Maybe you are one of these people: You get most of the way through an online purchase, then you see the shipping cost and you decide, “nah, I can buy it offline cheaper / I don’t really need it / maybe next time.”
Apparently, that’s what a lot of people were doing at the L.L. Bean website. And so the clothing retailer has decided to make free shipping, with no minimum order, its new policy. That’s according to an Associated Press story, which adds:
Online and catalog retailers like L.L. Bean closely examine the rate at which online customers discard their “virtual” shopping carts when they see the shipping fees.
“Three-quarters of consumers say that they will abandon their purchase when they can’t get free shipping,” [said Andrew Lipsman, analyst at comScore Inc., an Internet research firm.]
L.L. Bean offered free shipping around the Christmas holiday and also has tested free shipping at other times over the past three years, according to Steve Fuller, the company’s chief marketing officer. The story says the company had a 5.8% gain sales this past year and “is counting on a further boost in sales from the free shipping offer this year, and plans on the boost in sales to partially offset the costs of providing free shipping.”
MIT SMR’s fall 2010 story, “When Should You Nickel-and-Dime Your Customers?” explored the same issues L.L. Bean was weighing: how to decide whether to charge separately for such things as shipping or bundle everything into one price.
Given the statistics cited in our article, L.L. Bean’s decision is not too much of a surprise. “Many consumers find paying a separate price for shipping more aversive than paying a higher combined price with ‘free’ shipping,” wrote Rebecca W. Hamilton, Joydeep Srivastava and Ajay Thomas Abraham. The same research firm mentioned above, comScore Inc., “reported that free shipping influenced more than 40% of e-commerce transactions during the end-of-year holiday season in 2009. In an empirical study of consumers using shopping bots, consumers were almost twice as sensitive to changes in shipping charges relative to changes in the price of the books they were purchasing.”