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Ideas. Insights. Inspiration.

The Shipping Fee Hurdle

"Buy a hoodie, get free lottery tickets for a year" is an appealing offer if you buy lottery tickets regularly.


And I happen to buy lottery tickets regularly.*


So I fully intended to buy a hoodie from the Ontario Lottery & Gaming Corporation (OLG)'s innovative "Dream Drop" promotion.

But I didn't end up making a purchase.


Was it because I didn't like the style of the hoodie? No. Although I don't like the style of the hoodie, it looked comfortable, and while I probably wouldn't have worn it in public, I'd have been happy to simply wear it around my house.


Was it because the hoodie didn't come in my size? No. I could have squeezed my large frame into an XL sweatshirt, although I can't explain why that was the largest size available. (Hey OLG, big guys dream big too!)


Was it because the hoodie was too expensive? No. At $200, the hoodie wasn't exactly cheap, but it came with a voucher worth $260 on OLG.ca: the cost of one $5 LottoMax ticket every week for a year. The hoodie represents good value if you play the lottery regularly.


So even though I didn't like the look of the $200 hoodie and they didn't have my preferred size, I was still ready to make a purchase...


Until I realized I had to pay for shipping, which was when I decided to abandon my cart.


Is that completely ridiculous? Perhaps.


But I know I'm not alone in abandoning a purchase once shipping charges appear; research shows "free shipping" is the single most important driver for online sales.


(We can thank Amazon for training consumers to believe shipping should be fast and free.)


The least expensive shipping option was $19.12... almost 10% of what the hoodie cost.


And that was to receive my merchandise in "2 to 8 business days". If I wanted it within "2 to 4 business days", the cost was $36.01. (On a related note, how smug would you feel if you decided to pay the lower shipping cost and still got your merchandise in two business days?)


Add taxes on top of that (and inexplicably, the taxes were calculated on top of the shipping charge), and the $200 hoodie instantly and unexpectedly became 25% more expensive.

Interestingly, it's not the extra money that ends up being the purchase barrier: it's the disconnect between what you thought you would pay and what you actually have to pay.


Consumers don't like unexpected fees at the end of their checkout processes; when they suddenly appear, consumers will often pause and reconsider their purchase.


And pauses in the purchase flow are a bad thing: there's a good reason why Amazon patented the ability to buy in just "1-Click", and took full advantage of it until it expired in September 2017.


What's better than making customers choose a shipping option?


Offer "free shipping" and factor the additional cost into the price of whatever you're selling.


There are so many reasons your customers might ultimately decide not to buy...


Don't give them another one just as they're about to check out.


 

* Yes, yes... I realize it's been said lotteries are a "tax on the stupid". More specifically, I understand how probability works and thus how very, very small the chances of my winning a multi-million-dollar jackpot actually are. But my odds of winning are zero if I don't buy a ticket, and $5 in exchange for a few days of daydreaming seems like a good deal to me.

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