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Thursday, Sep. 13, 2012 at 2:47 pm

Why People Don’t Buy-Part 1: High Shipping Costs

By Mariel Bacci
September 13th, 2012

Why Don’t Customers Buy?

SeeWhy, a company that specializes in e-mail published the results to a questionnaire that asked people, “Why do you browse an ecommence website and then choose not to buy? The answer to this question was most often, the cost of shipping is too highIs reducing or eliminating shipping cost really a reason to lose customers? We don’t think so.  The reasons people gave for abandoning the buying process are all things that can be fixed on your site or with a follow up strategy.  In this series we will give you some strategies on how to pull abandonment problems out by the roots and guide your guest into becoming a paying customer.

Cost of Shipping is Too High

The number one reason people abandon your site once they find something they like is because the cost of shipping is too high.  If people are abandoning your checkout process after they have already been through every other step in the buying process-you’re actually very lucky.  You already invested a lot of time and money to get people to land on your site through your hard work in PPC, SEO, social media, offline advertising, etc.  You convinced them they wanted or needed what you are selling.  You negotiated a price point that your guest was comfortable with.  They found your site and brand trustworthy.  Now, after all those hurdles, its shipping prices that kill your relationship with the customer?  Time to think again.

Before you offer a solution for your shipping problem, make sure you understand the psychology of the problem. If you test a free shipping offer, do your conversions increase enough to give you a higher ROI?  Maybe you need to dig deeper and find out if certain segments of traffic are more price sensitive and willing to abandon their purchase when they see your shipping prices.  Does lowering the price have a better, worse, or similar effect on your bottom line as offering free shipping? Test what shipping price visitors are most comfortable with and you can even be so bold as to test this with different segments of traffic that you’ve been able to identify.

Also, by understanding the different segments of visitors that you’re getting, you can figure out how to most effectively present your shipping options.

*If your ROI sky rocketed after you offered free shipping, you should offer it continuously and advertise it well site wide to all segments.

*If it didn’t have the impact you were expecting, you could try testing it with specific segments of traffic only that you feel it will have the most impact on.

*If it made some difference, but still not the results you think it should have, maybe you should adjust your approach and charge regular shipping, but then deliver a pop-up with a code to get free shipping if a visitor abandons the checkout process on the page where you present shipping prices.

*If you are sure that your product will produce repeat customers, offer free shipping on the first order and then make up the difference on future orders.

Now that you know how to reel in customers that are turned off by your shipping cost, implement some of the strategies to increase your ROI!  The next post in this series will cover how to help people who are comparison shopping complete an order on your site.  If you need help recovering lost leads because of high shipping costs, get in touch with us and we can help you figure out how to collect all of the bucks you accidentally threw out the window!

Add Your Comments

Comments (62)

  1. Reducing the cost of shipping or eliminating it entirely will definitely help increase sales because you increase value by reducing purchasing costs. Doing a follow up promotion like “Free shipping before (date)” will appeal to customers and trigger their sense of urgency.

  2. I don’t think that the cost of shipping is so important, we should realise of the complicated economic situation we’re facing. Is difficult to sell if there are fewer people who can buy

  3. Reason #2 – “Changed mind and discarded cart contents” with 60% is also very interesting to consider when selling stuff online.
    Amanda

  4. This is surprising, I came across your blog when searching for shipping costs for the products that I sell to my clients. I always used to put the cost of shipping on the final page, but will now put it under the items as they are listed. Great info, really helpful!

  5. @ Amanda

    We should be covering that topic in the next few weeks!

  6. I found your post at a good time as we are currently determining the inclusion of freight costs (or not) for one of our product sites. Thanks for the info – it’s helped a lot.

  7. Great post, I think they should offer a reasonable shipping costs or the best deals.

  8. Shipping costs should be included in the total price and tell the client it is FREE is a good choice… as a customer you always appreciate something free, even if it isn’t free or aren’t charging you for it directly. That’s the strategy many eBayers are following now.

