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FutureNow Article
Thursday, Apr. 24, 2008

How to Increase Shopping Cart Abandonment

By Robert Gorell
April 24th, 2008

online shipping costs and cart abandonmentSo, it wasn’t exactly Daniel Day-Lewis in There Will Be Blood (“I’ve abandoned my CAAARRRRRRT!!!”), but when Jeffrey told me today that he still hadn’t bought his nephew the Fisher Price Grow to Pro Basketball hoop after two weeks of putting it off, I assumed he was being dramatic.

Jeffrey claimed to be sticker shocked from shipping cost inflation, a common reaction while shopping online. One minute, you think you know the whole price. Then — bam — you proceed to checkout, only to find that the price has shot up as much as 25%.

Was Jeff being cheap? Probably. But it’s understandable.

The truth is that online shopping has spoiled us. When Amazon ships for free — at least it feels that way if you buy into Amazon Prime — and when Zappos wants you to return those shoes (yes, really), anything less feels like a cheap plastic substitute for the real thing.

ToysRUs.com does so many things right. The product image views are clear and show multiple angles. The customer reviews are helpful and thoroughly integrated. I could go on, but the important thing — the reason they still haven’t sold Jeffrey a Fisher Price Grow to Pro Basketball hoop — is that they set a poor expectation of total cost before checkout.

Here we see Toys ‘R’ Us insisting that their price is $39.99; a price even our CEO can afford. ;)

online shipping costs

Sounds like a great deal!

And look at these reviews:

 

customer reviews

Wow, that’s a popular basketball hoop! You’d think he were buying an iPhone.

But when Jeffrey proceeds to checkout…

shopping cart shipping cost sticker shock

Fifteen dollars isn’t a big deal, but it’s something you’d never be asked to pay in a toy store. It’s not as though Jeff doesn’t have fifty-five dollars to spend on his nephew. [Author's Note: Jeff has reminded me that he was shown a $22 shipping fee, making the $40 toy cost over $70 after tax. This begs the question as to why we were shown different shipping charges since neither of us was asked to enter a postal code and we visited the website from the same office.] It’s just that, like you, me, and the millions of people who shop online, we’re turned off by hidden fees.

Is it believable that it costs the company $15 to ship this product? Of course. It looks big and bulky, if not heavy. Is it reasonable to expect them to ship it for less than that? No! In fact, it’s very unreasonable. But logic has very little to do with it. This is about setting the right expectation.

People rationalize buying decisions with logic, but we make buying decisions based on feelings.

As Sitebrand’s Carolyn Gardener points out,

. . . when shipping becomes a pain point due to lousy check-out procedures, strict delivery options and exorbitant fees, the odds of cart abandonment increase.

When you consider the abandonment literally squashes someone’s intent to buy, not to mention the e-store’s ability to make money, it’s a very serious issue.

How to Avoid Shipping Shock

Jeffrey insists that he still plans on buying the basketball hoop from toysrus.com — and I’m pretty sure he will — but let’s brainstorm some ways for e-tailers to reduce the emotional impact of shipping cost shock.

  • Offer multiple shipping options - Why should the retailer choose the shipping method? By giving the customer their choice of delivery options, the conversation becomes more about how soon they want it and how much the parcel service will charge them, not how much you’re going to charge them. Doing this also makes it easier to provide some level of free shipping. But good luck getting anyone who’s been spoiled by Zappos’ free overnight shipping policy to get excited because you offer complimentary snail mail. Still, as long as you show the costs for each shipping option right there in the shopping cart, you should be fine.
  • Include shipping in price – Why not say “all prices include shipping” upfront on the product page? Some sites allow you to enter a postal code on the product page to estimate shipping rates. Others use new e-commerce technologies to show an estimated cost to ship to the visitor’s current location. If you don’t want to do either of those, at least tell the customer that shipping is not included in the price on the product page. This is especially true for larger items that are expensive to ship.
  • Offer free shipping – A lot of established retailers may consider this to be a channel conflict. (“Why should we offer free shipping online? It would kill our profit margins.”) Maybe it is, maybe it isn’t, but if it’s at all a viable option, it will almost certainly lead to increased volume. Jeffrey would have gladly bought the same product on Amazon, but they told him it would take 1 – 3 months to ship. The irony, of course, is that without free shipping, it might take Jeffrey 1 – 3 months to actually buy it!

What other ways are smart e-tailers reducing shipping shock? If you have examples, please do share them in the comments.

. .

Want to reduce cart abandonment without sticker-shocking your CFO? We can help.

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Comments (40)

  1. Very good article!

    But I must admit, something tells me you’ve never directly worked in the shipping or logistics industry :-P
    (Hope you don’t get offended by that comment, please remember to read the smiley)

    I don’t know how things work in the US offcourse, but here in DK shipping costs for stuff like Big Toys or Flatscreen TV’s can be pretty tricky to calculate in advance. And even MORE advanced if you’re bying multiple toys/TV’s!

