Most e-commerce retailers understand shipping incentives are a great way to convince shoppers to complete the checkout process. Amazon Prime members receive free two-day shipping on hundreds of products, while other sites encourage shoppers to spend a minimum dollar amount to remove the cost of delivery. These advantages are great for businesses shipping in their home country, but they present problems for those sending products internationally.
Doing business overseas isn’t as difficult as it once was, but it still presents its own challenges. Time zone differences cause delays in order processing and customer service resolution. Meanwhile, the numerous currencies and payment solutions throughout the world are difficult for new business owners to navigate. Companies can use a payment processing company able to accept multiple currencies, but they still must deal with the difficult logistics of shipping internationally. Delivery companies vary between nations – some are run by the state, others are independent businesses. Customs presents another problem, as does the simple issue of language barriers.
Advantages of free shipping and returns
Consumers are reluctant to purchase a product online if they aren’t absolutely certain they’ll love it. The convenience of having the item delivered right to their doorstep is negated if they have to head back to the post office to return it. The cost of shipping an item back for a refund presents another barrier. Even if the customer gets the full price of the item back, they’re out the cost of return delivery. Thus, the person has paid money for a frustrating experience and an item they didn’t want. Even shoppers who have come to terms with these issues abandon their online shopping carts if initial shipping costs turn out to be greater than anticipated.
That’s why so many retailers offer free or reduced shipping. Zappos, for instance, is well known for its free shipping and returns policy. According to The Huffington Post, even though the exclusively online shoe store prices its products higher than its competitors to recoup expenses, 75 percent of its customers become repeat shoppers. The article also cited a study by ShopRunner and Harris Interactive that found 81 percent of online shoppers were unlikely to head back to an online store if they had been charged for return shipping. Yet if retailers offered free one to two-day delivery, 77 percent of consumers would spend more money online and less in stores. Meanwhile, 65 percent said they would purchase more quickly rather than waste time thinking about it.
Differences among shoppers and countries
A consumer’s view of shipping costs depends on where that person lives, PayPal’s director of global merchant and cross-border trade initiatives Melissa O’Malley told PYMNTS.com. For example, most e-commerce consumers in the U.S. avoid making cross-border purchases because of their high delivery costs.
“The U.S. consumer does not shop cross-border as often,” O’Malley said. “U.S. consumers are not used to having to think about having to pay additional customs and duties and taxes.”
Chinese consumers, however, have limited domestic product options and a rising middle class. They’re looking for quality and authenticity, O’Malley said, and they now have the means to pay for the product and the shipping. Meanwhile, the European Union’s open market and single currency makes cross-border shopping a breeze for its residents.
Unfortunately, some countries only allow citizens to receive a few international packages per year. Others, like Argentina, have high customs and duties. Such issues make international businesses less able to provide their consumers with free shipping or returns.
“Even as a merchant, if I could offer refunded returns or free shipping, that’s not going to change through the country regulations on customs and duties and I think that’s a bigger question that’s really outside of the merchant’s control,” O’Malley continued.
Still, cross-border payments present a fantastic opportunity for e-commerce businesses. Consumers in emerging markets such as India, China and Brazil are increasingly turning to the internet to find items they can’t get within their own borders. This enthusiasm likely makes them more likely to accept the cost of shipping. Business owners eager to accept global payments should consider the pros and cons of international deliveries and the consumer demand for quality products.
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