The Marketing of Shipping

I was listening to and studying the notes from MarketingExperiments.com’s study on shipping and shipping charges for online retailers. Here is a quick review:

Three Shipping Tactics

Tactic 1 – Low Prices / High Shipping
-Risk losing repeat customers
Tactic 2 – Average Prices w/ Free Shipping
-Customers first evaluate on price, then check on shipping
-Offer a Rush Order Upgrade Where it Ships Out That Day, No Extra Cost But Added Benefit
Tactic 3 – Free Shipping as an Incentive

Four Guidelines

1) Do not set threshold price too high
2) Do not set threshold price lower than average order price
3) Make sure customers are 100% aware of free shipping offer
4) Use a clearance item are to help customer reach free shipping threshold

In Action

I wanted to see these principles in action so I did a quick Google search for free shipping offers and found a few that we’re interesting to think about with these principles in mind.

ETOYS.COM – Minimum order of $99 required for free shipping, with most items being priced from $10-$30 it would require multiple items to be purchased and it would be hard to hit $99 right on the nose. But, $99 doesn’t feel very far out of reach when thinking about toys so I would imagine it would be a good incentive.

BACKCOUNTRY.COM – I love backcountry.com and noticed on this visit the “free shipping on orders over $50″ link in the upper right hand corner. If you know this site, you will know that most products cost at least $100, but I think the products this $50 threshold are geared towards are the smaller things like nalgene bottles, t-shirts, and beanies where normally that would just be a one item purchase, but the free shipping offer may encourage customers to order two or three to get the free offer.

ABEBOOKS.COM – They offer free shipping on almost everything in their store! As I thought about this one my guess is its all about their competition. Books are books, no matter where you buy them from and it is fairly easy to head down to Border’s and snag something. Shipping is also very inexpensive for books, if you can give them the added convenience of shopping from home without having to pay for the shipping then the appeal of online book shopping would increase.

MEC Labs – Shipping Charges Tested