Reduce Cart Abandonment with Effective Shipping Policies

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Reduce Cart Abandonment with Effective Shipping Policies

Through studies and surveys, ecommerce analysts have filled articles and eBooks to the brim with various factors that contribute to a high rate of shopping cart abandonment.  Collectively, these factors leave approximately seven of ten shopping carts in limbo, abandoned by consumers with items inside waiting to be purchased.

Reduce Cart Abandonment with Effective Shipping PoliciesOf the myriad of reasons for abandonment, shipping costs are undeniably the most prominent. According to a survey conducted by ComScore, 54% of respondents stated that “shipping costs made the total purchase cost more than expected,” leading to shopping cart abandonment.

Additionally, 34% of shoppers surveyed claimed that the shipping and handling fees were listed too late into the purchasing process, generating further dissatisfaction and abandonment.  It’s clearer now than ever that customers are simply unwilling to pay exorbitant rates to receive what they’ve ordered–and rightly so.

On a playing field where approximately 55% of consumers expect an option for free shipping and giants like Amazon.com are fulfilling that expectation, devising a strategy to get products to a consumer’s door with little to no extra fee and minimal confusion is paramount.  Many online retailers have adopted one of two mantras to reduce cart abandonment:

1. Provide free shipping.
2. Provide flat-rate shipping.

While charging for shipping should never be a revenue generator, it shouldn’t cannibalize profits either.  Luckily, there are a few tactics that can mitigate the cost to your company while cutting down on this heavy-hitting contributor to shopping cart abandonment.

 

Achieving “Free” Shipping:
As the old adage goes, there’s no such thing as a free lunch. While the following options may give the consumer a discount, someone has to foot the postage bill.  Consider the following strategies to determine which is most beneficial for you and your customers.

Indiscriminate Free Shipping.
In a perfect world, every online retailer would be able to offer free shipping on each order with zero repercussions.  Although this lofty offering may be a viable option for larger retailers, offering free shipping on any and every order may simply not be feasible for your company.  Take a look at your stock, average shipping costs, and average order value to see how much damage free shipping would do to profit margins.  With a little testing, you’ll be able to calculate fairly quickly whether the projected amount of sales saved and additional sales generated by reducing cart abandonment will out-pace the costs of “free” shipping.

Threshold Shipping.
Another popular tactic among top retailers is offering shipping for orders that exceed a certain order value.  Once again, the specific threshold is determined by leveraging your average order value and average shipping costs against your profit margin.  Setting the dollar value for free-shipping qualification is a great place to gain an edge over the competition, as there isn’t a universal best practice just yet.  For example, Banana Republic offers free shipping on orders exceeding $50 in value while Abercrombie and Fitch require cart values to surpass $150.

By setting your threshold lower, you make your store a more appealing choice for consumers. In addition to being a great way to dissuade shopping cart abandonment, offering free shipping after a specific value threshold is an effective upsell tactic.  According to the UPS study, over three-quarters of shoppers polled said that they had added more items to the cart in order to reach the free shipping price point.

Loyalty Rewards.  
If offering free shipping on every sale simply isn’t a profitable move, then consider using it as a way to entice repeat purchases.  By offering free shipping to loyal customers, you can absorb expenses using multiple sales as a buffer instead of one.

 

Free Shipping Alternatives:
If providing free shipping simply isn’t a possibility at any price threshold, there are other options available.

Flat-Rate Shipping.
Although customers seem to passionately dislike paying for shipping, the most offensive aspect is often unclarity.  Over a third of shoppers have cited a tardy listing of shipping and handling fees as a reason for abandonment.  By offering customers a low, flat shipping fee instead of a vague estimate unveiled at checkout, you can avoid frustrating consumers and reduce cart abandonment.

Once again, take a look at your average shipping costs and see if a flat fee that isn’t too costly can cover most of your expenses. Once you’ve come up with a number, if you’re clear with your policy, then shippers can determine from the very beginning whether they’re willing to pay the asking price.  Leaving customers in the dark about additional fees until the shopping cart stage is an effective way to drive up shopping cart abandonment rates.

Third-Party Programs.
Amazon’s Prime program gives shoppers free 2-day shipping on a wide range of selected products.  While your company may not have Amazon’s size to entice consumers to purchase a membership, there are partnerships out there that can help you capture interest.  For example, ShopRunner.com works with a number of retailers to offer competitive shipping options to consumers for a low, flat rate.  Although this option isn’t free for the customer, it’s often a great deal for serial online shoppers. As an added bonus, joining this or a similar program may gather additional traffic for your site and discourage shopping outside of the exclusive network.

Although optimizing your shipping prices are a significant contributor to reducing cart abandonment, there are hundreds of other factors to consider when optimizing your online store.  For more information on reducing site abandonment at every stage of the conversion funnel, schedule a consultation with UpSellit.  Our suite of proprietary technologies can provide your company with a customized solutions for reducing website abandonment.

 
Written by Bryan Gudmundson


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