What Is Etailing
what is etailing
The lure of free shipping
I read an article on online shopping with an observation that people are irrationally influenced by delivery charges, that we respond to delivery charges more than the cost of total purchase. A survey by Deliotte last year on Christmas shopping showed that 7 out of 10 shoppers are more likely to shop from sites that offer free shipping.
I don't know about you but it's certainly true in my books. Last month I had 2 shopping carts with goodies, one with ASOS and one with Dorothy Perkins. I went ahead with ASOS partly because they don't charge postage. And Dorothy Perkins' delivery charge is £10.50 which is pretty reasonable for shipping from the UK.
Business Model Selection: Strategist's Dilemma in the E-tailing Age.: An article from: Mid-Atlantic Journal of BusinessLearn more
A. D. Amar
Why do we get so hung up on postage? In most cases it's only a small percentage of the total bill. I think it's because we categorise the expenses into different buckets. The cost of the items we're buying give us something tangible. The shipping charge, on the other hand, feels like a surcharge on internet shopping. That's espeically true in the case of "click-and-mortar" retailers - if I can walk into the store and buy the item, why should I pay extra to get the same item from their online store?
Of course, that way of thinking doesn't factor in the time and effort required at our end. If the store is 20 minutes away from home, it'll take around an hour to get there, find and pay for the item, and go home. Typical delivery charge for an Australian retailer is around the $10. Is one hour of our time worth $10?
Efficient Retail Strategies (Lance Winslow Small Business Series - Retailing)Learn more
Lance Winslow
I think retailers do a similar type of cost categorisation too. After all, we're not charged extra for the rent of the shop, the wages of the SA's working at the store, or the cost of delivering the items from the warehouse to the store. These costs are built into the price. So why not do the same thing with postage? I suspect it's because most Australian click-and-mortar retailers are still relatively new to etailing and treat online sales differently from store sales. Because delivery is a new type of expense for them, and can be attributed to individual shoppers, at this stage they're charging extra for the service. I believe that in time, as the share of online sales increases and competition heats up, more etailers will realise the free shipping attract more sales and will absorb the delivery charge.
Some etailers go part way and offer free shipping for purchases over a certain amount. It stops people from placing small orders where the margins do not cover the cost of postage. It also has the added bonus of making people buy more in order to reach the threshold (I've done it many times myself).
I don't mind that approach as long as the threshold is reasonable. As a rule of thumb, fashion etailers should set a threshold no higher than the average price of a dress at full price. Feel free to quote me :-)
So what's your view on shipping charges? Do you only shop at etailers with free shipping? What is the most you've paid for delivery charges (mine was around $40 from The Outnet's US website and Nordstrom, I can only justify it because the discount I received is greater than the postage).
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