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Does free shipping sweeten an mcommerce purchase?

November 3, 2011

Offering free shipping to consumers is one way retailers will encourage trial of the medium this holiday season, pushing comparison shoppers to buy from one retailer and not another.

Free shipping has long been a tactic favored by online retailers and catalogers to spur interest around the holidays and help shoppers overcome any hesitancy they may feel about paying for shipping. Now that retailers such as Nordstrom and LL Bean are offering unconditional free shipping, the pressure is on for others to follow suit.

“Free shipping will certainly be an important factor in consumers’ decisions to engage in mobile shopping this holiday season,” said Graham Jones, general manager of PriceGrabber, Los Angeles.

“When our survey respondents were asked why they plan to shop online or from a mobile phone for gifts, an astonishing 76 percent indicated that they like to take advantage of free shipping,” he said.

“This was the second most popular reason for shopping via mobile or online, coming just short of the 78 percent who cited avoiding bricks-and-mortar crowds as a reason.

A strong ploy
With mobile shopping still being a relatively new method for shopping, retailers are looking for ways to encourage trial.

Many retailers could turn to free shipping offers as an important tactic for helping them reach their goals in mobile.

“Targeting free shipping to encourage shoppers to test the mobile channel should perform well,” said Lauren Freedman, president of the e-tailing group, Chicago.

Free shipping offers could also be the tipping point for consumers who use mobile to compare prices among several different retailers.

Some consumers may even end a mobile shopping session if they do not see a free shipping offer.

“With the power of mobile to access competitors at their fingertips they can quickly find someone who will [offer free shipping],” Ms. Freedman said.

Often the strategy for free shipping is the same for a retailer’s mobile and Internet presence as many retailers are still not set up to offer separate promotions. However, the messaging tends to be weaker on mobile sites, per Ms. Freedman.

“The best way to promote free shipping offers in mobile is with visual displays that stand out beyond text links,” Ms. Freedman said. “Ensuring display throughout the mobile experience even in the shopping cart is also a good reminder for on-the-go shoppers.”

However, despite the popularity of free shipping among shoppers, such offers are not a guarantee that a purchase will be completed in mobile, especially if the checkout process has not been optimized for mobile.

“Overall, free shipping is not a strong standalone differentiator but can tip the scales during impulse browsing and encourage larger basket size if positioned correctly,” said David Hewitt, Atlanta-based global mobile practice lead at SapientNitro.

“The biggest incentive for mobile conversion is probably one-click or express ordering for existing loyalty members,” he said. “Text entry is a big barrier for mobile, so any reduction of forms and steps can go a tremendous way to preventing shopping and checkout bail.”

Profit vs. volume
With shipping costs continuing to rise, free shipping is also not a favorite promotion for retailers since it forces them to sacrifice profit to gain a larger volume of orders.

One way retailers are addressing this in mobile is to offer other services and promotions that are well-suited for the mobile shopper.

For example, buy online, pick up in-store is an increasingly popular online service that works well in mobile.

“Buy Online, Pick Up In-Store is like free shipping in reverse and very well-suited for both retailers and consumers on mobile, especially for large items that have high shipping costs or relatively cheap items whereby the shipping cost is a large percentage of the order,” said Dan Israel, Atlanta-based mobile strategist at SapientNitro.

Daily deals are also an increasingly popular mobile channel promotion because of the ability to target offers and create excitement with these promotions. As a result, free shipping could begin to take on a smaller role in mobile.

A critical component for successfully offering daily deals is knowing what types of products to offer to which consumers. In comparison, free shipping is a much more pervasive benefit across the catalog.

“Deep discounting and daily deals have stolen some thunder from free shipping,” SapientNitro’s Mr. Hewitt said.

“More retailers are offering daily deals, ‘temporary’ price cuts,” he said.

“Those deals are pushing the impulse free shipping benefit a bit further into the background as retailers are trying to convert higher up on the impulse curve.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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