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September 4, 2015

The effect delivery and returns have on conversion

And how to decrease basket abandonment!

As an online retailer you cannot avoid basket abandonment, however by understanding why your users abandon their cart you can reduce the amount of people who do. We’ve found the most common reasons why users abandon the cart/checkout process:

  • General browsing
  • Forced registration
  • Technical problems / slow website
  • High delivery charges / lack of delivery options

As there is not much we can do about the users who are just browsing we need to focus our attention on the reasons which we are able to influence. In this post, we are going to focus on high delivery charges and a lack of delivery options.

Tackling high delivery charges

If you can, offering free delivery on all orders will undoubtedly help your online conversion rate, however we understand not all retailers can offer free shipping – offering this service is very dependent on the product being sold, delivery costs and your profit margins.

We’ve worked with a number of customers whose profit margin meant that it would not be feasible to offer free delivery on all orders. The most common way to work around this is by:

  • Offering free delivery on orders over a basket total threshold
  • Adding the cost of delivery to the price of the product
  • Upselling delivery service options
  • Offering Click & Collect

The reason it is so important to address the issue of high delivery charges is due to the incremental effects on revenue. A survey by Toluna Quick found a huge 74% of online shoppers would abandon due to high delivery charges.

Offering free delivery on orders over a basket total threshold

This is by far the most common way of addressing the free delivery issue and also an effective way of increasing your average order value. This method is now widely accepted by users and they are often willing to spend a certain amount before expecting their items to be delivered free of charge. You will need to ensure the threshold amount set is not too high, but also not low enough to eat into your profit margin.

Tip: Try split testing two different threshold amounts over a period of time to find the right balance. When you set a threshold do not alter it too regularly, visitors will notice and this could turn them in the direction of a competitor.

Adding the cost of delivery to the price of the product

You can up the price of your product to cover some or all of the delivery costs. This method is truly dependent on how competitive the price of your product is and your profit margins. So, in some cases this is not feasible and could do more bad than good. It is however an option to be considered for those creating an entirely new site or own brand, where the product cannot be purchased elsewhere.

Upselling delivery service options

Online shoppers don’t like to wait and tend to want their items quickly, we can play on this impatience by offering free delivery but explain that they will be required to wait a little longer for there items if they choose this option. You can then promote an Express delivery option which means their items will come sooner but for an additional cost. Also if possible, you may offer a Next Day delivery option at a higher cost than the Express option.

*With some online retailers there is actually no difference between free delivery and express/standard delivery. By telling the user they will have to wait longer if they choose free delivery, the user is more likely to pay the additional fee whilst knowing a free delivery option has been offered. In the event the user does choose free delivery over express/standard, they will be grateful when their items arrive sooner than expected.

Offering click & collect

Click-and-collect in store is fast becoming the delivery option of choice for our users. John Lewis reported in their latest financial year report that click-and-collect overtook home delivery. 54% of online orders were delivered to store for pick up which was a 47% increase compared to the previous year.

A survey by Econsultancy showed 79% of consumers have used click-and-collect with 63% saying they have done so at least once in the past 12 months. The same survey found that 50% of those surveyed had abandoned a purchase online due to unsatisfactory delivery options, showing how important it is to offer a range of flexible delivery options.

Not only may this option offer greater online sales and lower delivery costs for your business, but may also increase traffic and sales in store via collection.

Now click-and-collect in-store is great for those who have multiple stores across the country but what about online retailers who don’t have brick and mortar locations? There is Collect+. Collect+ allows you as merchants to deliver your products to over 5500 stores, which remain open late so your users can collect the items at a convenient time.

Free returns

Whilst on the subject of delivery, it is pertinent to mention how important free returns are to our users. Consumer analysis research by Stellar Search revealed that 56.1% of participants class free returns as being extremely important when buying online. Rate-free returns rank higher for females than for males, and users aged 65+ feel returns are more important than other age groups. Offering free returns does mean an additional cost, which you will have to either cover (as a loss) or build into your delivery rates. However, online discounted brand fashion retailer MandMDirect make it clear that returning an item is not free, but they do cleverly provide their users with the option to add a pre-paid returns label to their order for a small fee. Stellar Search revealed that 56.1% of participants class free returns as being extremely important when buying online. Rate-free returns rank higher for females than for males, and users aged 65+ feel returns are more important than other age groups.

Offering free returns does mean an additional cost, which you will have to either cover (as a loss) or build into your delivery rates. However, online discounted brand fashion retailer MandMDirect make it clear that returning an item is not free, but they do cleverly provide their users with the option to add a pre-paid returns label to their order for a small fee.

MandM CollectPlus Returns

Offering pre-paid returns as an additional option could reduce your standard delivery charges dependent on your courier, enabling you to discount your delivery charge for the user or make offering free delivery less costly.

The benefit to the user of paying extra for the returns service is they are assured if the items aren’t for them they can return the item easily. A small fee of £1.99 offers insured returns, which are at less expense than returning via the Post Office.

In summary: cost, speed, convenience and choice matters to our users when it comes to delivery and returns.

Usually we would say less is more but when it comes to converting users during checkout, ensure users are offered options!