lots of abandonments is quashed immediately and there is little confusion.

Some sites cannot do this of course and it is relative to the marketplace you are in, but for me free shipping is the 'buzz' thing to do and should be done if there is an opportunity to do so.

[RuralWeb]

I built a site a while ago and the client set thier prices for the product and shipping - the site had lots of traffic but very few sales. He asked me why this was and when I explained how a shopper looks at a site and compared his with his comptitors he kicked himself when he realised that although his product prices were below his competitors when you added the p+p he was more expensive.

He raised his product prices and did free postage and his sales immediately took off.

[Miranda Stamp]

I'm convinced free shipping does make a huge difference - even the breakeven point on shipping prices - lady the other day rang to say she wanted 10 of an item but 9 would get her the cheaper rate so could she have 10 at the cheaper postage.

[leehack]

Free Shipping - III
Charge for Shipping - nil

Rol up roll up.

Only point to note on increased prices is product feeds into Google base and alike, still the lesser of 2 evils though IMO. I guess the point to note is that whatever you think is right or wrong, pay a lot of attention to your marketplace, Mal's example is a prime illustration of this.

[Miranda Stamp]

Forgot to mention, I have a first order free postage offer (to encourage them to buy first time for those first few samples, then they come back for the bigger order later) and also on the postage drop down, as there are plenty of active nappy forums where things like free postage matter 'in discussion' - free postage to forum/list members - meaningless as they don't actually have to subscribe to anything but it keeps 'the few' happy. We also have a few customers always tick the first order box every time, and I just think well it keeps them happy and the repeat orders tend to be one-off nappies or wraps not too expensive on postage either.

BTW Lee when is the baby due? We have free postage for first orders - and washable nappies will save you lots more ££

[TraceyHand]

I used to offer free shipping.
When I first started up nearly 7 years ago there was little or no competition for secondhand maternity wear and I could afford to "fund" the free shipping by having higher prices.

As time has gone on, more and more competition has started up online and many more of the high street stores now offer affordable maternity lines, meaning that my prices have had to actually decrease in some areas..which is why I had to start charging for shipping.

I review my competitor situation regularly to check prices and shipping. Luckily for me, all (bar one) charge shipping so I compete on product price instead.
It's a fine line, I suppose but if I mark up my prices to cover the shipping, I run the risk of pricing some items almost at "new" price and people won't buy because that's what they'll see...

In the large supermarket chains (Tesco/Asda etc) you can sometimes get a standard pair of maternity jeans for £10.

Those brands I generally have them on site, in "as new" condition, for around £7 (I have to check the online stores of places like Asda, Dorothy Perkins etc regularly too to ensure I don't price some items higher than them!) plus £2 shipping (jeans cost me just over £2 to ship first class)..and people seem happy to pay that.

However, if I had them listed on site for £9, even with free shipping, I'm sure that customers would decide they could just go and buy new for that.

It's a tough one.. I go through a "shipping crisis" about once every 6 months..who knows, next time I might go back to free shipping again to get "one up" on everyone else!!

[TraceyHand]

BTW Lee when is the baby due? We have free postage for first orders - and washable nappies will save you lots more ££

hehe, Miranda...subtle

[leehack]

BTW Lee when is the baby due? We have free postage for first orders - and washable nappies will save you lots more ££

Given the size of her, i would say about 3 weeks ago, according to the quacks we might have 7 weeks to go yet. Poor girl has never been over 9 stone and she's never seen the scales go into double figures, she's weighing in at 11.5 stone at the moment and it's looking like a big one. I was nearly 10 pound at birth, poor girl is gonna be split in half.

[Tickle]

Brilliant - a great topic.

I'm so glad someone started up this thread as I'm going through the 6 month shipping dilemma at the moment.

I always thought of Free P&P as being something a business subsidised to some extent. If my competitors are selling items I sell at RRP then I can't see how it isn't effectively subsidised. I'd lose money on quite a few of the smaller products I sell with free P&P at RRP prices so it's been something I've avoided so far.

We charge a set price of £3.95 for all orders and then free over £35. I find that most people either want to order over 35 and go beyond it or order less. We often get orders for say £29.67 rather than just over the £35 mark so it doesn't seem to be a strong motivator in our case.

