Are Excessive Shipping Costs Costing You Sales? – Irv Brechner

Here's an online shopping experience that recently happened to me, one that is played out, mostly likely, millions of times every single day. And it's costing etailers untold hundreds of millions per year in sales and profits. And it wreaks havoc with all of the acquisition campaigns – DRTV,search, display, social – where significant dollars are invested, only to be wasted when customers abandon their online shopping carts due to excessive S&H costs.

I needed to buy a remote keyless transmitter to open the doors on my Honda Pilot. After wasting time and gas traveling to the dealer (who wanted $95 plus tax), I researched it online.

I found several sources offering it in the $50 range.

I started the process of purchasing from one of these online stores. But when I got to the payments page and they tried to hit me with a $12.92 S&H cost, my first thought was "Are you kidding me?" My second thought, followed quickly by my trigger finger clicking on my mouse, was to go back to the search results page and try another seller.

The remote I was ordering measured about 2" x 1" x ¼" thick. It weighs less than an ounce. Even in a padded envelop or small box, this thing would have cost a couple of bucks to mail. Had they charged me $5 S&H I would have been OK with that. But $12.92? Yikes! The S&H cost was a whopping 26% of the product's selling price! Are they out of their minds?

So I kept searching, and found what I needed for $39.99 plus free shipping! Five different sites selling the exact same product missed out on my order. Five sites that left a bad taste in my mouth. One site that got my order and one that I will go back to.

I'm certainly not alone.

Shopping cart abandonment rates have been hovering in the 70% range for years, and hit 75% in the first six months of 2011. And, according to Forrester, the #1 cause is that shipping and handling costs were too high, turning off 44% of consumers who were absolutely, definitely ready to buy!

As a direct marketer, I understand the need to include S&H costs, and even to pick up a few points when doing so. But there comes a point where you've got to realize that tacking on too much to S&H will result in a loss of sales, especially in an environment where consumers are used to free shipping and in a down economy where pennies count.

If you know or suspect you're losing sales due to the high S&H cost that you quote on your site, you've got to deal with it. Every day that goes by you are losing sales. And all those dollars you're spending to get prospective buyers to your site are being negated by this one mistake.

So what is a reasonable S&H charge?

Common sense needs to prevail here. Chances are if you ask 10 people what a reasonable cost would be for a given product, most of the answers will be clustered around a number that they consider to be fair. That's a clue to how people perceive S&H costs in relation to the price of the product. Think "crowdsourcing" to help determine an optimal S&H cost.

You can also explore creative ways of recovering actual S&H costs, such as giving a coupon for the value of S&H towards the next order. Whatever you do, eliminate this cause of lost sales for 2012!

Grab a PDF of this article at: http://A95.acquirgy.net

Irv Brechner has written over 100 published direct marketing articles and 13 books on a variety of topics. He's been a pioneer in online customer acquisition since 1996 and offline for his 35-year career. He has developed Acquirgy.com's "Customer Acquisition Intel Center" (acquirgy.com/intel ) he evangelizes best-of-breed tactics to help companies acquire customers in the digital age. He can be reached at: irv@acquirgy.com .

Read all Irv's MediaBizBloggers commentaries at Customer Acquisition Intel.

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