The follow is based on personal experience and anecdotes and should not be used to inform design or business decisions about e-commerce.
It seems many smaller e-commerce businesses adopt the position that “Shipping costs what it costs and we just pass that onto customers” without considering how much revenue they could be losing.
Lower shipping from another retailer
An obvious example is earlier this week when I wanted to buy a high-quality English Haws metal watering can; one retailer wanted to charge me $36 – I enquired about it and got a sound explanation which made sense but didn’t persuade me to place an order with them, which should have been the aim of their response:
All shipping is charged on the greater of the cubic weight or actual (dead) weight. Watering cans have a cubic weight 15-20kgs, where they only weight between 2-3 kgs. We simply pass through the cost based on Australia Post’s eParcel rates.
Instead, I went with Peter’s of Kensington who charged me $9 for shipping.
Then we look at a retailer like Book Depository who offer free worldwide delivery. Not having to pay a shipping fee to buy books has changed my pattern of buying behaviours.
Instead of maintaining a shortlist of books and then placing an order every few months I just order when I want, sometimes placing orders just a week apart because it doesn’t cost me any extra.
I skip the stage where I cull my shortlist and instead can place orders spontaneously with no financial repercussions, so the upside for both myself and the retailer is that I order more books.
Tiered shipping rates
When I ordered some sharpening stones from Lansky in the US there was a shipping cost increase when the order went above $100 so I spent twenty minutes moving products in and out of my cart and whittled it down to come under that price point.
It’s completely irrational because if they just had fixed the shipping at the higher cost I wouldn’t have cared. But because I could save a bit on shipping I spent the time to do so.
Rewards and coupons
Another thing that alters my buying behaviour are rewards programs. At Timbecon you get a $20 voucher for every $500 you spend, but the vouchers are only issued once a month so if I want to place an order and I’m expecting a voucher I put it off until it’s issued.
Their shipping costs are low too, just $10-15 but that’s enough to stop me placing orders as needed and instead maintain a shortlist in my shopping cart for weeks until I feel like I’ve got everything in there I want and have excluded anything I absolutely don’t need … and that largely comes down to the shipping cost which is ridiculous as shipping sometimes represents as little as 3% of the order.
If shipping were free I would have ordered more products, more frequently.
Fuck it I’ll pay anything
There’s a Spain-based retailer who charges $60 express international shipping. That’s pretty high, but I’ll pay it because it’s still lower than any single one of their hand-made products (even though shipping can represent a full third of the cost of the order).
For those products it’s an emotional decision; I want what they sell, it’s the only place I can get it. I basically shut my eyes, hold my breath and click Place Order.
What really feels wasteful is when shipping costs more than the product, like when I paid $10 to ship something from Hong Kong that cost 99¢.
I think many businesses don’t consider the influence that shipping costs and rewards programs have on customer’s decision-making about placing orders.
If they did and implemented or perhaps even revoked rewards programs or offered different shipping costs including partially subsidised shipping then they could potentially increase their revenue and profit.
I know many businesses don’t move the scale required to qualify for low courier rates and for many simply passing on the costs of shipping works for them.
But I don’t think it should be the default. It should be a considered and deliberate decision made in the best interests of the enterprise to maximise cash flow and profit and I think in some cases incentive and rewards programs may actually be detrimental.
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