New Research
Shipping charges? Some buyers blasé, others bothered
Archived article from Dec 6, 2004
By Michael Sepanic
Three weeks ’til Christmas – will you brave the crowds or buy online?
As more Americans turn to online and catalog shopping, they are increasingly being charged for the cost of shipping their purchases.
New research from the Rutgers-Camden School of Business shows that in targeting consumers, retailers must take into account their customers’ attitudes and perceptions of such charges. Robert M. Schindler and Maureen Morrin, associate professors at the School of Business-Camden, with Nada Nasr Bechwati, assistant professor at Bentley College in Massachusetts, have researched how consumers, even skeptical ones, react to shipping charges in a paper to appear in the “Journal of Interactive Marketing.”
The researchers focused on not only what consumers make of shipping charges, but how best to market an online or catalog product to them. They found that shipping-charge skeptics so dislike the charges that they would actually prefer to pay a higher price than pay a separate charge for getting a product sent to their door.
Even though it is more difficult to appeal to such skeptics, Schindler contends it is worth the effort. “Shipping-charge skeptics are less frequent online and catalog shoppers,” he says. “Targeting them might involve promotions offering new customers free shipping for a period of time.” Other approaches include conducting market research on what shipping-charge skeptics are likely to buy – items such as financial books – and bundle the price of the item and the shipping charges. This should include setting the charges at reasonable levels so that they just cover the actual cost of shipping and making sure the retailer’s calculation method meets the consumers’ expectations and that they communicate their calculations to customers.
The research also showed that nonskeptics prefer that shipping and item costs are listed separately. (Nonskeptics, the research notes, are the most avid users of online and catalog retailers.)
Nevertheless, while the Internet makes it easier to compare prices, it is still difficult to compare quality, Schindler says. “Even for branded items, it is hard to judge the quality of the seller’s services and the reliability and integrity of the seller,” he says.
For reasons such as these, the study shows, the price-comparison capability of the Internet appears not to have substantially increased consumer price sensitivity or substantially decreased the consumer’s loyalty to brands and retailers.
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