E-commerce shoppers often have to be encouraged to buy. While customers who visit your physical location most likely do so with the intent of making a purchase or looking into a future purchase, the majority of ecommerce sites report that their conversion rates are between just 1% and 5%. Customers can easily browse online, doing real-time price comparisons to help make their purchase decisions. Browsing on its own, with no intention of buying now or in the future, has become a form entertainment – think window shopping, but much more convenient. It takes a little nudging to convince these users to take the plunge and purchase… but not as much as you might think!
As an online shopper, I must admit, coupon codes, flash sales and other kinds of discounts are enticing. However, if I get to check out and the shipping is high in relation to my total spend, I’ll quickly click away without authorizing my purchase. And I’m not alone – 54% of online shoppers cited higher than expected shipping costs as the reason for cart abandonment and 44% have abandoned carts because they didn’t qualify for free shipping.
On the other hand, free shipping is included in 47% of all online purchases. What’s more, when free shipping is offered, customers spend 30% more per order. Thus, not only does free shipping lead to more conversions, but it can increase revenue overall.
2 Important Considerations
It’s clear that free shipping is a viable incentive to boost e-commerce conversions. However, there are 3 important considerations to make before you decide to follow through with this offer.
If an item is priced at $6, you spent $3 making it and it’s going to cost $4 to ship, it doesn’t really make sense to offer free shipping. If you’ve ever used Amazon Prime, you’ve noticed that items like this are often not eligible for free shipping or cannot be purchased and shipped on their own via Amazon Prime. You can follow this same strategy for your business, setting a minimum purchase quantity or spend (i.e. Free Shipping on Orders $35 or more).
That being said, if customers are expecting free shipping without any stipulations, they are more likely to abandon their carts if they see that they don’t qualify. To combat this issue, take control in setting their expectations. Clearly state the threshold for free shipping in a prominent area of the site – like the header – as well as on your product pages. Not only will this set a realistic expectation, it will also encourage customers who may have only planned on spending $20 to add $15 worth of goods to their cart in order to receive free shipping.
Free shipping is by no means the only incentive used to increase conversions, but it has proven to be a highly effective one – and sacrificing the $8 shipping fee on a $100 order is a much smaller hit to your bottom line than a 20% discount on the same order!
Need help optimizing your e-commerce strategy for 2015? Reach out to us! We’ll perform an audit of your website and overall digital presence and help you create a unique approach to increase conversions and boost your bottom line!