Practical Ecommerce

Free Shipping, Free Returns Critical for Online Shoppers

Online shoppers want free shipping, free returns, on-time delivery, and accuracy. Internet retailers that deliver on these consumer desires may earn loyal customers and gain a competitive advantage.

Order fulfillment — the act of packing products, choosing a carrier, and shipping an order — and online returns are two of the most challenging tasks retail ecommerce businesses face. Simply put, shipping and returns are difficult and expensive.

But shipments and returns also represent a customer service opportunity. Businesses that can meet or exceed expectations in these areas may be able to get more new customers and establish more long-lasting relationships that lead to repeat sales. And a shopper that returns three or more times to make a purchase is perhaps five times as valuable on each order to an online merchant than a single-visit shopper — and much more valuable for the lifetime of the shopping relationship.

Free Returns

A 2016 consumer survey from Shippo, a shipping application-programming-interface firm, found that 87 percent of respondents believed that free returns were an important part of their ecommerce buying decision.

Free returns are important to 87 percent — 53 percent plus 34 percent — of survey respondents. <em>Source: Shippo.</em>

Free returns are important to 87 percent — 53 percent plus 34 percent — of survey respondents. Source: Shippo.

What more, about 34 percent of those surveyed in the “2016 eCommerce State of Shipping” report said that they would only purchase from an online retailer if they knew they could return their order without having to pay for return shipping.

If Shippo’s data can be applied to ecommerce consumers generally, then something like one in three shoppers won’t buy from your store if it doesn’t offer free return or exchange shipping.

Given that many online retail businesses report return rates of three percent or less, offering an open and free return and exchange policy may lead to more sales and, possibly, even more repeat business without adding significant risk.

Free Shipping

Nothing makes a shopper abandon a cart or price-check a product on a competitive site more quickly than expensive shipping.

And more than one report or survey has found that free shipping is a significant buying incentive for online shoppers.

As an example, the aforementioned Shippo report found that about 63 percent of respondents would choose one online store over another for a free shipping offer and about 34 percent would only buy online if shipping was free. Thus, a free-shipping offer positively influenced about 97 percent of the consumers that Shippo asked.

Similarly, a Walker Sands Communications’ survey of about 1,400 consumers found that free shipping continues to be the most powerful incentive an online store can offer, with about 88 percent of those surveyed stating that free shipping impacted their decision to buy from a particular online store. This is up from about 80 percent just two years ago.

In a 2016 survey from Walker Sands Communications, 88 percent of respondents said that free shipping was an important online buying incentive.

In a 2016 survey from Walker Sands Communications, 88 percent of respondents said that free shipping was an important online buying incentive.

While not every Internet merchant can offer free shipping on every item, merchants that make some form of free shipping offer are meeting shopper expectations and may have a competitive advantage over stores that charge for shipping.

On-time Delivery

Sometimes, to offer free or low-cost shipping, online stores must use relatively slow shipping services. While shoppers seem to understand that free shipping won’t necessarily be as fast as paid shipping services, those shoppers still expect on-time delivery.

If a retailer’s site estimates that an order will take about five days to arrive, shoppers fully expect that shipment to arrive in five days or less. Anything longer is a service failure.

A recent survey from Voxware, a cloud-based communications provider, of about 500 shoppers found that 45 percent of those surveyed would be less likely or much less likely to buy from a particular retailer if the retailer missed its promised delivery date during the holiday season.

Effectively, shoppers expect online merchants to keep their shipping promises. When a store provides an estimated delivery date, that store needs to ensure that the order arrives on time.

Build a reputation for on-time delivery, and your store is also building trust.

Package Accuracy

Not surprisingly, online shoppers also expect merchants to send the proper products in each package. If you order an extra-large, red widget, you expect to get an extra-large, red widget.

Something like 35.4 percent of shoppers will never return to a merchant if that merchant makes just one packaging error, according to the Voxware survey. If a store stuffs the wrong item in the box three times or more, 91.8 percent of shoppers will never shop with that store again.

Online stores that use product checklists and detailed packing workflows may be able to avoid significant losses and thereby gain a competitive advantage if they are careful with picking and packing orders.

Order Fulfillment, Returns Matter

Your customers are very concerned about shipping — delivering a product to them and facilitating a return or exchange.

Taking care to meet or exceed shopper expectations around free shipping, free returns, on-time delivery, and packing accuracy may help your retail ecommerce business acquire and keep customers.

Armando Roggio

Armando Roggio

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Comments ( 4 )

  1. Rob Holzer December 21, 2016 Reply

    Thanks Armando. I do want to add that the free returns piece should be taken with a grain of salt (as with most blanket statements about what does/doesn’t work in ecommerce).

    When responding to surveys like the one cited above, people tend to lean towards answers that they think will benefit them as if the ecommerce gods are listening and granting their wishes. There’s obviously some truth to that line of thinking because articles like this one will have some affect on the return policies for some businesses and thus the consumers get their wish.

    That said, I highly doubt that 34% (or anywhere near that) of consumers “only buy if they know they get FREE returns”. Sure, when you buy clothing, shoes, and perhaps electronics, you may demand free return shipping but there are a large number of product categories where you don’t care if return shipping is free or if returns are offered at all. Many categories where you don’t even think about FREE return shipping until it’s mentioned to you (or a survey asks you) and then we’re all like “yeah, that sounds super important to me!”

    My point is that some context is missing here. What’s the makeup of the survey respondents? What product types do they have in mind when answering these questions?

    • Armando Roggio December 22, 2016 Reply

      Rob, I think the ecommerce gods are listening. :-)

      You’re right that it matters who Shippo asked. This is why I was careful to say that 34 percent of those surveyed required free returns not 34 percent of all consumers.

      About 59 percent of the folks Shippo asked were between age 24 and age 34. Those aged 35 to 44 made up another 22 percent of respondents, so that a majority (81 percent) were 24 or older.

      Some 70 percent of those surveyed are female, and about 56 percent of those asked had at least one child.

      Shippo did not say if it asked about particular product categories.

      It would seem to me the more expensive shipping a product is the more important free shipping and free returns would be to a shopper.

      Thank you for reading my article. I appreciate it.

  2. B.Brown December 22, 2016 Reply

    I agree with Rob. I look at my competitors first and see if they offer free returns. None do. I also find that many companies offer free return shipping but still have a restocking cost or they offer free shipping but have a handling fee. I rarely find someone having the lowest price on the same item I sell and have free shipping and free returns.

  3. Elizabeth Hollingsworth December 22, 2016 Reply

    Free shipping really depends on whether the retailer offers a flat rate, or prices according to weight and volume. If the retailer’s shipping rate is a flat rate price (as mine is – $15) then getting free shipping (as I offer it if you spend over $200) isn’t a concern.
    I certainly add more items to my basket to get free shipping if it’s priced on weight and volume (and therefore, much more than $15) when I’m shopping.
    But with regards to my own website, once I work out the various shipping price permutations, I expect to see customers adding much more to their baskets to reach the free shipping threshold.