  9. Yes, right ! High shipping costs are one of the first cart drop in e-commerce process. Another one is the delay to open a website. how often have i seen my girlfriend closing a site which load in less than 2 seconds -_-’

  10. Well, you have to take into account what these people usually buy online. It’s not the same if they are buying some books or some appliances, for example. For low price products, shipping costs can scare many people, as sometimes they can be just as high as the price of the product.

  11. If the stuff is easy to find offline, then I think it is better to be free shipping cost. But sometimes, the stuff is difficult to find off line. In this case buyer will not mind to pay the shipping cost

  12. I routinely will find another online source if the shipping costs are hidden or too high. There is WAY too much competition to have to overpay.

  13. I think I agree with the general consensus that more important than the shipping cost is the economic situation that has limited the number of people with buying capacity. The shipping costs and crude prices are just adding to the wows as another factor.

  14. I can pay shippings costs it’s not a problem. For me the most important thing is that you can send back things that you bought if there is something wrong with it.

  15. The company I work for offers free shipping on any order over $50. Since most of the stuff we sell is over $50, that’s pretty much everything. In a business as competitive as ours, vacuum and sewing machine sales, where prices are often fixed by manufacturers and nothing can be sold below a certain price by any dealers, it is important because free shipping is the absolute most we can do to cut the price by anything at all.

  16. “once they find something they like is because the cost of shipping is too high.” Most shipping cost usually involves return cost if the customer could not be contacted. All this unnecessarily increase the cost

  17. High shipping cost is the main reason why customers step back and don’t shop anymore in your site. You must have a pocket-friendly rate so that they can keep coming for more.

  18. Good article. But I can not still find a suitable solution to reduce shipping costs. Do you have other article related to this issue. Please share for me.

  19. At the end of the day it comes down to the ROI. Does it make financial sense to offer free shipping? If yes, then continue to offer it.

  20. I think competing on shipping cost is a big sticking point but it’s only a small factor. You have to get people into your shop and offer timely products, products that are selling now. The customer has to feel safe buying from the site and liek what it represents.

  21. Shipping is definitely a sticking point but its easy to compete on shipping cost. Anyone can offer free shipping but what really makes a customer abandon?

  22. Nowadays customers are very hard to please… They want free shipping, low product prices, and no delay in shipping. I think that the sellers should stop granting their wishes ! They can’t have everything at low price and with a good quality. Unless the website has thousands of visitors a day…

  23. Nowadays, our customers are always dissatisfied because of the cost of the shipping and the import tax. Last time I imported 5 poolcues to VietNam and they charged me me 500usd for shipping cost and import tax. It’s too expensive.

  24. I thing if we can include the shipping cost into product price than it will be better. This will help to reduce selling cost. Thanks for discuss about that topics.

  25. I have played with this before and occasionally got burned. As long as the product is light and there is a decent mark up margin, I find you can offer free shipping. If it’s a brick you are going to lose your shirt.

  26. As a customer, I sometimes find shop owners offering great prices for certain items, but “hide” the shipping costs until checkout – and they are clearly inflated. Knowing the usual rates, I sometimes get the impression that this is some sort of scheme – luring customers into believing they can make a great deal when in the end they save nothing because of excessive s&h costs.

  27. Free shipping is definitely a deal breaker for me when it comes to online shipping. If shipping cost bring the total within $5 of the normal retail price, I’d rather just go get it in person at the store.

  28. I think that shipping is not really something that makes us lose costumers, each client has his own reasons

  29. I’ll tend to stick with sites that offer free shipping over sites that don’t. Sometimes I can’t find a product elsewhere, though, which is fine. But I hate “hidden” shipping fees that are only presented at the last stage of checkout!

  30. yeah I think that shipping has gotten out of hand, even on ebay sellers will jack up the price of shipping so they make an extra profit for themselves, not even to have it arrive any sooner or to be better taken care of.

  31. This is a real problem when you think to buy something.But what do you do when your country is not in the shipping list?

  32. This post has turned out to be very useful to me. I was to start my E-commerce site and suddenly saw this post and decided to make few changes in my plans. Thanks Mariel.

