foresee

Free Shipping Without Restrictions
Vastly Improves Holiday
E-Retail Satisfaction

Holiday e-Retail Analysis By ForeSee Results Says Free
Shipping a Powerful Conversion Tool, But
Not Competitive Differentiator

ANN ARBOR, Mich. (January 3, 2007) – A recent study of the biggest online retail sites by revenue found that free shipping without restrictions significantly impacts customer satisfaction and loyalty. Also, free shipping was an effective tool for converting first-time buyers, but restrictions on free shipping limit the ability of such promotions to engender long-term loyalty.

The Top 40 Online Retail Satisfaction Index produced by ForeSee Results found that 41 percent of the 10,000+ survey respondents cited free shipping as the primary factor in their holiday purchase decision-making. For 79 percent of them, free shipping influenced them to choose one retail site over another.

Among the key findings on free shipping:

  • When offered with restrictions (e.g., tied to dollar value of purchase), free shipping does not significantly impact customer satisfaction and loyalty
  • Free shipping without restrictions is a powerful tool for increasing customer satisfaction, conversion and loyalty;
  • Free shipping, especially when offered without restrictions, is a powerful conversion tool for first-time buyers;
  • Retailers must offer free shipping to keep up with the competition, but it is no longer a competitive differentiator.
  • 63% of online holiday shoppers recalled free shipping offers, 24% said it wasn’t offered to them and 13% couldn’t remember if free shipping was offered.

“Consumers expect discounts, gimmicks and other promotions during the holiday season so when a retailer delivers on that expectation, satisfaction will increase. But putting restrictions on free shipping promotions has the effect of a caffeine buzz, generating short term gains at the expense of long-term benefits” said Larry Freed, president and CEO of ForeSee Results and an online customer satisfaction expert. “Retailers may boost short term sales through conversion of first-time buyers and higher average order size, but they won’t be doing much to engender goodwill for a long-term relationship with the consumer. The question becomes what do you want to do with your opportunity?”

“It’s much easier to match free shipping than it is to match website functionality or merchandising. Eventually, free shipping will become just another cost of doing business, but for this holiday season it was an effective conversion tool for first-time buyers,” said Freed.

About ForeSee Results

ForeSee Results is the market leader in online customer satisfaction management and converting satisfaction data into user-driven web development strategies. Using the methodology of the University of Michigan’s American Customer Satisfaction Index (ACSI), ForeSee Results scientifically quantifies the elements that drive online customer satisfaction and predicts future behaviors such as purchase, return site visits or referrals. A partial list of retail clients includes Best Buy, Blair, Cabela’s, Danskin, Eileen Fisher, Fashion Bug, Gateway, Lane Bryant, Newegg, Overstock, Restoration Hardware and Tower Records. ForeSee Results, a privately held company, is located in Ann Arbor, Michigan and on the web at www.ForeSeeResults.com.