Daily Newsletter

13 November 2023

Daily Newsletter

13 November 2023

Survey: consumers willing to spend more on holiday season shipping

As shipping costs become the pivotal factor in online purchases, retailers are advised to focus on consumers willing to spend more on shipping.

Mohamed Dabo November 10 2023

A recent survey by First Insight has revealed that a significant 33% of US consumers are willing to shell out a minimum of $10 for shipping, setting the stage for potential shifts in shopping behaviour.

The study, entitled 'The State of Consumer Spending: Holiday Shopping Trends 2023', is in its second annual iteration, highlighting key changes in consumer habits.

In a notable finding, the survey underscores that shipping costs have experienced a substantial 62% year-over-year increase, emerging as the primary factor influencing online purchasing decisions.

Regardless of the amount consumers are prepared to spend on shipping, the majority anticipate delivery times ranging from three to five business days.

High shipping spenders: a lucrative target for retailers

A closer look at consumers willing to invest more in shipping reveals a segment that retailers should strategically focus on this holiday season. Those open to spending more than $15 on shipping are 2.5 times more likely to increase their overall holiday shopping budget compared to last year.

Moreover, older consumers, specifically Gen X and Boomers, show a strong willingness to spend $20 or more on shipping, contrasting with younger shoppers.

However, despite their openness to spending, this group is bargain-conscious, with 42% requiring promotional offers ranging from 35% to 50% to encourage conversions.

First Insight CEO Greg Petro emphasises the potential benefits: “Targeting those consumers who are willing to spend more on shipping can reap countless rewards for retailers’ bottom and top lines this holiday season.”

He suggests a shift away from the expectation of free and fast shipping, signalling changes in consumer behaviour.

Social media's impact on high shipping spenders

The survey also uncovers that 78% of consumers willing to splurge on shipping use social media to aid their gift-finding quests, compared to a mere 37% of those spending $5 or less on shipping.

While newer platforms like TikTok gain traction, Facebook remains the top choice for almost two-thirds of respondents, with YouTube and Instagram following closely behind at 57% and 56%, respectively.

Ecommerce market dynamics

The emergence of ecommerce has made it imperative that companies understand consumer behavior, deliver personalized service, and offer competitive pricing models. Ecommerce giants like Alibaba and Amazon dominate the space, supported by huge customer bases, robust mobile payment platforms, and technology expertise in areas like AI. Smaller players focus on disruptive business models, such as subscription services, to make their mark. Per GlobalData, the ecommerce market was valued at $5.9 trillion in 2022 and is expected to grow at a CAGR of >9% by 2027.

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