FedEx recently released a new white paper in partnership with Morning Consult, titled Bridging the E-Commerce Divide: Meeting Consumer Needs with Retailer Offerings. The report highlights an important trend in online shopping: consumers are now prioritizing free shipping over fast delivery, a preference that has a significant impact on cart conversion rates and average order value.
Survey findings show that 75% of consumers prioritize free shipping over expedited shipping options, with more than half of respondents (57%) choosing free shipping as the top factor in their purchasing decisions, overtaking price considerations (54%). Additionally, 81% of consumers are willing to increase their spending to meet minimum order requirements for free shipping, underscoring the growing importance of free shipping in consumer purchasing behavior.
Out of necessity, only 48% of retailers offer free shipping, presenting a missed opportunity for many retailers to improve conversion rates and improve the customer experience.
“Consumer preference for free shipping over fast delivery, and the willingness to build larger baskets to reach the border, is a significant behavioral change that has a significant impact on cart conversion and average order value,” said Jason Brenner, Senior Vice President, Digital Portfolio at FedEx. “As the holiday season approaches, the question is not whether retailers can sell for free—but whether they can afford it.”
Consumer’s Willingness to Pay for Luxury
While free shipping is a priority, the report notes that many consumers are still willing to pay extra for convenience. In the survey, 40% of consumers prefer next-day home delivery from local retailers, with other delivery options such as in-store pickup (19%) and curbside (18%) options trailing behind. Additionally, 55% of consumers indicated they are willing to pay for same-day delivery, and 45% would pay for next-day delivery.
The report suggests that the best way for retailers to drive high cart conversions is a combination of free shipping, free returns, accurate tracking, and on-time delivery. Retailers are encouraged to set attractive minimum limits for free shipping, encourage larger cart sizes and improve the customer experience without deterring potential purchases.
About the Survey
The white paper is based on two studies conducted by Morning Consult. The consumer survey was conducted from May 23-28, 2024, with a sample of 2,103 US consumers, carrying a margin of error of +/-2%. A survey of retailers was conducted from May 31-June 11, 2024, among 510 US retailers with over $100,000 in annual revenue who sell goods online, with a margin of error of +/-5%.
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