Customer Insightbecause shoppers hate paying

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The Ins and Outs of Online Shopping
Online shopping is like a duck. The part above water—the algorithmically selected products, the easy checkout process thanks to the personal information stored on phones, the packaging that shows up on your porch two days later—moves along smoothly, causing only minor fluctuations in your attention. The apotheosis of e-commerce is that people spend money without feeling like anything has happened at all.

Below the surface, the webbed feet of retail thrash furiously. Miceli, for example, ships a ton of packages every day. The U.S. Postal Service delivered nearly 800 million packages this holiday season. In early 2020, FedEx will begin offering Sunday service year-round (a service that was previously available only during the holidays). In New York City, where daily deliveries have tripled in less than a decade, trucks clog streets and rack up nearly half a million parking tickets a year. In 2015, Amazon launched Amazon Flex, through which the company pays people to use their personal cars to haul packages, taking full responsibility for mileage and expenses.

Big retailers make sure their ducks stay upright. Orders arrive in boxes marked with the retailer’s logo, not the supplier’s. Narvar, a popular logistics startup that touts its ability to help brands “deliver a premium shopping experience,” directs shoppers to a clean, bright, landing page for tracking packages. If you don’t look closely, you might think it’s not UPS delivering your new glasses, but Warby Parker itself.

Masking the mundane details of shipping—namely, the cost—is online retailers’ most powerful tool for persuading people to click “checkout” and come back again. In a 2018 survey by Internet Retailer, shipping costs were cited as the most common reason shoppers abandon items in their carts, ahead of things like not wanting to create an account and being qatar number data unsure about a store’s return policy. Many shoppers are so outraged by high shipping costs that they’re willing to buy more expensive items or “upgrade” their order with little things like a hair mask or a pair of socks to qualify for free shipping, says Ron Berman, a marketing professor at the Wharton School at the University of Pennsylvania.

“Free shipping is tempting,” says Ravi Dhar, director of the Yale Center for for certain services, including ones they value highly, like fast, reliable delivery.”

This demonstrates an economic principle known as the “pain of payment,” a psychological discomfort that keeps people from making purchases. And certain factors seem to exacerbate that pain. Using cash rather than credit cards is typically more unpleasant, because paper money is physically handed over. Higher prices for convenience, such as a premium for a soda in a hotel minibar or closer parking at a sporting event, are also usually painful. Printer ink and hotel Wi-Fi are also painful, because they are means to an end that consumers feel they have already paid for. You bought a printer, and of course you need to print documents. You booked a hotel, and of course you need to check your email while you’re there. Paying for delivery is double the pain for the price of one: Not only are you faced with the actual cost of your convenience, but you’re also being asked to pay the store extra on top of what you’ve already shelled out.

“The response to free shipping goes beyond the usual cost-benefit approach,” Dhar explains. “A 20% discount that adds up to the same $5 or $8 as the shipping cost is not as effective as free shipping.”