Free Delivery and Returns

I experience this type of persuasion particularly when online shopping especially for clothes. It convinces me to order more and to order from a particular website when there is free delivery and returns, especially as a poor student in a town with limited shops. It does this by convincing people to take the risk if hesitating on a decision on items consumers are not sure they want or even need. Helps increase uncertain decision making when online shopping. Clever marketing strategy as it helps unsure customers. A recent survey by Redshift Research revealed how much consumers care about free returns when shopping online. 60% of those polled said they would never purchase clothes online unless they could return any unwanted items for free. Perhaps this is an example of valence framing as it involves losses and gains. There is nothing to lose from trying if delivery/return is free. All you can do is gain from the situation. People seek to avoid loses and therefore free delivery and returns this eliminates loss. Tversky and Kahneman (1981) illustrated how valence affects willingness to take a risk using what has become known as the Asian disease problem.

Online shoe store Zappos confirmed the effect of free returns by saying people who regularly return items can become some of your best customers, with its own customers who buy the most expensive shoes having a 50% return rate. People who returned half of their orders made the company more money. Morwitz, Greenleaf and Johnson (1998) tested the difference between“$82.90 including shipping and handling” and “$69.95 plus $12.95 shipping and handling”. They found consumers were less likely to recall the full total cost and were more likely to remember the product’s cost. Therefore unbundled pricing had more demand which shows the attention on delivery cost. This in turn could be why free delivery is effective.

References

 Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: consumers' reactions to partitioned prices. Journal of Marketing Research, 453-463.

Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-458.