Picture this: you walk into a department store and you see the price tag on various items you want to purchase; but you have no idea what you'll actually end up paying at the register because sales tax can range anywhere between five and 25%. For ecommerce shoppers, this scenario is often experienced because shipping costs and taxes vary greatly based on delivery location. At retail, consumers are comfortable with the additional tax they have to pay because it is a fixed rate they are accustomed to. Ecommerce customers, on the other hand, are often left in the blind until the very last step of checkout. After they've searched for and finally found the item they really want, put in all of their credit card and shipping information, and have moved on to the last step, they finally see the cost of actually getting the item to their doorstep.
The customer might abandon their cart at this point and unfortunately this is where many etailers lose hope for conversions. The moment of truth left the consumer blindsided and now they have exited the "store." They expected to pay one price, with a little wiggle room in their budget for shipping and taxes, but once they saw the true end-cost they realized either that they were not ready to purchase or that they wanted to look elsewhere for a better deal.
In order to increase conversions, etailers need to better understand why customers are abandoning their online shopping carts in the first place. Consumers may be spending more time comparing prices across multiple ecommerce sites rather than purchasing from the first one they find or they are shocked by the shipping rates and decide they want to purchase from a site that offers better rates. Whether the customer is from the US, China, or Canada, they each want to be offered the best rate available for their country's shipping. This is why it's of key importance to offer the best rates available to all of your ecommerce shoppers and show what the true cost will be early on rather than waiting until the end of the checkout process.
Online shoppers do recognize that they pay for shipping, and whether it is factored into the total cost or as a separate fee, they still want to know the estimated final cost before finalizing their purchase. If the cost of shipping is incorporated into the cost of the product, or if free shipping is offered only on certain amounts or types of items, then consumers may purchase more to get a better deal. If the shipping information is provided to consumers sooner rather than later, they are usually happier about their purchase and more pleased with the brand for being transparent.
While free shipping is a simple and effective way to lure people to the purchase point, you may be concerned about how it can affect your profits. If you offer free shipping on every order you could end up putting your business in a position that negatively affects profits. Instead, you can require a minimum order amount for customers to get free shipping, ultimately boosting the amount they spend on your site while keeping them happy about the overall cost. You may also want to consider a monthly membership that people pay for in order to get free shipping on all of their purchases, with no minimum required. Offering free shipping, after increasing your product price in order to maintain profitable margins, may end up driving shoppers away simply due to the higher cost. Depending on the item, shipping costs can vary greatly, so it is recommended to add a shipping calculator to your website to show customers a realistic price before they decide to finalize their payment.
To compete with large ecommerce companies like Amazon or eBay, smaller businesses could benefit from working with a consolidated shipping provider that can add packages to their network of orders. This is a smart option when first starting to sell and ship products internationally since you will likely be shipping smaller amounts. A consolidator typically gets the lowest freight rates available and will deliver your product for a lesser cost by using the local postal service. It is also common for them to help with customs brokerage, a process that ensures your customers will not end up have to pay additional taxes or duties once they receive their order.
Being straight forward about shipping costs is a simple way to boost conversions and reduce cart abandonment rates on your website. Instead of scaring potential customers away, being transparent will make customers happier and more inclined to purchase from you again in the future. It's even better if you can offer competitive shipping rates that are better than what other ecommerce retailers are offering. As ecommerce spending continues to rise, not only in the US but around the globe, knowing the ins and outs of your ecommerce strategy will ensure you meet the needs of your consumers in the best way possible.
Steven Page is the Founder and President of Stalco, a gateway to the Canadian market. Since 1994 Stalco has been assisting US companies with all of their Canadian logistics needs and they have now started working with Canadian businesses looking to expand into the US. Stalco assists with importation, customs clearance, regulatory compliance, storage, inventory management, pick-n-pack fulfillment services, shipping, and more. To learn more visit www.Stalco.ca or you can email Steven at Steven@stalco.ca.