    Offcourse you could allways take your estimated monthly shippings costs and divide it by your estimated amount of orders, and add the average to all prices. But shipping costs can vary a lot, depending on whether you’re in one “discount group” or another from one month to the other. And most customers shop around and compare prices with others, so you want the basic price as low as it can be.

    Personally I believe in showing estimated shipping costs at all times at the mini basket. Fx. :

    2 Items in basket
    Price: 39.99$
    ~ handling fee: 15.00$
    ~ Total costs: 44.00$

    You might aswell be honest with the customer up front, in the end that will give the best results.

  2. Robert, FYI – When I added it to my cart the shipping was more than $22 dollars and with tax the total on the $40 toy was over $70.

  3. I show the shipping amount right on the shopping cart page, before the customer even proceeds to the customer input information page. Plus on the shopping cart page, I show shipping for UPS 2 day, USPS Priority and International shipping, all on one page. I have always charged something for shipping, but I try to keep the shipping cost low. I think customers appreicate that. I think the idea, my shipping cost are low, builds good will between me and the customer.

    I do offer free shipping over $125, and I plan to do a better job of displaying that through the website, shortly. This area of showing shipping cost as soon as you can, is a tip I have picked up from learning about online conversation and re-enforced by ya’ll.

  4. Soeren,

    You’re right, I’ve never worked directly in shipping or logistics. And, like I said, the customer’s expectations of what they should have to pay for shipping is what’s most often out of step with the realities product delivery. So, like Jeffrey in this scenario, I’m looking at this from the customer’s point of view.

    As far as the U.S. is concerned, yes, we’re especially spoiled over here. We have a fantastic delivery system — regardless of how much we complain about it — that often leads to other unintended biases (like e-commerce shops failing to plan for overseas buyers or not even giving much attention to Canadian buyers).

    I should also be clear that I’m not advocating that e-commerce shops offer to ship TV’s, furniture, etc., for free. Although some might be able to afford it, that’s a business model issue that few companies could implement. All I’m saying is that if they can do it, for any particular item, they should seriously consider some level of free shipping.

    In this case, it seems odd that Jeffrey and I saw two different prices for shipping — especially since we’re searching from the same location and it never asked us to put in a postal code before estimating cost. And like we both pointed out, this could have been mentioned on the product page instead.

    I also want to say again that I don’t want people to think we’re picking on Toys ‘R’ Us. This is a VERY common way of showing prices, and it’s something e-commerce shops need to pay attention to — and test solutions for — if they want to lower cart abandonment.

    Loved your comment! There are definitely even more complex shipping concerns to account for in Europe than there are in North America, but we all should look at setting expectations from the same point of view: The customer’s.

  5. Jeffrey,

    Yes, I recall you showing me that on your screen now that you mention it. Seems odd that we got different shipping estimates, considering that neither of us entered a postal code and we were visiting the website from the same office.

  6. How about showing an estimated shipping cost wherever the price is listed? Better yet, how about NOT overcharging for shipping?

  7. As a frequent e-commerce customer, I’ve come to appreciate the sites that make shipping costs accurate and available up-front. That’s why we try to do the same for the people who purchase products through our company.

    For most of the products on our site, we offer ground shipping to the 48 continental states for a flat rate, which is displayed at the top of every page.

    Naturally, some of our larger products cost more to ship, and we do charge more for international shipping, which we outline on our “Information & Policies” page.

    We also offer three-day express and second-day air shipping through FedEx for most of our items, the cost of which is calculated directly on the page so that the customer can see it before making the final decision. For overnight shipping, we invite customers to call us for a direct quote.

  8. Personally I think it would make a huge difference if TOYSRUS had a link on the price page that said “click here to view shipping cost”. Then the customers expectations would be managed before they progress through the other screens. But at least it gets displayed before they started checking out.

    I disagree that shipping costs should be calculated in to the initial cost. Then the prices don’t look competitive.

  9. Same here…calculating the shippingcosts (with different options)is displayed in the first step of the checkoutpage and we only see an exit there of 11-13%.

    We’re using flat rates based on the weight and whenever the shippingcost is 8% or less of the total order amount, there’s free shipping.

    Dave

  10. We experimented with free shipping. It didn’t appear(during our test) to increase the number of sales. What it did was massively decrease the number of products people bought at a time.

  11. Ben,

    That’s very interesting. I wonder what would have happened had you tested “free shipping when you buy X number of products” or “free shipping when you buy X worth of products”.

