The shipping and handling
costs attached to goods bought online have kept many consumers from
completing their purchases, a recent survey found.
According to research by New
York-based Jupiter Media Metrix,
63 percent of consumers said shipping and handling charges have deterred
them from completing online purchases, and 45 percent of retailers said
they are losing money on shipping and handling costs.
Jupiter researchers said companies
should use a weight-based system like that of the United States Postal
Service to minimize the merchant and consumer risks attributed to
shipping and handling charges.
But retailers are split on how to
charge for shipping and handling. The survey of 50 major online
retailers found that 54 percent base shipping costs on order size, 30
percent base it on weight, and 16 percent base it on the dollar value of
the order.
"One of the surprises from this
research I found was the amount of consumers who said they would prefer
to pay shipping and handling costs on a weight basis," said Ken
Cassar, a Jupiter analyst who worked on the study.
Forty-five percent of consumers
surveyed said they would prefer to see shipping and handling charges
based on weight.
"I think people chose weight
because they all have gone to the post office and seen how the clerk
does it there," Cassar said.
In fact, Cassar said Jupiter's
research found that consumers are wiser to the true costs of shipping
than retailers think, because most of them have mailed packages via the
USPS, United Parcel Service, or some other delivery service that bases
its shipping costs on weight.
In addition, Jupiter is warning
retailers that the relationship with their customers will be undermined
if they continue to believe that they are simplifying matters by
charging based on the dollar size of an order.
Jupiter found that companies that
charge on any basis other than weight risk either losing money or
robbing their customers. For example, Jupiter points to e-tailer CDNow--which
charges $2.99 in shipping and handling for the first CD and 99 cents for
every additional CD--as a company that uses a per-item based pricing
model.
A purchase of 200 copies of
"Journey's Greatest Hits" would cost a customer $200 in
shipping and handling fees, while CDNow would incur only about $28 in
shipping costs.
"The long-term interest of the
retailer is best served if its customers trust it," Cassar said.
"Jupiter research shows that shipping and handling is not perceived
as a product, but as a necessary evil."
