Scott Services: Why e-commerce companies need to build shipping costs into prices

Thursday, 27 February 2020

Why e-commerce companies need to build shipping costs into prices

Working the cost of shipping into listing prices on e-commerce sites is becoming more common as free shipping grows in popularity.

Whether you work shipping into listing costs or add them separately at the end of the order, the end cost will be the same. So, why choose to make your listing prices appear higher on your site?

Research from Clutch shows that customers strongly prefer to invest in e-commerce products if the vendor offers free shipping. One way to offer free shipping without incurring unnecessary expenses is to include the cost of shipping in the listing price.

This article will examine three major benefits of building the cost of shipping into the prices on your e-commerce site: managing expectations of consumers, avoiding buyer reluctance and increasing revenue to your company.

Customers expect free shipping

Providing your customers with free shipping options will increase your company’s ability to align with their expectations for fulfillment.

Almost two decades ago, Amazon started offering free shipping to customers ordering specific goods. That decision ended up being one of many factors that led to their rise in popularity.

Now, Amazon has solidified its capability to promise shipping at no cost to the customer. Due to the company’s preeminence, it created a widespread expectation for free shipping.

For large and small items alike, customers demand free shipping on their orders. This is a fairly consistent viewpoint for both Amazon Prime users, who receive free shipping through their subscription and non-members.

At this point, Amazon has set the bar for other e-commerce companies to match fulfillment times and shipping costs.

Shipping cost cause buyers pause

Because of their elevated expectations for free shipping, people are significantly deterred from purchases by the sudden spike in cost caused by shipping at the end of an order.

When you tack on shipping at the end of an order process, customers see something listed as one price, only to find that it costs more in reality. This has the potential to build a sense of distrust that will eventually have negative impacts on your reputation.

Research shows that while 77% of consumers are likely to buy items that include free shipping, only 43% are still confident in their purchase if shipping costs $2.99.

Free shipping can boost sales

At first, it may seem counterintuitive to guarantee free shipping to customers, even if they’re demanding it. For many companies, it simply isn’t possible. After all, someone has to pay for shipping. If it isn’t consumers, then it has to be your company.

Building the cost of shipping into your product prices can mitigate this issue. That way, you don’t have to choose between satisfying your customers and generating revenue.

In addition to attracting interest with free shipping offerings, consumers often spend more on products if they know there is a promise of free delivery. It’s estimated that online shoppers spend 30% more on orders with free shipping than on orders with a separate delivery charge.

Offer free shipping to strengthen your brand

Even if it causes individual items to cost more, building shipping costs into the prices of your products is a good move. It has the potential to bolster your brand’s credibility with a broad audience while ensuring increases in revenue and conversions. This is an ideal way for SMBs to compete in the e-commerce industry and meet consumer expectations.

Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.