Free Shipping and Easy Returns Boost Online Customer Retention

Customer Experience
Customer Experience
Online retailers must fine-tune their purchase process and return options, removing the complications that often lead to customer attrition.

Life can get rather complicated, so when online retailers make the purchase process more cumbersome than their competitors' processes, customers tend to wander. Those consumers that gravitate toward online shopping do so for its ease and speed. But, when inconsistent checkout methods and costly return procedures plague the average interaction, most customers learn their lesson and change their ways accordingly-all at the expense of the retailer.

Based upon ShopRunner's recent study, retailers can see that consumers expect more from their online shopping experience than ever before. Conducted by Harris Interactive, the survey polled 3,036 adults in the United States ages 18 or older, of which 2,839 respondents indicated they shop online. The survey was designed to understand what drives today's online shopping experience, thereby uncovering the fact that both free shipping on purchases and free return shipping have the greatest impact on customer interactions.

The following statistics explore customer expectations and behaviors in the online retail space:

  • Sixty-nine percent of respondents feel that returning online purchases is complicated.
  • The majority of online shoppers (81 percent) say they are not likely to make additional purchases from retailers that charge for return shipping.
  • When it comes to buying online versus in retail stores, online shoppers showed that they value fast delivery, with 77 percent agreeing that they would spend more money online and less in stores if free one- to two-day shipping was offered.
  • Sixty-five percent of shoppers would procrastinate and put off making purchases longer than usual if faster free shipping options became available.
  • If they were able to use the same secure, easy checkout procedure across all websites, 67 percent of those surveyed would purchase more online from their mobile device or computer.

Key takeaway: According to a four-year long study conducted by Washington and Lee University, return shipping policies can have serious long-term consequences. After two years, customers who had to pay their own return shipping costs decreased their amount of spend with that retailer by 75 to100 percent. However, those customers who received free return shipping typically increased their level of spend with the given retailer by 158 to 457 percent. This study, along with ShopRunner's recent survey, proves that, while free shipping may cost the retailer initially, the incentive pays for itself over time. By giving customers what they want and easing the burdens accompanied with shipping and returns, these retailers have the opportunity to boost loyalty, retention, and revenue.