The word “free” has a timeless appeal. This is also true of the phrase “free shipping” — at least for anyone who shops online frequently.
Free shipping has consistently been proven to be one of the top purchasing factors among millennials. Therefore, it is not surprising that 66% of online retailers consider “free shipping” as one of the most effective marketing strategies.
In this study, Parcel Monitor partnered with Rakuten Insight to find out how free shipping can influence consumers’ purchase decisions. Read on to find out the correlation between the availability of free shipping and conversion rate of customers.
More Than Half of Shoppers Demand Free Shipping
With subscription plans like Amazon Prime setting the bar for fast and free parcel delivery, customers are now conditioned to expect the same from every online retailer.
According to Rakuten Insight’s findings, free shipping is among the top 3 factors affecting consumers’ decision to purchase online; at the top of the list lies the price of products (80%), followed by free shipping (59%), and then reviews & testimonials provided by fellow shoppers (49%). The same proportion of respondents (54%) admit that they are more likely to return to the same store for repeat purchases if free shipping is offered.
Free Shipping Can Boost Average Order Values of Online Shoppers
It is common for online retailers to set a minimum order to qualify for free shipping. Such a requirement is a great incentive for customers to add more items to their (online) shopping carts, all under the pretense of unlocking more “free” savings. As a matter of fact, 59% of survey participants indicated their willingness to top up their orders in order to meet the minimum amount to be eligible for free shipping.
A free shipping threshold has become a popular way for brands to increase their Average Order Value (AOV). United by Blue, for instance, offers free shipping for all orders exceeding $100. Another notable example would be Target, which provides customers with free two-day shipping if they spend at least $35 on their website.
A Reasonable Delivery Time Is Crucial Even With Free Shipping
Even with free shipping, customers still expect their items to be delivered in a matter of days. When asked what is the longest delivery time that they are willing to accept in order to receive free shipping, only 10% of them answered “more than 2 weeks”. A whopping 90% want their items within 7 days or less.
Should E-Commerce Businesses Offer Free Shipping?
As with any other strategic decision, whether free shipping is a viable tactic depends on a variety of factors. While it is a great way for businesses to gain a competitive edge as well as reduce cart abandonment, it also runs the risk of increasing returns, which may ultimately affect their bottom line. As such, it is crucial for brands to carefully weigh the pros and cons of free shipping before fully committing to it.
This survey was conducted by Rakuten Insight in the month of October, 2021. There were a total of 4 questions, each of which revealed important information on consumer behaviour associated with free shipping. The team distributed the questionnaire to 49991 shoppers coming from 6 Southeast Asian markets: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. The sample consisted of 60% females and 40% males.
About Rakuten Insight
Over the last two decades, Rakuten Insight has remained at the forefront of consumer market research data collection in the region. Rakuten Insight’s online panels have been developed throughout 12 major Asian markets and regions, all of which are managed by dedicated local support teams and meet the highest standard of the industry.