Online Discounts vs. Free Shipping: A Battle of the Ages - eMarketer

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Online Discounts vs. Free Shipping: A Battle of the Ages

Young internet users prefer percentage discounts, while older age groups favor free shipping

September 25, 2014

Who doesn’t love a good deal when online shopping? Pretty much everyone. But not all offers are created equal, and in July 2014 polling by Retention Science, percentage discounts led the pack as the most effective customer incentive.

Most Effective Customer Incentive According to US Online Retailers, July 2014 (% of respondents)

Among US online retailers, 30.9% said a percentage discount was the most effective customer incentive, the No. 1 response. Meanwhile, 21.8% cited shipping incentives—free or discounted—as offers that worked best for their customers. Though percentage discounts were the favorite, amount discounts weren’t very popular, with just 12.7% of respondents. And despite consumer demand for personalized experiences, only 7.3% of online retailers said dynamic offers were effective. Loyalty programs and multiple purchase discounts rounded out the list, with respective response rates of 5.5% and 3.6%.

However, a Q2 2014 study by Flagship Research for BlueHornet found age played a big role in whether US internet users preferred a percentage discount vs. free shipping. Consumers ages 18 to 45 favored discounts, while 46- to 75-year-olds preferred free shipping—indeed, shipping costs are a top digital shopping pet peeve for older generations.

US Internet Users Who Prefer a Discount* vs. Free Shipping When Making a Purchase, by Age, Q2 2014 (% of respondents in each group)

Older millennials—the 25-to-34 age bracket—were the biggest fans when it came to getting a percentage off a purchase, with 34.1% of respondents from this group saying so, and they were the least likely to favor free shipping (13.9%). On the flipside, 56- to 65-year-olds were the age group most likely to prefer free shipping, at 35.5% of respondents, and showed the least interest in discounts.

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