It's time to rethink shipping costs

Shipping costs are a leading cause of shopping cart abandonment Shipping costs are a leading cause of shopping cart abandonment Image credits:  http://www.shotsbyme.com/191/

Given that shipping costs are the number one cause of shopping cart abandonment, why do retailers continue to charge separately for it?

We are about to start work on a Joomla based e-commerce site selling skin care products. So, I was a little shocked when a package turned up addressed to my wife containing the same products we are about to start working with. She ordered it online a few days before. Coincidence, eh? Some might say that's "The Secret" or Universal Conscience or something.

Anyway, there happens to be only about a gazillion online retailers selling this product. So, I quizzed her about why she chose to purchase from that particular site. Her answer: "Free delivery".

Free shipping = no surprises = you got the sale

It wasn't the fancy design. The site looks like a high school project from the 90's. It wasn't recommended by a friend, it wasn't in the top 5 on Google and it wasn't the cheapest.

Turns out that every page makes it clear that shipping is totally free so the cost of the product going into the cart is the cost at the end of the checkout.

The leading cause of shopping cart abandonment

All the other expenses involved in online retailing like domains, hosting, staff, insurance, rent, website development, maintenance, marketing, legals, bank fees, ISP charges, etc are absorbed into the purchase price but the normal practice is to price shipping on an order-to-order basis and charge it at the end of the checkout. Coincidentally, this is also when the transaction is most vulnerable to "shopping cart abandonment".

Many sources quote different statistics about this but the general consensus is...

  1. Shopping cart abandonment rates can be as high as 80%. 50% to 70% seems to be the general rate reported.
  2. Shipping costs are the number one cause of shopping cart abandonment.

Given that retailers can't get the product to the customer without a shipping cost why not include it in the price? Or at the very least include the minimum shipping cost into the product pricing and slash the actual shipping costs at the checkout?

Some retailers will argue that the cost of shipping to certain destinations may be larger than their margins allow. Understood. But, these will be in the minority. Even in this situation, it may be prudent to accept the occasional sale at a reduced profit if it means many more profitable sales due to lower abandonment rates.

Here's proof

There are a multitude of online book shops selling the same books to the same market. But, Bookdepository.co.uk deliver anywhere in the world for free. I've been ordering from them for years. They turn over $180 million a year in sales and Amazon just announced their intention to acquire them in a deal that will probably have 9 zeros on the end.

john-pitchers-avatar smAbout John Pitchers

John Pitchers is co-founder and lead developer at Joomstore where his primary role is the design and development of Joomla websites. He is also the developer of the FocalPoint maps extension for Joomla. John has been building CMS based web sites since 2004, originally working with Mambo before it forked into Joomla. When not writing PHP, Javascript or CSS you'll find John carving up the hills around Baldivis on his longboard (long before Walter Mitty made it famous).

Find out more about John on his About.me page and . Follow John on Twitter.

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