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'Free shipping' with conditions is cited as their most successful marketing tool by more than half of the booming US online retailing sector.
By contrast, shipping and handling costs are said to trigger more than half of abandoned online shopping carts. It is argued that the attraction of free shipping offers may lie in appearing to make the online transaction more comparable with that at the neighbourhood store. (To make a proper comparison, shoppers should also build in their time and travel costs, which many may not and which would further favour the online option).
For online retailers, free shipping at a certain threshold can increase customer spend or reduce handling costs by encouraging bundling of purchases.
In contrast, retailers that want to sell advertisements on their site can use a low free shipping threshold to encourage more regular customer visits.
How the offer of free shipping affects online shopping
Knowledge@Wharton, 19 April 2006
Review by Steve Lodge.
This article was first published on World Business
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