The Psychology of Free Shipping

If you work in digital retail and don’t currently offer free shipping, you may want to reevaluate your business model. Currently, the online shopping space is as competitive as it gets, with every site vying for the attention (and money) of its consumers. Bargain bots run rampant, highlighting sites that have discount codes and deals — and shunning those that don’t— while an increasing number of businesses are shifting to online sales.

Given this state of affairs, many online storefronts turn to seemingly reduced product prices and gimmicky promotions to entice shoppers. However, market research shows the real money lies with free shipping.

The Data Doesn’t Lie

Online subscription programs like Amazon Prime continue to boom, even with comparatively fewer “deals” on eligible products. Sure, Prime gives subscribers more than just free shipping, with access to its large media streaming library and “lightning offers.” As it turns out, though, free shipping may actually be the only thing customers care about.

When it comes to securing purchases through online retail tactics, the numbers are impressively consistent:

93% of participants for a Return Customer survey preferred free shipping when given an option between discounted items or a bonus item with purchase, assuming the same value for each.

One Marketing Land survey reported that 9 out of 10 consumers say free shipping is the number one incentive to making an online purchase. That’s ninety percent of your potential customer pool!

A similar study conducted by Lab42 echoed these results with 96% of those surveyed saying they’d be more likely to shop at a site if it offered free shipping.

The most interesting detail, however, is the fact that users would still opt for an item with free shipping over a discounted item plus shipping that costs the same.

Why It Works

Free shipping hinges on a common (and surprisingly efficient) psychological ploy that feeds the user’s desire to receive something for nothing. Of course, we all know this is not the case. The user is still paying for the product, and this price may be higher than they’d pay in stores.

The gaffe lies in the user’s perceived value of shipping. Online shoppers are more than accustomed to high shipping prices, so when presented with the option of not paying, they are delighted. Shipping, in itself, has become an expected addition to any online interaction. So, when users are offered free shipping, it elicits the same response they’d feel if offered a free product—even if they’re paying the same price or more for their purchase.

Test the Waters

If the data above intrigues you, put it to the test! If you manage an online retail business, employ a simple A/B test on offers with one being a discount and one being free shipping. Let the results speak for themselves.

Have something interesting to add? Send us your insights at lfontenot@foodmarketingnow.com.

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