  33. Cost of shipping is definitely a deal breaker for me. That’s why I love play.com (not sure if you have it in America). Free shipping on everything you order, no matter what it is. Then again, free shipping when you hit a certain amount can influence people to spend more money – certainly works on Amazon

  34. I’ve tested shipping costs and their effects on CLV (customer lifetime value)

    While free shipping increases conversions, for most testing I have done, it does not increase CLV or profitability.

    The the solution I have found that works best in most cases is:
    1- Offer cheap shipping with limitations (slow)
    2- Offer nicer shipping at a cost (fast)
    3- Offer FREE shipping if they put 1 or two more products in their cart. If your average order is for $100, give it at $150 or even 200. That way, you will get a good % of customers to buy more and ‘stock up’. Given the extremely competitive environment that is online retail sales, you never know if the customer will buy from you next time; or your competition. So making sure you lock in those sales now if you can.

  35. Good post. As always, TEST, TEST, TEST. There are no silver bullets. However quick thought on shipping:
    I buy hobby items that are bulky online, but most of the online vendors offer free shipping over a certain price (around $100). This is great, but it means you better make sure you have a good variety of items at various prices so you can easily make the correct threshold. If I am buying a 90$ item I will not purchase another 90$ item, you better have a ~10$ item I want or I will shop elsewhere. It also means I only shop when there are a few items that I want.
    Food for thought.

  36. In my country, some online stores offer free shipping. It is proven to increase sales. But on the other hand, sellers have to raise prices.

  37. As a consumer, its not just the cost of shipping that’s the problem but when the cost of shipping is high relative to the item price. If I’m buying a $300 item and paying $20 for shipping ok, but if item is $30 and shipping $20 then I’m put off. I would rather pay $50 for an item (because I VALUE that item) whereas I don’t value shipping (shipping is just a necessary expense to me).

  38. Great site,very informative. Now a days its very hard to deal with customers needs and satisfactions.We have to get people into our shop and offer timely products. Thanks for sharing the post.

  39. I’m 100% agreed with Edward – Nowadays, our customers are always dissatisfied because of the cost of the shipping and the import tax. Last time I imported 5 poolcues to VietNam and they charged me me 500usd for shipping cost and import tax. It’s too expensive.

  40. Of course shipping cost is going to be high. This is not the fault of the company, the fault lies with OPEC and Oil speculators. To combat this, companies are wise to either provide free shipping for a specific purchase price or hide the extra cost of shipping into the cost of the product. There is NO way, you can overcome the cost of shipping.

  41. Before you offer a solution for your shipping problem, make sure you understand the psychology of the problem.. :)

  42. These days any added costs will deter purchases. Making the offer as juicy as possible is the key to success.

  43. To combat this, companies are wise to either provide free shipping for a specific purchase price or hide the extra cost of shipping into the cost of the product.

  44. I think the biggest issue with shipping costs is when they’re not clear up front.

    Many times I’ve put things in a basket, got to the buying stage, and realised the shipping costs were far higher than I had anticipated (either through misleading web copy or no mention of the cost at all). This has always, always, resulted in me abandoning the purchase.

    The issue is that you have a price in your head that you’re going to pay, and if at the last moment you find out that price is actually more, even if only by a few pounds, it makes you reconsider your purchase.

    Either make the cost crystal clear from the get go, or even better, eliminate shipping costs altogether.

  45. I agree with Amy. I actually had an item in my shopping cart and was ready to buy and the shipping cost doubled the total!

  46. Now a days most of the online stores provide free shipping. When I browse online stores, I always check whether they provide free shipping or not.

  47. Shipping costs is a tough one. Consumers are expecting more and more, while shipping prices climb higher and higher.

    Even if it’s a mere psychological tactic, bundling the shipping cost into the final item price can work. Where this becomes a problem, is for those selling commodity type items, who compete via a race to the bottom.

    Free shipping over X threshold tends to work well in some cases, and even increase average order value.

    At the end of this day, this problem transcends shipping costs. It points to how you differentiate yourself as a brand, offering something unique that have clients coming back over and over. Even willing to pay a little more for the experience you offer.

  48. As on online retailer I’ve found from my own experiences that putting up shipping costs results in a direct fall in sales.

    However, if I was to add the shipping cost onto the price of the product and advertised ‘FREE SHIPPING’, sales spiked.
    I can however only do that for smaller items. – this doesn’t work with large heavy items.

