What matters most to consumers: free shipping, low prices, or coupons?

May 7, 2009

eBay Strategy readers – I’m excited to introduce a guest post from ChannelAdvisor’s COO, David Spitz.  A lot of readers think I’m pretty analytical – well you haven’t met David!  David penned this piece on a general ecommerce trend and I’ve had lots of discussions with eBay folks around the ‘free shipping/low prices/coupon’ topic and thought you would be interested in his insights. Now without further ado heeeeeerrreeeeeee’s Dave....-Scot
We spend a lot of time at ChannelAdvisor thinking about e-commerce trends so we can make sure we’re helping our customers stay ahead of the curve.  Today, our friends over at Google announced an embeddable Google Trends gadget, which reminded me of an interesting query I ran the other day.  We hear a lot about the pros and cons of free shipping, and obviously Amazon Prime has been a great growth driver for Amazon over the past couple of years.  But we also know that, especially in this economic environment, more and more people are turning to e-commerce as a way to get the best possible price and save money.  So I wondered: what do people spend more time looking for when shopping online – free shipping, or the lowest price?
Turns out, as you can see below, people search for “free shipping” about five times as often as they search for “lowest price.”  Even more interesting, that trend has accelerated significantly in the past couple of years, and is particularly pronounced during the holiday shopping season.  I’m betting that Amazon has really raised the bar here and set the expectation in a lot of peoples’ minds that shipping can and should be free.
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Then, thinking about my own shopping habits, I wondered how many other people look for coupon codes before completing a purchase.  At our Catalyst conference last week, one of the participants on our consumer panel talked about how she would always stop half-way through the checkout process when making a purchase to open up another browser and search for an applicable coupon code, all to try and get a last-second discount during checkout.
She and I have a lot of company: as you can see from the trend chart below, the search frequency for “coupon code” has accelerated faster than “free shipping”, and eyeballing the graph is now a good 40-50% higher.
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So, what should you do?  Well, as always, keep your prices low and competitive, but if you don’t have free shipping and promotion programs, you should implement them now (especially by Q4) and aggressively promote them on your site and on all your marketing channels.