“Free Shipping” and Customer “Value Add”

Posted by Joseph Michelli, Ph.D. on December 17, 2010

0 comments | 1765 reads

Zappos knew it all along! Free shipping is a huge “value add” for online consumers.

According to comScore Inc., in the first 35 days of the November – December 2010 holiday season, more than $17.5 billion has been spent online, marking a 12-percent increase versus the corresponding days last year.

2010 Holiday Season To Date vs. 2009 (Millions $; Non-Travel Retail; Total U.S. Home/Work/University Locations)
	*2009*	*2010*	*% Change vs. 2009*
November 1 – December 5 *	$15,723	$17,553	12%
Thanksgiving Day (Nov. 25)	$318	$407	28%
Black Friday (Nov. 26)	$595	$648	9%
Cyber Monday (Nov. 29)	$887	$1,028	16%
Week Ending Dec. 5 (Nov. 29 – Dec. 5)	$4,601	$5,028	9%
Source: comScore, Inc, December 2010; Corresponding days based on corresponding shopping days (November 2 thru December 4, 2009)*

According to the study authors, “Over the years, one of the most prevalent promotions used by retailers during the holiday season to drive e-commerce purchasing has been free shipping…. An analysis of the share of e-commerce transactions that included free shipping suggests that the promotion has accelerated in importance once again in 2010 with each of the most recent three weeks seeing more than 50% of all transactions include this incentive.”

The report also acknowledges that Amazon and Walmart are both offering free shipping on virtually all transactions this season and “transactions with free shipping run an average of 30% higher in basket value than those without, helping to offset some of the margin compression from such attractive incentives.”

What “value add” contributes substantially back to your bottom line?

Joseph Michelli, Ph.D.

Joseph Michelli, Ph.D., an organizational consultant and the chief experience officer of The Michelli Experience, authored The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company and the best-selling The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary.

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