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Online shoppers enjoy the perks of free shipping

Sometimes I harken back to when free shipping became a phenomenon online. For me, it was L.L. Bean’s announcement in 2011 that all orders would ship for free. Not everything lasts forever, as their current policy is free shipping with a $50 threshold or being part of their credit card program. But ultimately, Nordstrom extended free shipping that same year, which turned the tables, causing many other retailers to follow suit.

And in fact, a look at the Digital Commerce 360 Top 1000 database reinforces that 74.4% of retailers have some sort of free shipping. Just 20.4% had unconditional free shipping for all orders, while 45.1% had free shipping when shoppers reached a dollar threshold. Lastly, 14.5% had another pre-requisite which often includes being part of a loyalty program.

Over the years, surveys from Digital Commerce 360 and Bizrate Insights have shown the importance of free shipping to online shoppers. As recently as January 2022, we asked 1,108 online shoppers about the attributes or conditions most likely to lead them to place an order on a retailer’s website. Free shipping topped the list at 76%. That’s even higher than the right price (73%), in-stock products (54%) and product selection and trust in the brand (tied at 53%).

Free shipping determines where shoppers covert

As the all-important 2021 holiday season approached, a second survey asked a similar question about retailer selection. Once again, free shipping came in at the top (66%). Next: competitive prices (60%), in-stock products (53%), delivery speed (46%) and past overall experience at 42%. Free shipping appears etched in the minds of online shoppers. There are implications for both retailers and online shoppers as they evaluate choices in shipping charges for their customers.

Our most recent survey focusing on free shipping began with wanting to know what percent of respondents were Amazon Prime members. I can’t help but believe that is a lens through which those shoppers see the world. This Digital Commerce 360 and Bizrate Insights survey of 1,097 online shoppers was contrasted with 1,029 online shoppers in 2021 and 989 in 2020

For starters, 67% of survey respondents were Amazon Prime members.

For starters, 67% of survey respondents were Amazon Prime members. Certain expectations come with being a Prime member. Interestingly, it starts with delivery speed, cited by 37%. Similarly, when choosing from two retailers, they gravitate to the retailer that ships faster (35%). One in three expect more products to be shipped for free at other online retailers.

We then inquired, “What percentage of your online orders over the past 6 months have included free shipping, outside of those placed on Amazon.com?” Revisiting past numbers, we see that shoppers consistently seek out free shipping when shopping online.

% orders beyond Amazon that included free shipping (2022 vs. 2021 vs. 2020):

  • 50%+: 69% vs. 68% vs. 70%
  • <50%: 31% vs. 32% vs. 30%

Of course, we all know that not every order will come with free shipping. Yet, online shoppers find limited reasons to pay for free shipping. Thus these online shopper reasons are instructive and can help retailers know when these fees are deemed acceptable among the online community. Simply wanting the product is highest on the list for 41% of respondents. 32% look at the cost of the order and, if palatable, will pull the trigger. Knowing they can’t meet the threshold in the cart was a factor for 26%. In the same vein, 19% paid for shipping when receiving a product discount greater than shipping. And let’s face it, with private label products, there may only be one choice for buying a product. Lastly, fast matters and 18% of those surveyed wanted same-day delivery.

How do Prime shoppers compare with non-Prime shoppers?

When looking at the Amazon Prime members versus their non-Amazon counterparts, we saw significant gaps in behavior in wanting same-day delivery (35% vs. 6%). Meanwhile, most of the cost elements were not significant. The fact that a product was also only available on one site saw a 13% gap between Amazon Prime members and those without Prime memberships. We saw that those who weren’t Prime members were 8% less likely than Prime members to buy a product that didn’t have free shipping if they really wanted it, which is often the determining factor.

Factors that affect buying behavior

Amazon Prime members Non-Amazon Prime members Gap

(Prime vs. non-Prime

All survey respondents
Want same-day delivery 35% 6% 29% 18%
Item was only available on one site which had additional shipping fees 28% 15% 13% 25%
Free shipping was not offered, and I wanted the product 42% 34% 8% 41%
The product discount exceeded the cost of shipping 21% 15% 6% 19%
Item is oversized or requires special handling or setup 17% 11% 6% 15%
Need to ship to multiple addresses on the same order 7% 2% 5% 5%
Did not have enough items in the cart to meet the threshold 27% 23% 4% 26%
Need it faster than the free-shipping timing offered 27% 23% 4% 26%
Could not locate a promo code for free shipping 18% 16% 2% 18%
The total cost of the order was acceptable, even with shipping charges included 32% 30% 2% 32%
Did not want to become a member of the retailer’s unpaid rewards/loyalty or free-shipping program 9% 11% -2% 10%
Did not want to become a member of the retailer’s paid loyalty or free-shipping program 9% 13% -4% 11%
I do not ever complete a purchase if I must pay for shipping 5% 17% -12% 8%

Base: 2022-Prime (737) vs. Non-Prime (355) vs. Survey Respondents (1,092)

Finding free shipping has always been desirable; nothing much has changed over the years. It’s highly recommended that retailers review their shipping policies annually as well as in advance of the fourth quarter holidays. Decisions will impact the perception of the retailers and could be an important factor in driving conversion as we have learned. Perceptions aren’t likely to change, so being prepared and using free shipping tactically throughout the holidays can keep the bottom line in check and shopper satisfied, which is a win-win for all.

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