Study: S&H Charges Deter Many from Buying Online

New York–It’s an Internet economy paradox: Shipping and handling charges deter 63% of consumers from buying online, while 45% of retailers claim to be losing money on S&H, according to a recent study by technology analysis firm Jupiter Media Metrix.

The study also notes that 46% of consumers believe that shipping costs should be based on the weight of packages, while only 10% say that price or order size should determine S&H costs. Jupiter concluded, however, that 54% of retailers base S&H costs on order size, while only 30% base those costs on weight.

Jupiter’s analysts warn that companies charging on any basis other than weight risk losing money or alienating customers. The company uses the example of Pets.com, which it says went out of business in part because it subsidized the high costs of shipping pet food. Conversely, online music seller CDNow charges $2.99 S&H for the first CD and $0.99 for each additional CD. This is a “dangerous” per-item pricing model, according to Jupiter, as the purchase of 200 CDs would cost a customer $200 in S&H, while CDNow would incur only about $28 in shipping costs.

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