What makes your e-shoppers angry? Shipping costs!
The situation when your customer puts items into their shopping cart but then suddenly leaves before the purchase is finished is called cart abandonment. This is quite a common phenomenon in the eCommerce world. In 2015 the average abandonment rate was 68,95%, which means the value of abandoned carts was about $4 trillion!
To be honest, the largest percentage of people who left their shopping cart in the middle of your shop and run away is a natural consequence of how users browse eCommerce sites. They are exploring their options, making price comparisons and watching items for future purchases. It is the same process as window shopping in brick-and-mortar stores. Forget about these customers and let’s focus on those shoppers who would like to buy something but changed their mind because of a flaw in the checkout process.
Loads of research pointing out the problem of cart abandonment has been conducted giving a clear answer — all consumers absolutely hate paying for shipping costs. Moreover, they are very sensitive to how shipping rates are presented.
Free shipping is not always for free
Many online shoppers now expect free shipping as a critical element to their eCommerce experience. They claim that this factor over all others compels them to order. For those who are selling expensive items with low shipping costs, it’s easier to offer free shipping. However, for many retailers it is quite difficult.
Some businesses may find it interesting to add the shipping cost for each product into its listed price rather than having separate prices for shipping. There are many people who would prefer to pay more for the selected item than to pay the shipping cost, even in the case that the total price is equal. However, it is very complicated to find out how to spread the shipping cost through the whole portfolio of products.
So what are the possibilities?
Free shipping through minimum order value
Meaning you set a dollar amount needed to reach the free shipping. This motivates your customers to increase their order to achieve the given amount and gives them a way to avoid losing money on smaller transactions. It’s more than important to clearly inform about all the conditions in advance and show how close they are to get there. One survey revealed that 58% of shoppers have added items to their shopping carts to qualify for free shipping. Yes, your customers definitely hate paying for shipping costs!
Keep in mind that it’s necessary for you to take the time to carefully determine the appropriate minimum order value. One way is to calculate your average order value and set the free shipping order value little bit higher, but it’s important to remain realistic. For example when your customers spend approximately $72 per order, try to set the free shipping at $90. Then start to track what is happening. You need to be very careful and keep testing which minimum order value is the most efficient for you. You can track this process with a tool such as MonkeyData for example.
Calculated shipping
Another way is calculated shipping. This means that your customers are informed about shipping costs in real time and pay almost exactly what you would pay to ship your products. It is the most exact method of making sure products are priced correctly. When the shoppers see clearly for what they are paying, they are more willing to accept it. And what’s more, this method can win you a lot of trust with your customers.
Flat-rate shipping
Flat-rate shipping is another possibility where you calculate the average shipping cost. You’ll lose money on some of your shipments and make many on the others. The drawback is you need to still pay attention to what your average shipping cost is and change the shipping cost according to that and this might make your customers angry if you are raising the price. You also need to be careful that flat-rate shipping does not make your smaller products so expensive that customers refuse to buy them. The advantage of flat-rate shipping though is that it is simple for shoppers and you can inform them about the price in advance.
Choosing the right option really depends on the type of your business you operate and the products you offer. However, there are two important things that matter a lot while considering shipping and are equal for all types of businesses:
Don’t forget …
1)… to give your customers clear info
It is important to know that customers aren’t so angry when it comes to paying for shipping, but they get very angry when there is no transparency of the total cost. Customers complain a lot about having no up front information about shipping rates. Regardless of whether these charges are shipping or sales tax, online shoppers want to know about these fees before having entered all of their billing information. An important lesson comes from this: if you are going to charge for shipping, inform the users about it before they get into the billing process. The earlier you do that the better a chance of them finishing the purchase you have.
2) … the time of delivery matters
Slow shipping and a lack of shipping options can also be the cause of cart abandonment. Customers want to receive their order as fast as possible. Do everything to provide your shoppers with the fastest delivery option. Sometimes, customers are willing to wait for their packages but they need to be informed in advance. Keep them informed about the process of delivery by giving them regular updates. It’s great to include an approximate shipping date or an arrival date when they can expect to receive their packages.
Now you know a little bit more about dealing with the fact that consumers absolutely hate paying for shipping costs. Hopefully this will help you to gain some money from that $4.975 trillion, the value that all abandoned carts had in 2015. Employing these techniques will surely help you grow the sales of your online store.