    I’ll combine it as much as I can, then after that I’ll only charge the customer the exact price of shipping, nothing more. In order to keep my website profitable I’ve found that making no profit at all on shipping is a great way to go.

    Ben.

  49. We have found with experimentation that high shipping costs are a definite deterrent. They often bear no relationship to the value of the article. There are a lot of freighters out there who would love to have our business and are willing to negotiate a fair price and we owe it to our clientele to keep our final prices down as low and attractive as possible.
    We do offer freight-free deals on orders over a certain value and this works too.
    Good article thank you.

  50. Once i was buying a book online, its shipping cost was more than book’s price. so avoided online checkout and purchased from a local book shop

  51. Frank (October 6th, 2012) – To be honest I never thought about negotiating shipping/freight prices before. Thanks for enlightening me.

    Ben.

  52. I mainly do my shopping on e-bay and I effeminately can say that I ALWAYS start out by looking for items that offer free shipping! Sometimes you have to pay a little more for the item if it offers free shipping as opposed to an item that does not. Sometimes you only get free shipping if you bundle a package together. All in all most of the times it’s worth it.

  53. There is a lot more than just the shipping cost. The hardest part is to find out the reason that prevent them from buying your product. Of course, it is easier said than done, otherwise, every one can be a marketer.

  54. Ok, you were looking for an item and your search gives you 49 items from different sellers. You found the item you were looking for. Of course, as a smart seller you discard the more expensive and look for the less expensive option, and bid or do Buy it Now on it. You might be happy, you made a big deal, then the check out and pay your item.

    This is, aparently, the normal and smart buyer. But he forgot something: checking the shipping cost and knowing how much will the grand total be before buying the item. If he or she had done this, he could have seen other options; maybe better or maybe not, but would have had more choices.

    One friend told me: “I am not upset if I paid more or not for an item, we all can make a bad choice or purchase. What really upsets me is when someone tries to fool me offering me an item at low price but with a high and excesive shipping cost”

    Some sellers list their items at very low prices, hoping that buyers don’t realize the high shipping charges which is where the sellers are making their money. For example, on Mannequin forms you will find them starting at $ 0.99 with shipping cost of $ 39.99 when the real shipping cost is around $ 12.00. Of course, some sellers can list at $ 0.99 as an strategy to get visitors to their stores or hoping the auction goes up, but the shipping cost must be the real cost, or their auction, is just a scam.

  55. I think it’s the surprise element that does this most of the time. If the shipping cost was clearly on there from the start, people would be able to make an informed decision to buy at the getgo. People hate being confronted with surprise additional costs, they feel like someone tried to pull a fast one on them.

  56. Shopping cost matters a lot and many dont buy if its high compared to other sellers. many hide the actual cost inside shipping fee some times. thanks for the great write up that gives me more idea about online shopping.

    Rob.

  57. I’ve always been told to add extra for shipping and handling above the actual costs. But I don’t like it when people do that to me, so I only charge the actual cost (or very close to it) of the shipping.

    Shipping is expensive enough these days so I don’t think it’s fair to add on to that.

    I didn’t even think about some of the other reasons.

  58. When someone wants to buy, they buy, problem is, there’s too much trickery in the process.. usually!

  59. Once i used to be shopping for a shirt on-line, its shipping value was over shirt’s worth. thus avoided on-line checkout and purchased from a neighborhood shirt shop.

  60. Shopping cost matters a lot and many don’t buy if shipping cost is high compared to other sellers. Many hide the actual cost inside shipping fee. Thanks for the great write up that gives me more ideas about online shopping.

  61. You should always go in occasionally as a customer and check your own shopping cart process. I never realized that I had been charging $5.50 for each item sold, which really added up.
    I like the comment about giving free shipping but setting a deadline on it for urgency.

  62. Costing of shipping is a major aspect that decreases the number of sales. It can be completely reduced to zero. But, when it comes to less number of buyers it makes loss to the sellers. So, the cost of the product and the shipping charges must be balanced.

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Mariel is a GA certified analyst at FutureNow, Inc.

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