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How do shipping costs affect a shopper’s choice of retailer?

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Online shoppers often do not consider shipping costs until they reach the checkout. However, shipping costs could influence which retailer the shopper decides to buy from. This, in turn, could help manufacturers understand why their products sell better on one retailer’s site as oppose to another.

Brand View include shipping costs in the Daily Prices and Promotions analysis. Clients can simply include the data by selecting the ‘Include Shipping’ option in the Filtering Options drop down menu. Further refinement is possible by selecting shipping type and shipping duration.

As an example Brand View examined the Philips 42 inch 3D Smart LED TV , available online from Argos and John Lewis and priced at £699.00 on both retailers’ sites. Considering price alone, there is no reason for the shopper to choose one retailer over the other.

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However, Argos only have one shipping option – delivery in 2 days for a cost of £3.95 – whereas John Lewis’s default option is delivery in seven days for free.

Presented with these two options, the shopper would potentially be more inclined to purchase this product from John Lewis due to the free shipping. Furthermore, if the shopper needed this product as soon as possible John Lewis also offer a two day delivery option at a cost of £19.95; Argos, however, offer no quicker delivery options.

The most expensive delivery option (£19.95) is only 1.5 percent of the total cost of the product and as such probably wouldn’t affect the shopper’s decision to shop online. However, delivery costs on lower priced items might influence where the shopper decides to buy the product – online or in-store.

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The Breville Stainless Steel Toaster is available online for £16.99 from both Argos and John Lewis, however, when including the default delivery option fee, Argos would be 95p more expensive than John Lewis.

The £3.95 delivery charge is 23.2 percent of the cost the item which may encourage the shopper to buy the product in-store and save on delivery.

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Manufacturers can review their ranges and identify whether certain products are selling better than other because of shipping costs. For example, Panasonic have three 42 inch televisions in stock at Argos. Two of these TV’s have a delivery charge of £3.95 which would take two days.

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The Plasma model, despite being cheaper, has a £8.95 delivery charge which would take five days. This may explain why Panasonic are seeing more sales on the two other televisions.

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