Despite our fixed price being much lower than all our competitors except those offering free delivery it's a problem for us as we get a lot of low value orders in the mix possibly due to the shipping price being low enough perhaps. However as we're not yet into PPI realms then the cost of the stamp is evident (shown on Smartstamp) which upsets some customers if the value is below £3.95.

I'm not keen on going into weight based shipping but it's something I've been seriously considering recently.

However, I really like the sound of doing free delivery but my biggest concern is that I would need to add something to the price of all items. The products I sell tend to be sold by almost all my competitors at RRP so suddenly I'm going to be setting all my prices above RRP right next to competitors, particularly on googlebase, shopzilla, etc, where the product price is clearly shown.

It may well be the case that the overall price to the customer would probably be cheaper for a customer coming to me if I offered free delivery bt who's going to delve into every website to add up all the options. Surely they'd see a higher price in the listing for my site and move onto the cheaper advertisement?

Obviously to attract business it's worth advertising Free P&P in Adwords rather than the actual price.

I'd love to know people's view on whether offering free P&P would overcome the impact of higher than RRP prices and I mean slightly higher to cover post costs?

That's the crux of the question for going with Free P&P I guess?

[brian.mc]

We used to include shipping in the retail price - which is what "free shipping" really means. However, all our product images etc are supplied by Interflora, and to use their products we have to comply with their rules, and they state that delivery must be shown separately from the product price, so now all our products show delivery separately. The reason for this was that if a customer spent say £25 to have a bouquet delivered, and that price included a £5 delivery charge, they were actually only getting a £20 bouquet, so they used to get quite a few complaints of poor value. By showing the price they are paying for the goods and delivery separately the customer knows exactly how much they have spent on the flowers and can relate this to what they have received. As a result, poor value complaints have decreased considerably since this change was made.

We display the delivery charge clearly as part of each product description, so we don't get many cart abandonments as a result, because the customer has seen the shipping charge before clicking the add to cart button. About 6 months ago our delivery charges went up by £1 but rather than a sales drop we have seen a substantial increase, so certainly in our industry it hasn't been detrimental to show shipping separately, but obviously that will vary depending on what your competition are doing.

One word of caution - some posts are suggesting increasing prices to cover shipping and advertising "free shipping". I think that's in breach of the Trade Descriptions Act. To advertise shipping as "free" it has to be just that. It's ok to to run a promotion such as "free shipping (usually £3.99) during July", or "free shipping on all orders over £x", but to claim free shipping on a permanent basis might attract unwelcome attention from Trading Standards.
A much safer description would be "including shipping" or similar, although it certainly lacks the commercial impact of "free".

[TraceyHand]

One word of caution - some posts are suggesting increasing prices to cover shipping and advertising "free shipping". I think that's in breach of the Trade Descriptions Act. To advertise shipping as "free" it has to be just that. It's ok to to run a promotion such as "free shipping (usually £3.99) during July", or "free shipping on all orders over £x", but to claim free shipping on a permanent basis might attract unwelcome attention from Trading Standards.
A much safer description would be "including shipping" or similar, although it certainly lacks the commercial impact of "free".

Sorry, but that makes no sense to me whatsoever!
Might just be my Monday morning brain but who's to say that it isn't free shipping?
Compared to what?

[Tickle]

I don't really think it's an issue for Trading Standards.

I took a look at their site last night and there's almost no reference to P&P, here's a quote:

"All price indications which can be seen by consumers must include VAT and any other compulsory charges or taxes. Postage, packing or delivery charges may be shown separately as long as they are unambiguous, easily identifiable and clearly legible."

So my intepretation of what they want is for any charges a customer will receive are presented clearly so their credit card statement matches the figures in the online checkout. It doesn't mean that your business overheads built into your pricing for an item (which may also include P&P) need to be explained and listed seperately.

On that basis I would say that claiming that P&P is free and/or showing P&P as Free (£0.00) in the checkout is fully in line with what Trading Standards would require.

If there were any exceptions to Free Delivery then that's where it would be in contention to the principle unless the exceptions are clearly stated.

John