Too Many Abandoned Carts? Don’t Blame Shipping Costs
We all know you can’t close a sale every time someone clicks on a "Buy Now" button on your website. There are dozens of studies showing cart abandonment rates in the 65 percent to 80 percent range. Some of those people are just kicking the tires and aren’t going to buy today, but too many of them have every intention of buying but get cold feet at the moment of truth — and shipping costs are the No. 1 reason why.
Consumers are accustomed to paying additional costs above and beyond the sticker price. If you live in a state with a sales tax, you're constantly doing the mental math of adding a few percentage points to the sticker price before you walk up to the cashier. Imagine the chaos if you walked into your neighborhood department store and the tax randomly floated between 5 percent and 25 percent, and you had to wait until the little green display tells you what to pay.
When customers order online, they understand there's a cost associated with shipping the product. The biggest mistake a retailer can make is waiting until they check out to show shipping costs. If the shipping cost is too high, the customer leaves frustrated. Even if it’s a fair price, the customer is forced at the moment of truth to adjust their budget and spend limit.
Amazon.com is notorious for waiting until the last minute to show shipping costs, but it does so with a purpose. From the time you click “Add to Cart,” it takes six clicks before you see the shipping cost. Every step of the way you're bombarded with offers to join Amazon Prime. That’s because Amazon Prime members have an astonishing 74 percent conversion rate. The lure of free shipping with no minimum purchase amount is a powerful incentive to buy, even if you have to pay $99 annually to get it.
Free shipping isn't automatically the answer to your shopping cart abandonment woes. If it’s a cost you have to absorb that ultimately raises your prices, it may drive shoppers to other sites. Depending on what you sell, your shipping costs may be unpredictable and vary widely based on weight and quantity. If you have a shipping calculator, make it prominent on your site. Also, consider using discounted shipping offers as a closing tool. If a shopper has made a budget decision knowing there's a $10 shipping fee and on the checkout page is greeted with a $5 shipping discount, it could be the push they need to complete the sale.
But you ask, “How do I get shipping rates to be competitive with Amazon?” Let’s say you're shipping 100 orders a week. Instead of doing it on your own, consider a consolidated shipping provider. A consolidator will pick up your packages and add it to their network of orders being shipped across the country. Most consolidators are moving thousands of packages a day and get the lowest rates from the freight companies. They can pass those rates onto you plus the cost of picking up your orders from your warehouse.
Consolidators are particularly valuable for your international shipments. Shipping internationally using USPS or FedEx can be cost prohibitive, but a consolidator can use its network to bring your packages to the country of destination and use the local postal service to deliver your order at a fraction of the cost. You don’t even need to split up the orders by country. If you have 50 orders for Canada, 20 for Australia and 30 for India, a consolidator can pick them up all at once. They can even provide custom brokerage services to prevent your customer getting stuck with additional taxes and duties upon receipt of their order. In-country local fulfillment is also an option if you want to lower international shipping costs even further.
Simply put, be up front with your customers and make shipping a part of the conversation as they shop on your site.
Marcel Caballero is business development manager for Stalco, a logistics and fulfillment company providing a gateway to the Canadian market. Since 1994 Stalco has been assisting U.S. companies with all of their Canadian logistics needs, including importation, customs clearance, Health Canada compliance, storage, inventory management, pick-and-pack fulfillment services, and shipping. Stalco works to ensure your product gets into the Canadian market in a matter of days while guaranteeing the lowest shipping rates, and without customs delays or surprise charges for duty and taxes.