Do Shipping Costs Matter To Shoppers This Year?

The recent announcement by Walmart+ to do away with shipping minimums is clearly a bid to stay competitive with Amazon Prime. Amazon is a juggernaut, with an ecommerce market share of 38%, 126 million Prime memberships worldwide and a long simmering rivalry with Walmart, a retailer more dominant in brick-and-mortar sales. The launch of Walmart+ in September, at a time when ecommerce was booming, and the change to free shipping with no minimums so early in the life of the service, indicates that Walmart is feeling around for a way to reach more online shoppers and keep them coming back. “At the intersection of these [Amazon’s and Walmart’s] colossal corporations’ core businesses is ever-faster and free delivery. The more reliable, fast and low-cost your ability to deliver products to a customer’s front door – especially amid the coronavirus pandemic – the more likely that customer will order from you again in the future,” reports Nick Statt for The Verge.

How Important Is Avoiding Shipping Fees To Shoppers This Year?

A recent survey by Digital Commerce 360 and Bizrate Insights asked 1,000 online consumers why they shop on Amazon. 51% of respondents said they have Prime and get free shipping. Since December 2019, Prime memberships have increased by 14 million, which appears to mean that with the rise in ecommerce shopping, free shipping remains a priority for consumers. However, given the necessity to order online for so many families this year, is free shipping as important as in prior holiday seasons? The short answer is yes. 71% of those surveyed said that free shipping was the most important factor to them when choosing where to shop, followed by competitive pricing, availability and speed of delivery. 

Many retailers, like Walmart+, are tweaking their shipping policies to try and meet increased demand. Dropshipping, an order fulfillment method that does not require a business to keep products in stock and ships from a third-party seller, has been adopted by 40% of retailers, including Nordstrom and Kohl’s, this holiday season, mitigating the cost of taking on a lot of inventory. Dropshipping is a similar approach to the very successful Amazon and Walmart marketplaces, where third-party sellers are responsible for shipping their items, but the retailers provide the hub. Taking a different approach is Best Buy, which will turn “about a quarter of its approximately 1,000 stores” into “specially designated” shipping centers to “help speed up orders and improve efficiency over the holidays and beyond,” according to Melissa Repko, reporting for CNBC. Many retailers and brands are also ramping up their in-store fulfillment options like curbside pickup, which have been hugely successful in 2020. Retailers understand that, though consumers likely grasp that this holiday season is unique, they still want value, delivered quickly and ideally for free.

What Can Brands And Retailers Do In Lieu Of Free Shipping?

Although free shipping is certainly an alluring prospect for many shoppers, brands that aren’t able to offer free shipping across the board can provide other perks and deploy strategies that may temper the cost of shipping for many consumers. 

Shipping Transparency: If a brand can’t offer free shipping, being completely upfront about how long something will take to arrive, offering tracking and relaying information about delays can go a long way toward making shoppers feel more comfortable with making purchases. For example, Target has created a landing page on their site explaining exactly when products will be delivered based on when they are ordered. Being honest and transparent about shipping and supply, and taking responsibility when things go wrong, is good for holiday business today and creates loyalty and trust for the future.

Discounts And Promotions: Free shipping after a certain purchase dollar amount is reached can be enticing for shoppers. For example, The Gap always offers free shipping after a purchase reaches $50, hoping shoppers will add just a bit more to their carts to get free shipping too. In 2019, a survey of 3,000 consumers by BigCommerce found that “30% [of respondents] always increase the size of their orders if it qualifies them for free shipping.” 

Explanation Of Shipping Costs Versus Product Prices: Shoppers understand that shipping costs real dollars. And though shoppers don’t want to pay for shipping themselves, understanding the costs of shipping can help shoppers feel better about them. For example, some ecommerce sites explain how they have not included the cost of shipping within the cost of their products so they can provide more transparency about the actual cost of the product. These sites still offer consumers the option to choose the shipping speed that is right for them.

Shipping Memberships: Although Amazon and Walmart both appear to offer free shipping, they both require shoppers to pay for shipping memberships. Other ecommerce sites, like Uncommon Goods, also offer membership programs. The Uncommon Goods “Uncommon Perks” program offers 12 months of free standard shipping for $14.90, encouraging loyalty while defraying some of the shipping costs.

Many consumers this year will be attempting to create special holidays after a trying year, but many are also watching their spending as the economy remains uncertain. Brands and retailers that can bring the holiday magic, while still meeting the preferred shopping needs and desires of consumers, are likely to see positive sales growth this holiday season and beyond.

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