Audience Recommendations for Every Vertical
A couple weeks ago, I discussed the overall significance of free shipping to holiday e-commerce purchasing, indicating that we expected it to once again play a major role in how consumers transacted online. We recently crunched some numbers to look at just how significant it has been to the 2010 holiday season, and the results were pretty staggering.
We found that, in the first three weeks of the season, the percentage of transactions including free shipping closely resembled last year’s pattern, where it began at around 45% and climbed to 50% by November 21. However, in the two weeks since, the patterns have looked very different. In 2009, the percentage of transactions using free shipping declined to around 45% again, while this year the number surged to 55% in the week ending November 28 and came in at a still very high rate of 51% in week ending December 5.
Perhaps these numbers should not be such a surprise, with e-commerce leaders Amazon and Walmart offering free shipping in a big way this year, and other retailers being compelled to follow suit.
Such a prevalence of this incentive might cause concern for retailers over its tendency to compress margins; however, as I mentioned in my previous post, consumers are spending a lot more on transactions with free shipping than they do on those transactions with paid shipping. This increase in basket value can certainly help offset some of the negative impact of free shipping on retailers’ margins.
For the week ending Dec. 5, 2010, transactions using free shipping were $125.20 on average, 45% higher than those with paid shipping. So any retailers worried about the costs of offering free shipping should remember that consumers will be more willing to open their wallets when they can take advantage of this important incentive.