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Free Shipping Sways Online Shoppers

Ann Arbor, Mich. — Perhaps the surest way to close an online sale is to offer shoppers free shipping — with no strings attached.

According to a study of the 40 largest-volume e-tailers by ForeSee Results, free shipping without restrictions significantly impacts customer satisfaction and loyalty and is an effective tool for converting first-time buyers.

The Top 40 Online Retail Satisfaction Index found that 41 percent of more than 10,000 respondents cited free shipping as the primary factor in their holiday purchase decision-making. For 79 percent of respondents, free shipping influenced them to choose one retail site over another.

“Consumers expect discounts, gimmicks and other promotions during the holiday season,” said Larry Freed, president/CEO of ForeSee. “So when a retailer delivers on that expectation, satisfaction will increase.”

Conversely, the study found that placing restrictions on free shipping, including time limits or minimum order requirements, limits the ability of such promotions to engender long-term loyalty. “Putting restrictions on free shipping promotions has the effect of a caffeine buzz: You get short-term gains but no real long-term benefits,” Freed said. “Retailers may boost short-term sales through conversion of first-time buyers and higher average order size, but they won’t be doing much to engender goodwill for a long-term relationship with the consumer. The question becomes, ‘What do you want to do with your opportunity?’”

“Eventually, free shipping will become just another cost of doing business, but for this holiday season it was an effective conversion tool for first-time buyers,” Freed added.

Key findings from the study included:

  • When offered with restrictions (e.g., tied to dollar value of purchase), free shipping does not significantly impact customer satisfaction and loyalty.
  • Retailers must offer free shipping to keep up with the competition, but it is no longer a competitive differentiator.
  • 63 percent of online holiday shoppers recalled free shipping offers, 24 percent said it wasn’t offered to them and 13 percent couldn’t remember if free shipping was offered.