7. Juli 2016

Delivery costs: Two retailers in comparison

A study by international delivery services UPS shows, that free delivery can clearly boost sales. UFirst Group analyzed shipping costs of two retailers, Athleticum and Vögele-Shoes. Because 88 percent of all online shoppers cancel their orders at least once due to delivery costs.

The answer to the question about the current delivery costs of Swiss retailer Vögele-Shoes is clear: «We offer free delivery». They came to this approach in three steps. Sabine Schwärzler is head of e-commerce at Vögele-Shoes since fall 2012. At that time the new online shop went live with a shipping fee of CHF 3.00. In October 2015, free shipping was introduced for orders of more than CHF 90.00. The third step finally lead to the free delivery for all orders. Since spring 2016 customers don’t pay shipping fees for their orders. If a customer returns an order by mail, however, it is not free of charge. Vögele-Shoes argues, that with the quite impressive amount of Vögele stores throughout Switzerland, the customer can easily return the ordered shoes there. The UPS paper supports this conclusion: The study, conducted in the United States as well as in Europe, says that 38 percent of customers choose delivery to the store. Obviously, the channels are merging.

Sign for delivery

The packet is being supplied by signature. (Photo: Swiss Post)

For Swiss retailer Athleticum the driving force behind the introducing of standard delivery fees was a change of the contract with the delivery service. This decision had a positive impact on their webshop for sports goods.

Previously, the delivery prices of Athleticum followed the prices of the Swiss Post's priority and economy services. In May 2016, Athleticum introduced a standard price of CHF 7.50 for all orders, with the exception of large gear and special deliveries (e.g. bicycles or home trainers). Instead of delivering to the mailbox customers now needed to sign for delivery. Carlo Bergamin, e-commerce manager at Athleticum, says: «We accepted this basic change. We will see, whether we get more feedback from customers in the future.» As this improves the security of the delivery, it might also have a positive impact on the purchase process.

Conversion rate is the key

In the long run Athelticum has to follow the market conditions. They would like to launch free shipment above a certain amount. That might boost the conversion: According to the study, 43 percent of customers are adding extra goods to get free shipment.
The contributing factor for the launch of free delivery for Vögele-Shoes was a competitor analysis among Swiss shoe retailers. Back then, Vögele-Shoes had the only shoe webshop in Switzerland to charge delivery costs. The company changed shortly after to free delivery to increase sales. At the beginning they worried about getting more returns. But in the end this fear turned out to be wrong.
On the contrary, this change was profitable for the shoe retailer: It had a positive impact on the conversion rate.