Book e-marketplace does away with ‘Plus Shipping and Handling’

After reading a recent economics paper from the University of California at Berkeley’s Haas School of Business, UC Berkeley graduate and BookFinder.com founder Anirvan Chatterjee, based on the research in the paper, decided to make an across-the-board change to his e-commerce site. Rather than listing only the price of products, the site now lists the total price of products with shipping and handling charges figured in. The change has led to a general if slight increase in conversion rates, Chatterjee tells InternetRetailer.com.

In the paper, “...Plus Shipping and Handling,” economists John Morgan and Tanjim Hossain describe an experiment they ran on eBay: customers spent 21% more on CDs with a $.01 starting price and $3.99 shipping vs. identical CDs with a $4.00 starting price and free shipping. In the paper the authors explore why buyers were unconsciously biased toward the $0.01+$3.99 products rather than the “revenue equivalent” $4.00+$0.00 items.

“We’ve noticed significant changes in the pricing landscape in the used and rare book markets. On one hand, we’re seeing a flood of very cheap titles, often less than 25 cents, where the seller makes the profit from the shipping charges,” Chatterjee says. “On the other hand, we’re also seeing increasingly price-competitive international bookselling, where it can be cheaper to buy a book from another country, despite the relatively larger shipping cost. Bundling shipping prices can make clear the real cost of a $0.01 book while making it a little less scary for a Californian considering buying a title from London.”

The company implemented the change earlier this year and some preliminary results are in. The early data indicates varied impacts across different retailers on BookFinder.com.

“One mid-sized retailer on our platform saw incoming customer clicks decline by 25% but sales jump by 50%. Another retailer, one with atypically high shipping rates, saw conversion increase by 50% but overall sales decline by a third,” Chatterjee reports. “In general, conversion rates have been slightly higher; we’ve found that having better data upfront means customers are less indecisive. And increased transparency definitely favors retailers with shipping costs in line with industry averages.”

The company made the change in part because of what it sees as a larger e-commerce industry move to reconsider the role of shipping prices. In June, for example, eBay announced it would start cracking down on sellers who charge excessive shipping prices.

BookFinder.com enables shoppers to search an inventory of over 100 million books for sale from booksellers in more than 50 countries. Shipping estimates are available for residents of more than 240 countries and territories.