E-Commerce · Food and beverage

Free vs. Paid Shipping?

Eddy Okun Growth, Marketing Manager

July 9th, 2016

http://www.nudebeehoney.comI know that conversions are higher on e-commerce sites if shipping is included in the pricing, the problem is that it raises the perceived cost of the product. Which would you prefer?
  1. $15/jar of honey with Free shipping
  2. $10/jar of honey with Flat shipping of $5
  3. $10/jar with variable shipping depending on location
Would love feedback as it pertains to our website: nudebeehoney.com

Thanks!

Adam Levenson CTO & Co-Founder at Digital Operative

July 9th, 2016

Most research and studies suggest that consumers want free shipping from a psychological point of view. But that doesn't mean you can't be as successful or more so otherwise. It looks like the site has free shipping over $20 now, which basically means you have to buy 2 items to get free shipping, driving up your AOV. That could be option #4.

What I prefer is irrelevant as I am not your consumer; I have no expectations on the cost of a jar of your honey. I would assume from the looks of the site (nice site BTW) its a premium product and so discounting is not ideal as it cheapens the brand.

So the answer is this: #5. Test it. Use optimizely or another tool or do an email campaign and see what converts and drives the most revenue. Let your customers decide based on their actions and have it be objective vs subjective.

David Evans Angel Investor

July 9th, 2016

Test it and utilize the one that converts at a better rate. Historically, our customers converted higher with free shipping and we were able to pass on the costs. But each segment is unique. Split test it and see what yours respond to best. Maybe even consider a free, "slow" shipping option and a paid expedited option

Sidney Sclar SID the SECURITY PRO at sidthesecuritypro.com

July 9th, 2016

Great question. Obviously there is more than one correct answer.
 If you want to offer free shipping as a limited promo, go for it. Otherwise, first orders of a single item should have a shipping fee.
Reorders are a totally different issue to address now  not later.
It is your plan, your way. Good Luck.




Lauren Harriman Rockstart Pitch Writer, Licensed CA Attorney, CIPP/US, Tech Law Blogger

July 9th, 2016

It would depend on your return policy. I'm often willing to pay more if there are also free returns because then I know I can get my money back if I don't like the product, and the fact that the company is even offering free returns and free shipping leads me to believe that they are more confident in their product.

Paul Garcia President at TABLE

July 10th, 2016

One other tactic you may consider in shipping is making faster shipping a premium. So if you say standard shipping is free and put a 4-9 days delivery estimate on that option, and offer Priority Mail shipping for a kick of $5 (or whatever number) with a 1-3 day delivery estimate and include tracking, this may incentivize your customers to choose to pay for the premium shipping option and absorb more of your actual shipping costs, while being more satisfied with the delivery speed. I tested this myself with a consumer product line and had guessed that less than 10% of customers would pay extra for faster shipping, and instead found that closer to 35% of customers elected to pay for faster shipping, which reduced the company's expense burden by a large amount on shipping and also created happier customers (surveyed after delivery).

Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

July 9th, 2016

i think that ONCE I am already on the http://www.nudebeehoney.com site, the psychology of the answer is clear. Free shipping is always best: I get a higher value ($15) jar and don’t have to pay shipping. The psychology of the other offers is that I get a lower value product plus I have to pay extra to get it to me. I might not like that and I might look elsewhere for a comparable priced product with free shipping, maybe even preferring an apparent higher priced product with free shipping (that is, your first offer).

Ellyn Ito Managing Director at Sigma Integrated Resources

July 9th, 2016

Having "free" in the offering is always a positive! Definitely the $15 with free shippinfg

Mateo Aviles Business Development Consultant

July 12th, 2016

Does $15 and free shipping price you out from your competition in the sense that they sell a similar product for $10 and $5 shipping ($5 being a standard low rate within the US for a product that heavy). If yes then go for $10 plus $5 shipping, if no, go for $15 includes free shipping. The beauty about your competition charging somewhere close to $15 with free shipping is that if you're charging $15 per product, after the first one on same orders, you are making a very decent additional margin on the shipping. The risk of going for $15 when your competition goes for $10 plus $5 shipping, is that you are perceived as more expensive and your competition is probably subsidizing shipping on same orders after the 1st product which puts you at a serious disadvantage (they will very unlikely charge $5 for each product on same orders, it will probably be $5 total for shipping 1 or 10 items). Unless you are selling on E-bay or a similar platform and not directly.

Paul Garcia President at TABLE

July 10th, 2016

Since almost nothing these days actually ships for $5 and is now even more than ever based on distance, $5 flat for shipping is already a discount. As you are surely finding the cost for any single small package is generally $6-7 baseline, unless you have a shipping center that can offer you consolidated discounts because they ship such a volume of other products, but then you have handling expenses. Shipping is always a concern when it's a large portion of the cost. Here shipping is 50% of the price of a single jar, so to the consumer shipping is always going to look too large. The ability to bury the cost of shipping in the price of a product usually relies on other efficiency elements recovering some portion of the added expense of shipping. When the postage price increases, you lose margin because your flat shipping or free shipping burden is all on you.

As many have said above, testing is really the best way to evaluate your customers' preferences. Guessing is never as good as testing. At $15 for a half pound (250g) honey, your price is already double what I'm accustomed to paying for specialty honey and more than four times the average retail price of generic honey (hovering around $7/lb). Customers will need to interpret a very high degree of value for your super-premium product and may expect that shipping is included. With a selection of only five varieties and significant difficulty determining the amount of honey in a jar, your web site does not currently present a super-premium story. If your company has been around since 2010 and one of your "main goals" is educating customers about honey, you have fallen short with just one article and two recipes. This does not help you in establishing a super-premium position either.

Getting back to shipping options, consider that in testing customer response you may need to test other elements that could be contributing to fewer sales than simply the shipping options. There are LOTS of honey options out there, especially in super-premium and gift markets. Consider making a chart of your competitors and what they do with pricing, shipping, number of SKUs, and other factors. Also include their relative traffic (Alexa, Quantcast, etc.) and see how they're doing at attracting business. You may discover patterns that you did not expect.

I actually buy a lot of honey myself and for gifts, dozens of pounds a year. The sexy sleek look of a web site for honey tends to make me think the money I'm spending pays for design work and not beekeepers. So I'm not typically looking for beauty, even in gift honey, but rather uniqueness and value. I'll provide an example of some honey farmers who frequently run out of inventory because they're so popular, and they're not sexy at all. http://www.beefolks.com/ At one of their seasonal (weekend only) retail shops they sell hundreds of pounds per day. The rest of the time they are farmers. That's part of their story.

I'm not suggesting you cannot do well with your artistic and clean honey packaging, but you do need to tell a lot more of your story to persuade customers to accept your pricing or shipping costs. Carve out your niche and exploit the heck out of it.

Michael Brill Technology startup exec focused on AI-driven products

July 9th, 2016

As everyone suggests, test whatever you can. Most research says including shipping at a higher product price tests better.

Having said that, I think you have to evaluate this in the context of what you actually want to sell. Are you really trying to sell single bottles of honey or multi-packs? Your question and the onsite merchandising makes it look like the focus is single bottles (your multi-packs are tiny images of generic kraft boxes - nowhere close to the branding of the individual bottles).

If indeed your goal is to upsell to multi-packs then that'd argue for incorporating shipping into the single bottle price as it makes the discount for multiple units that much more obvious.