Does Your Target Consumer Demand Free Shipping? - eMarketer

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Does Your Target Consumer Demand Free Shipping?

Younger shoppers may care more about percentage discounts

November 18, 2014

Consumers want convenience. While that sometimes means they're willing to pay extra for it, the Amazons of the world have conditioned consumers to expect convenience without the cost, too. But how much do cost and convenience incentivize consumers to purchase?

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

Accent, an omnichannel customer engagement technology vendor, released new data indicating that 88% of consumers would be more likely to shop online if they were promised free shipping. Consumers were also motivated to shop online by the lure of deals and promotions (30%) and the possibility that they might be able to avoid holiday crowds (20%).

A survey comScore administered to more than 5,800 US online shoppers in June 2014 suggested the same, adding that 83% of respondents said they were willing to wait an additional two days for delivery if shipping was free. Over half of respondents said they have added items to their shopping carts in order to qualify for free shipping, bolstering the idea that consumer prefer free shipping to fast shipping.

Still, customers are most motivated by percentage discounts—a 10% off coupon, for example. Two in 10 respondents to a Retention Science "Marketer Survey" said that free or discounted shipping was the most effective customer incentive they could offer, 9 points below the response rate for percentage discounts.

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

Whether consumers prefer free shipping to steep discounts varies by demographic—age most of all. A study Flagship Research conducted on BlueHornet's behalf revealed that respondents between the ages of 18 and 45 preferred percentage discounts to free shipping when making a digital purchase. Older internet users preferred free shipping above discounts.

What customers are willing to pay for is quality. Accent's study found that product quality drives loyalty among 70% of its respondents. And upwards of 66% of those respondents were open to paying more for a quality item, especially when the brand delivers positive customer service as well. But customer service often falls short for shoppers. While 87% of retailers are confident their brand gives consumers all the information they could ever want or need about sales, inventory, backorders and more, 54% of consumers surveyed said that the store employees they've interacted with have difficulty answering their questions.

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