Free shipping is a major factor in picking online deals

Three days in Cyber Week broke $1 billion in sales, retailers curb bets by offering free shipping

When evey dollar counts in finding the right gifts for everyone on your Christmas list, comparing online deals and searching for shipping deals can impact your website choices greatly. This year, a record number of companies offered free shipping for holiday purchases and helped drive up Cyber Week sales.

According to a data study released Sunday by comScore, Cyber Monday was one of three online holiday shopping days this season that eclipsed the $1 billion mark with $1.25 billion, followed by Nov. 29, with $1.12 billion and the subsequent Wednesday, Nov. 30, with $1.03 billion.

These three sequential days showed the increased desire to take advantage of the epic sales and free shipping offered across the web for the days following Thanksgiving, it also showed the desire to get shopping out of the way early, doesn't end at  the close of business on the momentous Friday, but has continues to roll over through the entire week.

These three record days helped Cyber Week reach a record weekly total of nearly $6 billion in spending, according to comScore Chairman Gian Fulgoni, in a statement.

"As the deals from this week expire, it will be important to see the degree to which consumers return to the same retailers to continue their holiday shopping, thereby helping improve retailers’ profit margins, or if we experience a pullback in consumer spending – which has occurred in previous years – before promotional offers and spending intensity pick back up in earnest around mid-December,” said Fulgoni in a statement.

Each time period looked at showed at least a 15% increase in sales since last year. Black Friday led the pack with a staggering 26% jump in the amount of money spent online and Cyber Monday bringing in 22% more money than the record breaking $1.03 billion last year.

ComScore found that free shipping was being offered as part of Cyber Week deals in record numbers. More than half of all transactions this holiday season included free shipping. Most of these companies also showed their intention that they would be charging for shipping later in the holiday season.

The week of Thanksgiving (week ending Nov. 27) saw free shipping appear in 64.4% of all online transactions, while Cyber Week maintained nearly the same number, at 63.2%. Both time periods showed a 10 percentage point increase over the same time the year prior. The week prior to Thanksgiving saw the least growth in free shipping offered, over the year prior, with a 5.8 percentage point increase.
More than one-third of respondents, 36% rated free shipping as “very important” and that they would not make a purchase without it. A substantial 42% stated that free shipping was “somewhat important” and that they actively seek out free shipping deals. A modest 15% said that free shipping was not a major factor in their purchasing decisions.

Free shipping is one of the most crucial factors helping shoppers compare between sites where they can purchase identical or similar items and often give the big retailers a big advantage (such as Amazon and Best Buy) since they have the infrastructure to curb shipping costs and offer shipping discounts to their customers.

Some controversy has been discussed in recent months about the companies, such as Amazon, that have used questionable work environments for its employees to work in so that free shipping is financially viable for all of us to get that new best-seller by the end of the week.

While offering free shipping has its obvious costs that hit retailers bottom-lines, it also has its benefits since it tends to drive the average total price paid (especially when their is a set minimum to qualify for free shipping) and it creates special events that can drive purchases on some, otherwise, slow business days like the newly popularized 'Free Shipping Day' on Dec. 16, which is the last day that thousands of merchants are saying will guarantee a package to get to its destination on time for Christmas.

Last year’s Free Shipping Day was the third largest online spending day of the year at $942 million, representing a substantial 61% jump from the say day, one year prior.

This free shipping trend has shown its sucess to the companies able to provide it and may be the go-to tactic for creating more shopping events for other days that would otherwise see average or below average sales.

Image Source -- Merchantblog.resellerratings.com