SitePoint Sponsor

User Tag List

Results 1 to 10 of 10
  1. #1
    SitePoint Zealot
    Join Date
    Apr 2008
    Posts
    141
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)

    Shipping charges vs. Adding Shipping to Price

    I've decided that this winter (which is our off-season) we'll begin offering $9.99 flat shipping on all orders and free shipping on all orders over $199, opposed to our current system of charging price + shipping. Our items are heavy and on average cost about $25 to ship. Subsequently, we'll simply be adding the shipping cost into the price. Our actual overall prices, will in effect, not change at all.

    We're the price leader on most of our products. However, I'm worried that now we won't appear to be so economical, despite our prices not having changed. We also have at least one major competitor who prices shipping separately as we currently do.

    Currently
    US $99.99 + $35 shipping
    COMPETITOR A $145 + $7.99 shipping
    COMPETITOR B $110 + $37.99 shipping


    New Format
    US $125 + $9.99 shipping
    COMPETITOR A $145 + $7.99 shipping
    COMPETITOR B $110 + $37.99 shipping

    I'm sure we'll compare more favorably to competitor A now. However, I'm worried that competitor B will now appear to be the price leader. At the same time, I think consumers may be more quick to dismiss companies with high shipping and therefore we'll compare more favorably to both companies.
    What's your opinion?
    www.ChineseImporting.com Guide to importing products from China.

  2. #2
    . shoooo... silver trophy logic_earth's Avatar
    Join Date
    Oct 2005
    Location
    CA
    Posts
    9,013
    Mentioned
    8 Post(s)
    Tagged
    0 Thread(s)
    You might as well just list the price as $135 under the guise of free shipping. The buyer is going to pay that regardless.
    Logic without the fatal effects.
    All code snippets are licensed under WTFPL.


  3. #3
    SitePoint Wizard silver trophy
    Join Date
    Aug 2003
    Location
    Southern California
    Posts
    4,686
    Mentioned
    19 Post(s)
    Tagged
    0 Thread(s)
    The rule of thumb is that free shipping is expected and downright demanded at the $99 plus level. People will pay more to not have this tacked on and will abandon if they see it.

    But don't assume any rule applies to your business. It's easy to test and that's exactly what you should do.
    - Ted S

  4. #4
    SitePoint Zealot alicia101's Avatar
    Join Date
    Oct 2001
    Posts
    168
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Agree, level of abandonments at shipping charges page goes up the higher the order total.

  5. #5
    SitePoint Member
    Join Date
    Feb 2003
    Location
    Sydney, Australia
    Posts
    10
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    I have found if you just make shipping a flat $10 almost regardless of value of cart people dont mind. Means you can then use free shipping as a promo item as opposed to simply giving it away.

  6. #6
    SitePoint Wizard silver trophy
    Join Date
    Aug 2003
    Location
    Southern California
    Posts
    4,686
    Mentioned
    19 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by Angus View Post
    I have found if you just make shipping a flat $10 almost regardless of value of cart people dont mind. Means you can then use free shipping as a promo item as opposed to simply giving it away.
    I can't speak for AU specific market dynamics but the rule of thumb for US shoppers, backed by a ton of research, is that people will pay a few bucks more for an item with free shipping and abandon in droves without it... A big part of shopping cart abandonment is in fact people going through to validate fees hence why Amazon was able to use free shipping as a marketing campaign rather than ads or offers.
    - Ted S

  7. #7
    SitePoint Member
    Join Date
    Feb 2003
    Location
    Sydney, Australia
    Posts
    10
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by Ted S View Post
    I can't speak for AU specific market dynamics but the rule of thumb for US shoppers, backed by a ton of research, is that people will pay a few bucks more for an item with free shipping and abandon in droves without it... A big part of shopping cart abandonment is in fact people going through to validate fees hence why Amazon was able to use free shipping as a marketing campaign rather than ads or offers.
    You might well be right. I thought it was more about when they get to the checkout fees are considered exhorbitant and so they abandon. If you have a flat rate stated in your header and carry it all the way through the site "$10 shipping Australia wide!" then there is no checkout shock... ? Sounds like something we should AB test further, but what I do know is when people use a comparison engine and you are $10 more on the base product because of built in freight costs, then your site doesnt get the first click...

  8. #8
    SitePoint Wizard silver trophy
    Join Date
    Aug 2003
    Location
    Southern California
    Posts
    4,686
    Mentioned
    19 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by Angus View Post
    You might well be right. I thought it was more about when they get to the checkout fees are considered exhorbitant and so they abandon. If you have a flat rate stated in your header and carry it all the way through the site "$10 shipping Australia wide!" then there is no checkout shock... ? Sounds like something we should AB test further, but what I do know is when people use a comparison engine and you are $10 more on the base product because of built in freight costs, then your site doesnt get the first click...
    Test it and I bet you'll find that even if your traffic sources drop, your CVR increases as long as you are in line with competitors.

    Hence why most CSEs have built in the total estimated cost...
    - Ted S

  9. #9
    SitePoint Enthusiast PromptSpace's Avatar
    Join Date
    Jun 2012
    Posts
    96
    Mentioned
    1 Post(s)
    Tagged
    0 Thread(s)
    I would second everyone else. Factoring in your shipping cost and offering free shipping is the way to go.
    Host4Geeks | Hosting powered by geeks, enhanced with a scoop of
    love and awesomeness!!

    The goal as a company is to have customer service that's not
    just great, but legendary -Henry Ford

  10. #10
    SitePoint Zealot
    Join Date
    Apr 2008
    Posts
    141
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    So for what it's worth we switched over to the model mentioned above (free shipping over $150, $9.99 other wise). Our overall number of sales is almost unchanged from the same period last month (up around 1%). Overall revenues per order is up about 7% (including shipping or lack there of).

    I think it's too early to judge performance one way or the other. The overall revenue per order number is encouraging but again, it needs some more time to make a clear assessment.
    www.ChineseImporting.com Guide to importing products from China.


Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •