How shipping cost and speed affects conversions across marketplaces

Today’s e-commerce has changed dramatically from even a few years ago. Modern customers aren’t delighted by fast or free shipping – they expect it.

This is a shift largely driven by Amazon and its huge pushes to deliver products more quickly and cheaply, but it impacts e-commerce as an industry.

Understanding how shipping costs for the customer and total fulfillment speed affects conversion and sales across marketplaces will give you a better basis to understand how, where, and why you should be investing in faster and cheaper shipping.

Shipping costs have always been one of the largest factors behind abandoned shopping carts and missed sales, which is evident in studies as well as customer product reviews, where shipping speed directly correlates to customer satisfaction with the product.

As a result, most e-commerce platforms are using shipping cost and speed as factors in ranking and Buy Box algorithms, as each marketplace attempts to deliver a faster and better customer experience.

Many e-commerce platforms have also begun to integrate fast-shipping programs like Guaranteed Delivery, Free 2-Day Shipping, Next Day Delivery, Prime, and more – all of which boost product ranking and conversion across sites.

We’ll cover several top marketplace options, starting with Walmart.com.

Walmart: Walmart Free 2-Day Delivery

Walmart entered the e-commerce game relatively late, but is taking massive strides to keep up. At the same time, Walmart’s third-party merchant policy is largely to offer fast shipping and a total low-cost for the product. Walmart cares about being the fastest and cheapest, which is their only real hope at beating Amazon.

In 2017, the retail giant launched Free 2-Day Shipping for all customers, which any Walmart seller can enroll in through Walmart’s fulfillment partner, Deliverr.

Walmart highlights fast and free shipping in several ways, starting with search. Walmart’s search algorithm heavily factors shipping speed, so sellers with faster fulfillment rates do eventually receive higher placement. However, Walmart’s highest consideration in search is cost, so their free shipping component could boost results higher than faster solutions.

This holds true with the Walmart Buy Box, which primarily considers total product cost (Shipping + Product Price). Here, you likely can’t compete with Walmart itself, but you can win the Buy Box by offering fast and free shipping without changing your product price.

Similarly, opting into Walmart’s 2-Day Free Shipping will help you to boost conversion through increased product placement in categories, highlights across the site, and in-search filtering – enabling customers to remove all products that don’t qualify for Free 2-Day Shipping. Opting into the program also means customers can return products to any Walmart retail center, which will boost confidence in purchase.

Tip: Walmart also has performance ads, which are PPC ads across the marketplace that sellers only need to pay for if someone clicks through to your listings.

eBay: eBay Guaranteed Delivery

eBay has begun leaning toward fast shipping in their marketplace, with the introduction of eBay Guaranteed Delivery. They feature their fast shipping tags in search and across the marketplace, and have increasingly strict account health requirements for sellers.

The most obvious effect here is that eBay’s Cassini search algorithm highlights fast and/or free shipping options in search. The algorithm takes other factors such as value, total cost, seller feedback, and ranking into account as well, but getting on eBay Guaranteed Delivery is likely to result in higher placement in search.

eBay's Guaranteed Delivery Program claims up to 146% increase in sales. Since customers can filter for Guaranteed Delivery products in search, it also helps you reduce competition when shoppers are looking for quick delivery.

Shipping speed and cost affect your seller account in other ways. For example, both will affect your long-term seller feedback, which greatly affects conversion. Both are also included as metric requirements for eBay programs like Top Rated Seller and Best Match, which can help you to boost conversions.

Tip: To increase eBay conversions even further, look into eBay Sponsored Products.

Shopify: Independent merchant fast shipping

Selling through your own store can help you to take control of your brand and drive more repeat sales, but unless you have a brand following, it’ll be hard to match your own store’s sales with your marketplace sales.

Offering competitive shipping costs and speed is one way to boost customer trust in your products, even if you aren’t selling on a trusted marketplace.

Here, shipping cost should be your primary concern. Studies show that most customers actually perceive added cost to the product as lower than the same cost added to shipping, so you’re much better off selling your product for more to subsidize “free” shipping.

At the same time, many people increasingly expect fast shipping (1-4 days) as a minimum standard rather than as a luxury. Some will pay for faster shipping, but most expect it. Offering fast shipping can help to increase trust as well, because customers won’t have to wait to see if your product is what they expected.

Like with other channels, offering fast and free or low-cost shipping will improve your reviews and online feedback and increase customer satisfaction, which will pay off in the long-run.

Amazon: Amazon Prime

Amazon was one of the first online marketplaces to focus on fast and free shipping, with offerings through Prime over a decade old. Today, Prime has more than 100 million subscribers.

Most experts believe Amazon has shaped how consumers view e-commerce today, and it is undoubtedly the primary reason many consumers expect fast shipping.

Delivering quickly with Amazon FBA can boost conversions in several ways, the most significant of which is that Amazon’s search algorithm strongly favors shipping speed. Shipping speed is also part of the Buy Box algorithm (although cost and account health metrics are also a big consideration).

Similarly, Amazon’s account health metrics contribute to your ability to rank in search and on product categories. Delivering products quickly and for a low price is a large contributing factor.

Amazon also highlights shipping speeds on products, in product search, and allows consumers to filter based on search options. Prime users (who pay a subscription fee) can also filter based on Prime Free Shipping, so that they benefit from Free 2-Day or Next Day shipping.

Overall, shipping costs and speed have a huge influence on conversions across e-commerce platforms:

• in front-end, where customers actively make a purchase decision based on shipping speed and cost
• and in back-end, where platform algorithms highlight products with a better value or experience, which results in better placement and increased competitiveness

Fast, free shipping boosts conversions and helps sellers provide a good customer experience. This will create a positive impact, generate reviews and eventually result in more loyal customers.

If you want to remain competitive across any marketplace, including your own platforms, you will have to keep up.