Online shoppers value cheap shipping rates over speed of delivery, a new survey of North American consumers shows.
Among shoppers who made a purchase in the past six months, 58 percent of U.S. buyers chose extended delivery times—arriving in four days or longer—over faster, more expensive options, according to the survey, which was conducted by freight forwarder Purolator International. About 78 percent of Canadians ordering from U.S. online retailers chose slower delivery times, the survey showed. Canadian shoppers are sensitive to international shipping rates because tariffs and duty charges can sometimes add up to a greater cost than the value of the item itself, said Purolator president John Costanzo.
About 65 percent of Canadian consumers and 55 percent of Americans said they "very often" or "always" chose slower delivery times in return for reduced shipping costs. "We were surprised to find out that speed wasn't as important to consumers as we thought," Costanzo said. "It was more about price. Customers are willing to wait five days and longer as long as they get consistent, reliable delivery."
The survey also showed that two-thirds of shoppers in both countries said a free shipping option was very important in their choice of an online store to purchase an item.
Those findings reinforce the logic behind recent moves made by retailers in building marketing strategies to compete for online business. Last month, Wal-Mart Stores Inc. launched a subscription-based free shipping option to compete with Amazon Prime, a similar product from e-commerce giant Amazon.com Inc.
The survey polled Canadian consumers only ordering from U.S. e-tailers. U.S.-based respondents had no geographic restrictions.
Despite the trend toward price-sensitive online shopping for everyday items, the survey also showed that there is room in the marketplace for couriers to provide expedited and overnight shipping for high-value items such as holiday and anniversary gifts, Costanzo said.
Online retailers are also sensitive to shipping costs, since fulfillment costs typically range from 10 percent to 30 percent of the value of low-cost e-commerce items such as apparel, electronics, and consumer goods, Costanzo said.
"There's an expectation of free delivery. But after you factor in manufacturing and warehousing, there's not much room left for profit," he said.
According to the survey, e-tailers may have found a solution: Offering buyers the choice between delivery cost and speed.