  12. What I’ve noticed is that many e-commerce sites only provide the product price on the product page and not additional shipping costs. Some good suggestions here would be the link to the flat rate shipping costs and even the mini basket on the page. However, shipping costs depend on a number of variables such as total cart value and type of delivery. I think Toys’R'Us downfall is not to provide a link to the shipping costs within the product page rather than not providing a shipping cost in the product page.
    Although they have at least provided a shipping cost within the shopping cart before checking out which a number of major players do not do until checkout….such as Amazon. (I’m sure someone will correct me if I am wrong but I couldn’t locate any costs until checkout.) A good article and something to certainly consider.

  13. Alays enjoy the articles… first time poster.

    I realize this article is about improving shopping cart abandonment; however, focussing upon this single metric may lead the store owner astray.

    If the shipping and handling rates are displayed all over the site, then the decision of buying something has been moved up one step. Meaning, a customer can decide not even to click the ‘add to cart’ button because the total price (product plus shipping) is out of line. The sticker shock just happens earlier in the process.

    Now, if this happens and the ‘add to cart’ button is not pushed, then the shopping cart abandonment will decrease because the leads have been more qualified. Is this a good thing?

    Not necessarily… regardless of where it happened (on the item page displaying total price or in the cart) you still lost the sale.

    I would think that your cart abandonment rate coupled with the number of times a SPECIFIC item sells on the site are the metrics that must be optimized.

    One should test each of the above methods to see which way ultimately converts more sales (more clicks into the cart or more qualified clicks into the cart).

    I realize that this is somewhat intuitive. But sometimes people get so fixated on a single metric to improve that they forget about the big picture.

  14. GreekForMe,

    Great points! There are many factors that could result in cart abandonment, and it’s not always the most important thing. Average order value is very important, and it’s certainly no better if someone proceeds one more click without completing the sale.

    You’re right. Showing too much information can lead to unintended consequences in some cases. That’s why, as you say, testing is so important. People shouldn’t get too fixated on a single metric, but it is important to see what factors might be affecting a single metric, so you can develop a hypothesis for how fixing it can improve overall conversion.

  15. Yeah, was looking at Mother’s Day flowers on FTD. Offered a $17.99 lily bouquet. “Pretty cheap!” I thought. Got to checkout… $50! Ouch. Bye-bye shopping cart.

  16. Great article!

    When I bought my wedding dress, I was taken to a page that specified the shipping cost for the postal code i typed. i personally think this is better than adding the shipping cost to the product itself (as this will Shock customers as well!!). Its better to add the price of the product then the shipping cost without adding them together.

  17. We love Grokdotcom here in Wrigleyville!

    Even though we are a very lean operation (there are only two people who work on our web site design and ecommerce strategy full time), we pay attention to and implement the best ideas we find here on your site.

    Shipping is a very big deal – a deal maker or breaker no matter what you’re selling online. We try to do a few things to set shipping expectations on our site:

    1. We tell people on every page that orders over $100 get free shipping (there are exceptions for very large, bulky items, which we have very few of, but they do exist).

    2. We put that “free shipping” graphic on every page, just above the cart summary. If the items you have in your cart total $95, you can easily see that if you add one more item for $5, you’ll get your shipping for free. Obviously, if shipping was $7.95 before adding the $5.00 item, and it’s free after adding it to your order, it’s like getting a small discount on your order! Fine. We’ll trade the couple of bucks if that means a converted cart vs. an abandoned one. We’ve toyed with the idea of having a “countdown to free shipping” function in the cart summary module, but we haven’t tried it yet.

    3. We also tell people that their orders normally ship within 1-3 days. Usually, they ship the same day, but if a customer orders something in the middle of the night on a Friday, UPS isn’t going to ship it until Monday.

    4. We put the estimated shipping charge right there in the cart summary on every page. Never a surprise when the customer gets to the checkout. Also, the shipping charge is right there in the cart when customers add an item to their cart. Again, no surprises.

    5. Finally, for those items that cost over $100, we insert a graphic into the item detail page right above the “Add to Cart” function that says “This item includes Free Shipping!”. This eliminates doubt for the customer, and removes a potential friction point that could cause site or cart abandonment.

    We do some other things, too, but those are the major points.

  18. We switched to free shipping on all of our merchandise. It was a big hit with our customers.

  19. Thanks for the kind words, Wrigleyville! Glad to hear that your shipping options are working out for your visitors.

  20. We receive an “incentive” (discount) based on each shipment’s weight and service level from our shipper. I calculate that into what I charge my customers to give them the lowest price I can. In our cart I had the idea of showing the pre-incentive rate, and below that the incentive figure as a “shipping discount”.

  21. Following on from Wrigleyville Sports’ comment, we have just launched our in-house e-commerce platform, and our 1st client site to use the platform ensures delivery costs and options are highly visible throughout the store.

