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Free Shipping Drives Online Purchases

09/15/2011

Free shipping is the most effective incentive to encourage shoppers to purchase more goods online.  By a country mile!

“The State of Online Retail”, a white paper released by Compete indicates that in Q2 2011, 77 percent of consumers said free shipping would encourage them to purchase more products online.

In comparison, 56 percent cited free returns, the second-most-popular feature. This means free shipping is 39 percent more popular than any other online shopping feature. No other feature garnered a 50 percent response rate, with 43 percent of consumers saying an in-store return option would encourage them to purchase more products online.

Outdoor retailer REI has leveraged this concept in an even more compelling fashion. REI offers free shipping to any of its 110 stores. Customers purchase via catalog or website then go to the store to pick up (and return) their order with no shipping costs. This tactic was smart for REI logistically as it sends trucks from its distribution center to the stores at least once a week.

What REI did not anticipate was the additional shopping done by customers when they went to the store to pick up their “free” shipped product. On average, customers spent $90 IN THE STORE! each time they went to pick up an order.

Multi-channel is the only way retailers of any scale will survive. Free shipping is a low-cost for customer conversion.

For the record, I’m still a fan of independent local stores where unique product mix and great service can be found…but most of the independents’ derive little revenue from their online presence.

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