The Shipping Charge: Break It to Them Quickly
E-tailer 1-800-flowers.com (FLWS ) taught me it's possible to love shipping charges. That was no easy task. Like most Internet shoppers, I had come to view shipping and handling fees as the great rip-off of online merchants. But that changed when I met Delivery Wizard at the gift-and-flower site. Delivery Wizard is an online calculator that appears on the screen early in the shopping process (way before checkout) and allows you to preview potential shipping charges. I can scan shipping-charge options as I peruse the floral selection and decide which combination suits my purposes and budget. Delivery Wizard removes the "Gotcha!" factor of shipping charges that leap onto the bill at the very last click of an online transaction. I still pay for shipping, but I'm not fuming while I do it.
That's the kind of consumer-centric approach that is going to have to take hold in e-tailing if merchants are going to overcome the shipping backlash. Delivery charges are the No. 1 reason shoppers abandon a virtual shopping cart, according to Jupiter Media Metrix (JMXI ). Every Internet shopper has a shipping-charge horror story. My best friend, while shopping for party favors for her 3-year-old's birthday bash, was stunned when she got to the end of the transaction and was greeted with a $10 delivery charge on a $30 order. "I'm buying goodie bags and paper noisemakers," she told me. "For $10, I'll drive to the store." And she did.
E-tailers have no one but themselves to blame. It was the Internet retailing community's bright idea to lure us online with free shipping in the first place. Bad move. Like letting a kid eat ice cream for breakfast, it set a bad precedent, and it's tough to break. Once we got it into our heads that shipping ought to be free, any charge has smacked of gouging. "Online retailers made us feel like charging for shipping was at their discretion," says senior analyst Ken Cassar of Jupiter Research. Instead, he says, paying the cost of getting the package to your door is a crucial element for any online retailer. Without a way to cover shipping costs, an online merchant is doomed, he says. "When free shipping ended, consumers felt they were being taken advantage of--that the merchant was just making money."
Actually, charging for shipping is probably the only way virtual retailers will survive. But to get shoppers on board, e-tailers will have to be disciplined and creative in their approach. Jupiter recommends the industry move to standardized rates--something that is sorely lacking now. Today, e-tailers use a wide swath of measurements. Some charge by order value, some by the number of items, some by weight, and some by a combination of these factors. This confuses consumers, and it perpetuates the idea that e-tailers are making the whole thing up as they go. E-tailers ought to move to weight-based calculation, says Cassar. It's a standard anyone who has ever mailed a package from the U.S. Post Office is familiar with, he says: "It doesn't take a lot of explaining, and if it were standard in the industry, consumers would feel more comfortable."
Good idea, though e-tailers shouldn't stop there. Merchants that create ways to make shipping less burdensome are seeing rewards. Thanks to Delivery Wizard, 1-800-flowers.com has seen the number of delivery-related customer service calls drop from 100 a day to "near zero," says President Chris McCann. Sears.com will roll out a program later this fall that will allow consumers to buy online but pick up items at a local Sears (S ) store, eliminating shipping charges altogether. Now in pilot testing, it has helped reduce shopping cart abandonment rates and boost online sales. "We're helping customers go that last step in the online buying process," says Dennis Honan, general manager of Sears Customer Direct, which runs the Web site. Retailer Baby-universe.com has an on-screen shipping calculator, and CEO Neil Closner says customers praise it in e-mails. When it comes to shipping charges, "if they can control the decision, consumers are happier," says Closner. Or, at least, not feeling ripped off.