Why is free shipping the only option in Indian e-commerce?

In the US, shipping fees are used creatively by merchants to build customer loyalty and segment customers based on urgency and total spend. There are numerous examples – Free shipping above $25,
Next day delivery if you order within the next 2 hours,
2-day shipping for Amazon Prime members,
Free shipping on Valentine’s day for students,
Add $5 to your order for next-day shipping, and so on.

Behavioral studies show that a “free” offer makes a person’s mind enter a risk-free zone hence something for free is a lot more appealing that something at Rs. 5. Anything non-zero does not create the same effect.  However, this conclusion holds true in cases that are actually risk-free. For example, get a free DVD of Titanic with this TV. In this case, you know exactly what you’re getting – no risk of delay (when will it come) or quality (what it is). Free shipping is a service and has inherent risks. It can arrive late and I cannot penalize for the delay, or it can arrive broken. I recently ordered a room heater from Indiatimes and it arrived a month later when the winter was almost over.

Without the ability to price, slice or waive shipping, how will merchants convert shipping into a service by itself? How will customers who want it tomorrow be able to say so and pay for it? It’s no different from paying for a superior gift wrapping. You can waive the fee, but as a shopper I need the ability to ask for overnight shipping and gift wrapping.

Flipkart does an awesome job of keeping its promise of delivery date and has kept the threshold for free shipping very low (Rs. 200). In its early years, Flipkart had to provide free shipping as Indians were apprehensive of online shopping, and any extra charges would make them run away.

Times have changed. Indians are now comfortable with shopping online even for last-minute purchases. The cost of fuel, traffic and weekend rush are not worth a trip to the mall. Given today’s spread of e-commerce websites, I expected at least the Nth website to offer a range of options in shipping and gifting at checkout. In a country like ours where most cities are within 2 hours of flying time, a variety in shipping options especially overnight and same-day delivery should be possible.

It’s time that e-commerce entrants and their shipping providers start examining their ‘one-size-fits-all’ shipping policies and introduce more proactive options to delight customers. With Amazon’s entry into India, I’m guessing that the service standards in e-commerce are about to change!

Unless otherwise noted, the following websites only have one shipping option.

All Major Categories
flipkart.com      
infibeam.com

yebhi.com     
homeshop18.com

shopping.indiatimes.com
pepperfry.com

shoppersstop.com
letsbuy.com

Apparel and Accessories
jabong.com
fabindia.com
madameonline.com
ladybug.in (Standard and Express Shipping options, no waivers)
shersingh.com
myntra.com
fetise.com (As per their website, Fetise charges flat Rs. 100/- per order for delivery, irrespective of the goods weight, volume, fragility, value or location. They also have an ‘Express Delivery’ shop for some items.)
inkfruit.com
zovi.com
fluma.in

Others
allschoolstuff.com
babyoye.com
firstcry.com
righttoys.in
hoopos.com
goodlife.com

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12 comments

  1. Raj

    Anjali, stumbled upon your blog via twitter and loved it.

    Best
    Raj

  2. Interesting topic Anjali. I feel the reason for one size fit all shipping policies is two fold 1) Copy what others in the domain are doing 2) Lack of shipping options from most courier companies and the difficulties in integrating them without making it complex for the customers.

    For ex: DTDC has a expedite shipping option but it is valid in certain cities and the price will vary depending on the weight. Now to integrate in regular checkout workflow is a bit tricky.

    We try to do a couple things to solve this 1) By offering expedite shipping(next day delivery) in select cities at extra charge of Rs 150/Kg 2) Same day shipping locally for extra shipping charges(depending on the weight).

    Would love to hear if you have some suggestions for us for the same

    • Anjali Gupta

      You’re right. There are constraints but I think what your website is doing for major cities needs to be done. I just saw your website and liked the fact that you’re clearly stating that in Delhi you can get a book in 24 hours. If I need a last minute gift, I can rely on your website rather than rush to the nearest bookstore. E-commerce is about giving people what they need and taking care of the corner cases or as they call it the long tail. The 3 attributes of ecommerce are all equally important – Selection, Price and Convenience, and I think shipping options are a key component of convenience as customers’ needs vary a lot. Each additional option/city that’s well covered across all attributes is a chance to acquire another customer. That’s crucial especially when the competition is so high. Do you agree?
      Thanks for posting.

  3. krishna

    You missed ZOVI.com

  4. vasundhar

    Hope your startup is doing great !
    You are right, India being risk-averse culturally, despite slowly changed trend we still seem to have carried “Free” = Risk free notion. Hope that changes soon, what it needs to change is radically lucrative incentive despite charged shipping. It may come probably in couple of years.

    I personally think being honest and discount on the invoice about the charges we are including for shipping is good way to show how much we are actually spending to make sure they get the product in good shape. We are doing that with our soon to be launched “http://www.gadgetvala.com” a Niche lovable store for people who love gadgets. (I am not promoting here.)

    Flipkart is really doing good job and all the ecommerce startups including the ones that came before flipkart should thank those folks sachin and vineeth bansal for the bold step, People really got used to ecommerce now.

    Throughly Enjoyed the post and comments Thanks to you and Mayank for insight.

  5. Rajeev Upadhyay

    As you said earlier it was trend in India but now it is changing, I agree with it but about the title I feel otherwise. Today the quality of services and time has become important even if people have to pay some higher they are happy. No compromise is becoming the only option for the customers as they have s lot of options to deals or trade with

  6. it varies from place to place. At chennaishopping.com, we have provided Express Delivery for Rs.50 (Same day delivery if ordered before 1 pm)

    it’s very rare that people have chosen it. although, i haven’t advertised it much. yes. some are willing to pay for it.

  7. true..indians love free shipping but its becoming increasingly unsustainable as in case of ours http://www.vicky.in/shopping – car and bike accessories store online

  8. Hi Anjali,
    Chanced meting you via Twitter @toy tasting. Firstly congratulations on the clutter free and simplistically designed blog.
    On free shipping, it’s actually ironical that in India where the business owners pay more for our under developed logistics as compared to the 1st world (read US), we have actually made shipping free to the end customer. Is it desperation?
    I will first speak here from a consumer perspective. If I know that shipping is free, I have no incentive to plan and club all my purchases together. As a consumer I am organized with a list in hand while I am visiting a brick and mortar store. But on internet I have no need to do so. As e commerce service providers are we changing consumer habits for worse? I think so.
    As an e commerce site owner, free shipping is a disaster economically, which is very well understood – so won’t spend any time here. What I will like to emphasize is that as drivers of E-commerce in India if we are going to focus only on Price, COD and free shipping then we are doing market making at the basic levels. In such a case other finer aspects like usability, design and better consumer experience take a back seat. Of course the big question here is, “Is the Indian customer willing to pay for better usability, design and better customer experience?”

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