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Shippo finds free delivery is essential to driving consumer spending


A new report from multi-carrier platform provider Shippo has stressed that free delivery is becoming increasingly essential to drive consumer spending, while the cost to meet expectations remains the number one challenge for ecommerce merchants.

Shippo’s State of Shipping Report polled more than 1,000 respondents each from both the ecommerce merchant and ecommerce consumer communities on shipping and fulfilment industry headwinds, trends and shifting consumer expectations year-over-year.

Findings from the report uncovered that as supply chain disruptions and delivery delays decrease, the cost of shipping is now both merchants’ and consumers’ primary concern amid inflation and a looming recession. As many as 41% of merchants said shipping prices were the biggest challenge for their business in 2022, and 36% expect this to hold true in 2023.

“The data our report uncovers confirms the growing discrepancies between what consumers want and what e-commerce merchants are delivering, while also highlighting strategic opportunities for closer alignment between the two,” said said Laura Behrens Wu, founder and CEO at Shippo.

“It’s clear the economy is the primary driving factor for these concerns, as supply chain disruptions, decreased capacity and labor constraints take a backseat.

“In 2023, we’ll see a renewed focus on winning customer loyalty through optimised fulfilment and a greater variety of delivery options, to accommodate cost-effective strategies that drive repeat purchases without impacting profit margins.”

The study also highlighted that despite the return of in-store shopping, ecommerce is not expected to lose traction in 2023. Shippo found that 60% of consumers do at least half their shopping online, up from 41% in 2021. When given the choice between shopping online vs. in-store, 61% of respondents prefer making online purchases.

Furthermore, the report said cost-effective fulfilment strategies have the power to drive consumer loyalty. Providing shipping options at checkout like larger shipping windows or greater carrier variety to lower prices keeps consumers happy. Only 3% of consumers reported they don’t care about shipping costs while 42% said they would join a loyalty or membership program in exchange for free shipping. 47% said they would meet a minimum payment to qualify for free shipping.

Delivery speed is less important to consumers going into 2023, according to the study. Only 10% of online shoppers wanted same or next-day delivery in 2022, down from 18% in 2021. Timeliness of receiving packages was less dire in 2022, reliability remains essential. The study found 19% of consumers wouldn’t make a second purchase with a retailer who lost their package and 42% said how the merchant responds to, or resolves this issue, determines whether or not they’d be a returning customer.

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