When online shoppers hear the words “free shipping,” their attention is peaked and their likelihood to make a purchase certainly increases.
This year, Digital Commerce 360 and Bizrate Insights once again looked at the free shipping phenomenon, surveying 1,000 online shoppers in March 2020. Being an Amazon Prime member sets the stage for shopper perceptions when it comes to shipping, so we felt it was essential to understand how many of our survey participants oriented from that perspective. 60% of survey respondents indicated they were Amazon Prime members.
Online shoppers have embraced Amazon Prime, forever altering the shopper’s perception of free shipping. Along with the breadth of assortment, speed and savings are the two elements that shoppers seek relative to online ordering. Amazon Prime shoppers are looking for free and fast delivery including same-day from all e-tailers. It certainly was not a surprise to see that 58% expected that more products would ship for free at other retailers. The perception is that if it ships for free from Amazon, why shouldn’t other retailers follow suit.
What I found most fascinating was that fast deliveries topped the list of influencers. 60% of those surveyed suggested that if the price was the same on two websites, fast would serve as the tiebreaker as they gravitate to sites that could deliver quicker. Not a significant finding, but nonetheless still interesting, was the fact that 21% of Amazon Prime members expect online retailers to make more products available for same-day delivery. We can certainly conclude that shoppers will push retailers for quicker deliveries while also seeking to pay as little for shipping as possible.
Customers continue to take advantage of free shipping across the retail landscape. When asked about their online behavior beyond Amazon, 70% of respondents indicated that more than half of their orders included free shipping. 17% suggested that all of their orders shipped for free.
Many sites beyond Amazon also extend free shipping to shoppers. Shoppers have honed their free-shipping radar, and they know the sites that offer this perk often seeking them out as part of their shopping routine. Email is also effective at alerting shoppers to offers beyond the retailer’s standard shipping policy. Knowing these dynamics, an ongoing review of every retailer’s free shipping policy is welcome.
Online shoppers have been conditioned to find free shipping available across the board so it’s not a surprise that 63% of online shoppers rank this option most important when buying from online retailers. Victoria’s Secret recently sent this email promoting free shipping and also referenced free returns—another shopper favorite.
Unfortunately, free shipping often comes with conditions. When not unconditional, 37% also find value in it being free for a majority of items, while a pre-established order minimum is seen as important for 30% of online shoppers. Over the course of the past few years, retailers who did not wish to offer a blanket policy of unconditional free shipping made free shipping available on thousands of items.
The Home Depot is a perfect example of a retailer that has adopted this strategy. Its 2-day delivery notes that thousands of items are eligible for this benefit.
I find this option was challenging as a shopper as I never seemed to land on a product with free shipping. I also find that it causes me to abandon sites with greater frequency because I get frustrated when I’m not getting the promised free shipping, despite knowing the limitations.
There are many ways retailers can get creative; one of those includes mirroring Amazon Prime. Retailers offer both paid and non-paid membership programs, and the degree of traction depends on the strength of the retailer and its package. In thinking about programs that I’ve considered over the years, I never see a reason to say no to a free program. Nike tees up just such a program, and I long ago signed up explicitly to get free shipping but to date have only placed a handful of orders.
A quick roundup of the research results shows which free shipping options are most important to online shoppers. Retailer paid membership benefits were important to 27% of online shoppers surveyed while rewards program benefits gained traction among 23% of those surveyed.
Ann Taylor does a nice job of visualizing its credit card and related perks that come with participation. Its many benefits and bottom-line implications for retailers often result in associates pushing shoppers to use these proprietary cards. Retailer credit card benefits were important to 21% of respondents but ranked as the least favored free shipping option in the survey.
There are many reasons that all of us have paid for shipping. A quick rundown of the reasons starts with the basic fact that 54% wanted the product. Some retailers find themselves in a compelling position as their products are exclusive. Under those circumstances, 37% paid for shipping as there was only one place to get the product. Shoppers will still pay for shipping based on an array of personal circumstances. Those included needing it faster than ground delivery at 33%. They may do a cost-benefit analysis deciding how paying for shipping fits into their thinking and personal needs. This may include some of the following calculations and those who actually paid for shipping under those circumstances:
- Total cost of the order was acceptable with shipping charges (45%)
- Didn’t have enough items in the cart to meet free shipping threshold (29%)
- Product discount exceeded shipping charges (27%)
The retail POV
Knowing the demands of the shoppers, I thought it would be insightful to look at 20 companies that sold apparel, ranked by their position in the 2020 Digital Commerce 360 Top 1000. This was just one of the many categories that was challenged under the coronavirus and, therefore, its free shipping model would be directional in nature. Though Nike, Chico’s and Foot Locker had membership programs that waived any shipping fees, I chose to look at this from the cost of shipping for any unaffiliated customer.
As can be seen from the chart below, only one of the companies, Fanatics, did not make free shipping available. This was likely due to the products they were selling, many of which were exclusive by nature. The majority had pre-designated thresholds where the dollar increments were grouped as $49-50 (7), $25-35 (3), $60-75 (3), and $100+ (2). Four had unconditional free shipping, including Nordstrom and Victoria’s Secret, The North Face and lululemon.
During the coronavirus, these retailers are hoping to encourage shoppers to place some orders and look to avoid any inhibitors. As a point of reference, while 70% of the retailers in the 2020 Digital Commerce 360 Top 1000 offer free shipping, the most common minimum orders to get free shipping remains at $50.
| Rank | Company Name | Free Shipping | Threshold |
| 14 | Fanatics | No | NA |
| 15 | Macy’s Inc. | Yes | $25 |
| 18 | Nordstrom Inc. | Yes | $0 |
| 21 | Kohl’s Corp. | Yes | $75 |
| 23 | Gap Inc. | Yes | $25 |
| 24 | Nike | Yes | $150 or Nike member |
| 27 | Victoria’s Secret | Yes | $0 |
| 34 | Urban Outfitters Inc. | Yes | $50 |
| 45 | The North Face | Yes | $0 |
| 46 | Foot Locker Inc. | Yes | $50 or member |
| 49 | American Eagle Outfitters Inc. | Yes | $50 |
| 55 | Lululemon Athletica Inc. | Yes | $0 |
| 58 | L.L. Bean Inc. | Yes | $50 |
| 61 | Lands’ End | Yes | $75 |
| 87 | Carter’s Inc. | Yes | $35 |
| 89 | Under Armour Inc. | Yes | $60 |
| 96 | Chico’s FAS Inc. | Yes | $100 or passport |
| 44 | Dick’s Sporting Goods | Yes | $49 |
| 72 | REI | Yes | $50 |
| 102 | Lulus.com | Yes | $50 |
Free shipping will always be in favor. If it can’t be unconditional, retailers will look to entice shoppers with programs and rewards that capture their attention. Amazon will set the standard and should be monitored for its influence among shoppers. Rest assured, they will look for ways to save their money, increasingly finding ways to get free shipping on all their orders.
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