As you may know, postal charges are one of the main reasons why customers abandon their baskets. A study carried out jointly by PayPal and ComScore in 2008 confirms this. Apparently, approximately 43% of Internet users abandon their basket when shopping because of postal charges that are too high. At a physical shopping outlet, customers do not pay for postal charges, and it is most probably for this reason that they think twice before confirming an order on the Internet. Businesses who have identified this behaviour try to remedy the situation by putting in place special policies concerning their postal charges. We will present them according to the marketing objectives that they fulfil.
Different postal charge policies allow:
- New customers to be acquired and retained
- The conversion rates on your site to be increased
- Your average basket to be increased
- Some of your items to be sold off
- The sale of products neglected by your customers to be increased
- The visibility of new products to be increased.
1- Attract new customers and retain them.
Your postal charge policy obviously depends on your marketing objectives. If you want to expand your customer database, offer, for a given period of time, free postage and packing from the first Euro (you cover the postal charges for any order of any amount). New customers will then take advantage of this promotion and create an account on your site. You will then have their email addresses and be able to send them personalized offers in order to build customer loyalty.
Of course, your average basket will decrease since your customers will no longer try to reduce their postal charges by buying several of your products at once. It is an excellent way of attracting new customers but obviously you must think of the profitability of the operation before implementing a policy such as this. If your products have a high profit margin you can more easily manage this type of promotion.
A fixed postal charge policy consists of offering postal charges at a fixed rate whatever your customers’ orders. It is obvious that you will have to cover part of these charges in order for customers to perceive an advantage. This policy is suitable for impulse purchases and therefore allows you to attract new customers and boost your sales.
2- Increase your average basket
By offering your customers free postage and packing from a given amount (e.g. "free postage and packing when you spend 70 Euros or more"), you will see your average basket increase. Most Internet users prefer to buy an additional product rather than pay postal charges.
To increase your average basket, you can also implement a policy of free postage and packing from a certain amount of products sold (e.g.: “free postage and packing when you purchase 5 products or more”). The objective of this policy is similar to that of the free postage and packing from a certain amount but is more suited to stores offering homogenous products which do not weigh very much.
Setting up a fixed postal charge is also a way of encouraging your customers to increase their average baskets. In this case, you decide a fixed postal charge amount that covers your “actual” postal charges. This amount will obviously be high in the eyes of customers, which will incite them to place larger orders.
3- Sell off certain products or make them more visible
Offering free postage and packing with the purchase of certain items allows you to increase the turnover of one of your product categories, quickly sell off the given products and make your new products more visible.
Don’t hesitate to set up different scenarios presented here in order to constantly develop your store. You can set up some actions for only a few days and then announce them as a big event in order to attract visitors to your site.