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SHIPPING FEE AN ONLINE DEAL-BREAKER

Posted on October 9, 2002

      A study by market research firm NFO CFgroup says for every full shopping cart Canadians check out of online retail operations, another one is abandoned at the cash register.

      According to the May survey, Canadian Internet users abandoned 3.2 shopping carts in the previous three-month period. Higher-spend customers averaged 4.8 abandoned carts over the three months. Even non-shoppers left almost one a month behind. Comparatively, the average online shopper makes 1.1 purchases a month.

      Online retailers have to improve the shopping experience if they want shoppers to complete checkout, says NFO's public affairs director, David Stark.

      Reasons for abandoning half-finished purchases varied. One in 10 shoppers were put off by the amount of personal information required to check-out purchases; nine per cent found the total cost too high. But shipping appears to be the most frequent deal-breaker.

      The high cost of shipping led 17 per cent to abandon their carts. In fact, 59 per cent of online shoppers believe they're being gouged for further profit on shipping costs.

      Stark says a clear statement that the retailer is not marking up shipping costs might have led some of those shoppers to finish their transactions. "If companies were to do that, it might have stopped people from ditching their shopping carts," he says.

      Stark says that special offers on shipping might be conditioning shoppers to expect free home delivery. One-third of users said shipping should be included in the purchase price, while only 13 per cent completely agree that home delivery should be a paid service.

      It seems likely e-tailers will exacerbate that problem over the coming holiday shopping period. In a presentation last week, Jupiter Research senior analyst Ken Cassar said 59 per cent of retailers planned to use free or discounted shipping and handling to entice online buyers.

      There's not a lot of room for "promotion escalation," Cassar said, since big players like Amazon.com have already aggressively reduced shipping and handling costs.

      Stark says the carts abandoned by non-shoppers suggest consumers are experimenting with online shopping, and retailers have an opportunity to convert dilettantes to buyers. Though one in five said nothing would have kept them from abandoning their carts, 29 per cent of non-shoppers and 47 per cent of frequent shoppers would have completed the purchase if they could have saved the contents of their carts until later.

      "It's tied to the psychology of shopping," says Stark -- real-world shoppers often want time to mull their purchases or discuss them with family.

      Other survey results:

      Other strategies might have prevented shopping cart abandonment. Providing customer service contacts ranked high as a prevention strategy: 22 per cent said a 1-800 number to call customer service might have changed their minds, while 15 per cent said live text chat with a customer rep would have helped. The former option was most popular among non-shoppers (27 per cent), while the latter appealed to more frequent shoppers (23 per cent).

      Little irritates online shoppers more than filing an order only to be informed the item is out of stock. Seventy per cent of those surveyed ranked the availability of real-time inventory information as "important" or "very important" to the shopping experience. That number grows to 90 per cent among high-spend shoppers.

      Sears.ca has jumped to the front of the queue of popular Canadian e-tail sites -- 25 per cent of online shoppers said they'd purchased from the Sears Web site in the previous six months. That's an encouraging sign for online retail in general, says Stark. "People are increasingly buying clothing on the Internet" in addition to traditional e-tail offerings like books, CDs and computer equipment.

      Meanwhile, Chapters.Indigo.ca is losing ground, with 16 per cent in the May 2002 survey saying they'd bought there in the last six months, down from 25 per cent in November 2001. Don't blame Amazon.ca -- the Canadian arm of the U.S. online bookmonger hadn't launched at the time of the survey.

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