    Some specific points on this:

    1) Irrespective of a customers landing page (homepage, category, product page) delivery messaging, in particular the ‘FREE delivery over £xx’ business USP, are prominent throughout the store, plus there is a dedicated delivery page which can be visited from the marketing messages

    2) At shopping basket stage, above all basket information is large page heading and statement, saying:

    Shopping Basket
    2 items, £55.21 inc. VAT and delivery

    The total basket amount is broken down beneath the basket contents, but by having this statement at the top, along with a ‘proceed to checkout’ button, customers don’t need to scroll all the down the page to know what they will be charged with their current order

    3) Also at shopping basket, each of the delivery methods (FREE over £xx, FREE if picked up in person, Special Overnight Delivery etc) are presented along with information on each option, are presented, giving the customer full control of their shipping method

    4) If a customer updates their delivery option, a prominent message is presented to ensure they know that change has been made and what affect (if any) has been made to their total basket cost

    5) Our clients products range from pens to bubble wrap to machinery, but rather than confusing customers with weight or physical size based delivery costs, fixed costs depending on the speed of delivery required are provided, providing easy to understand (and potentially very cost effective!) delivery costs.

    More developments in delivery are planned as our e-commerce platform evolves, but to conclude we at PRWD couldn’t agree more with the importance of highly visible delivery charges throughout a shopping journey, especially using FREE delivery as a strategic buying motive.

  22. Nice post. I agree with you when you are buyng something online and you think you know what you are going to pay and it ends up not being the deal. Sucks. Especially if you are on a budget. Including shipping in the price might work if the price is right.

  23. I always feel that shipping kills internet competitiveness compared with bricks and mortar.

    In many instances, why pay $15+ in shipping when it is $2 in gas to buy it locally – unless it is some exotic product.

    Personally high shipping kills 90% of my potential online purchases.

    Not to mention the need to create an account first…but that’s a new article, right ;)

  24. “Not to mention the need to create an account first…but that’s a new article, right ;)

    Caricature King,

    Great point, and we’ve got you covered! Bryan Eisenberg already wrote that article: “Why Must I Register Before Checkout?

    Enjoy! :)

  25. Take it from Dr. Horrible: Bait and switch sucks….

    Your customers deserve to get what they expect. And they really hate it when they don’t. Here’s why.
    ……

  26. “Free shipping on all Items” is an easy thing to offer when your product is costly and its weight low – like the diamond rings that Randy sells :-)

    It is a much more complex issue when they are bulky and relatively low cost like chef uniforms!

    Still it is a great idea for us to test.

    Dennis

  27. I can’t count the number of times I’ve added to a cart only to be blind-sided by the addition of tax, shipping and handling fees. Unless I have no alternative choice of where to buy the product, I will continue looking for free shipping. Thanks for your post!

  28. your blog is so excellent.
    Thanks,

  29. Great article!

    I just add this article in my bookmark.

  30. good good study

  31. Love the article. Honesty yes, I to find the shipping costs to be extremely overpriced. I especially feel the heat because I am currently living in Asia and the currency conversion results in me paying a ton of cash. But, then again, shopping carts and shipping have helped me out immensely to get down things I want which are not available here.

  32. Interesting article indeed. I think things with shipping and online selling need to be much streamlined and controlled. There is a huge lot of people relying now on online buying and selling and it would immensely benefit them.

  33. Hi, your article is very deep analysis. I like reading it. It is very informative and practical. Thank you for sharing it to me.

  34. Nice information, for sure this idea could be good to many websites.

  35. Interesting indeed. I completely agree about the shipping charges applied. Sometimes the shipping charges cost more than some of the products being sold.

  36. costs can vary a lot, depending on whether There is a huge online and you think you know streamlined and controlled. what you are going to pay lot of people or another from one month to the other. relying you’re in one “discount group”

  37. Interesting study. I can certainly attest to the high shipping costs encountered. As an Australian, searching online for almost anything to buy invariably results in stumbling across a supplier that either DOESN’T ship internationally period, or, if they do, they charge a fortune for postage/shipping..

  38. I want to say again that I don’t want people to think we’re picking on Toys ‘R’ Us. This is a VERY common way of showing prices, and it’s something e-commerce shops need to pay attention to — and test solutions for — if they want to lower cart abandonment.

  39. Quite often, a visitor leaves the checkout process because she/he may not be comfortable with the navigation of the checkout process. Analyze the checkout process for its user-friendliness. Is it easy to Add/Update/Delete products from a shopping cart? Are the steps in the check out process self-explanatory? Is the user getting the goods exactly as he wanted it to be? And look into such aspects that can distract the user’s attention.

    realize that this is somewhat intuitive. But sometimes people get so fixated on a single metric to improve that they forget about the big picture.

  40. [...] How to Increase Shopping Cart Abandonment – “Must Read!” [...]

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