Where the Highest Converting Online Retailers Calculate Tax and Shipping

On a current client project that we are building on Magento Commerce – the client brought up a great question – should we provide shipping and tax calculators on the shopping cart page – or on the checkout page?  By default, Magento Commerce has widgets that do both on the cart page itself, but to answer this question, we wanted to do a little research.

Magento Commerce Shopping Cart Page with Shipping and Tax Calculators

Magento Commerce Shopping Cart Page with Shipping and Tax Calculators

We actually posed this question on our twitter account and just as we expected, most of the respondants indicated that they felt it was better on the shopping cart page itself.  And traditional logic would lead us to believe that this is the case, we’ve been told for years that “surprise costs” late in the checkout process can lead to higher rates of shopping cart abandonment.  The theory was, provide as much cost information to the customer as early in the process as possible to provide transparency of final costs.  So many of us have been practicing this technique for years.

But, we wanted to see how some of the top converting online retailers handle this very question.  And I’ll preface this study by clarifying that just because something works for them, doesn’t necessarily mean it will produce the best results for you.  Every market, every site, and every product is unique, so by no means are we necessarily advocating any particular method simply because the best converting sites do it.

The Results

Schwan’s

With a conversion rate of an astounding 42.1%, Schwan’s site calculates shipping and tax on the checkout page.  In fact, what surprised me most is that they have an industry leading conversion rates while requiring users to register or login to proceed, which has been well documented as to lowering conversion rates.

Schwan's Shopping Cart Page

Schwan's Shopping Cart Page

ProFlowers

With a 36.5% conversion rate, ProFlowers actually calculates shipping on the product page.  In fact, because of the nature of these products that make the delivery date a much more integral part of the order process I consider this example to be an exception simply because of the uniqueness – as it actually provides shipping rate estimates on the product page itself.  But continuing through the order process, I’m never actually presented with an order total at all until after my credit card is processed.  In relative comparison though, I’d think this would be equivalent to providing the user actual tax and shipping costs on the checkout page.

Proflowers Shopping Cart Page

Proflowers Shopping Cart Page

Quixtar

Boasts an impressive 33.2% conversion rate.  But, after taking a look at the site – really?  Very surprised by these results especially seeing that the site seems  unusable – buttons actions that aren’t apparent (on a catalog page, scroll down, add something to cart – absolutely nothing happens even though it is actually added to the cart), very small text, small photos, poor layout/design, etc.  Regardless of what I think about the site however, they also calculate tax and shipping costs on the checkout page.

Quixtar Shopping Cart Page

Quixtar Shopping Cart Page

VitaCost.com

Converts 28.9% of its visitors, and does so without mentioning shipping costs or taxes (aside from some shipping banners) on the cart page, and does calculate these on the checkout page.

VitaCost Shopping Cart Page

VitaCost Shopping Cart Page

Woman Within

Manages to convert 24.2% of its web traffic while providing users estimated tax and shipping on the cart page, with actual tax and shipping costs being provided on the checkout page.

Woman Within Shopping Cart Page

Woman Within Shopping Cart Page

Are you seeing a recurring theme yet?  For the sake of keeping this post short (is it too late for that?), to summarize the remaining 5 top converters, LL Bean – checkout page, Office Depot – checkout page, Tickets.com – doesn’t equally apply, but checkout page, 1800Flowers.com shows shipping on the cart page, but taxes on the checkout page, and finally, QVC – checkout page.

Summary

So what do I take away from this?  Well, first of all, 9.5 out of 10 of the top online retailers by conversion rate calculate shipping and tax costs on the checkout page and not the shopping cart page.  So I think we can see a pretty significant trend towards this practice, but something I’ve noticed over time primarily with smaller retailers as well as eCommerce platforms in the small to mid market (such as Magento), by default, provide tools for the user to actually calculate these costs right on the shopping cart page itself.  While I wouldn’t say the results of this brief study are at all conclusive, I think it’s worth questioning whether you should be calculating this in your shopping cart.

One of the unexpected results of this research however was actually in the surprise that many of these top converting online retailers actually go against some of the traditional best practices for conversion rate optimization and minimizing shopping cart abandonment.  Which leads me to believe one of three things:

  1. These sites do quite a bit of conversion optimization and testing.  Best practices are never a “one size fits all solution” – each individual site could have realized greater returns using these techniques that go against the “norm” through testing.
  2. That some of these sites see a great deal of repeat customers, which typically convert higher than first-time shoppers.  If a significantly larger portion of their visitors are existing customers, it could greatly influence these conversion rates.
  3. The numbers presented in this research are not accurate.  And I’ve questioned its accuracy before.  It’s based on Nielson Online Megaview Retail which according to Nielson is “MegaView Online Retail service is based on the Nielsen/NetRatings’ MegaPanel®, which provides retailers with the most comprehensive intelligence on online consumers by linking past surfing behavior from the panel’s large sample with current opinions through real-time surveys. By combining these survey results with the actual surfing habits of the respondents, retailers and marketers are able to better understand how consumers are spending online.”  How this data is actually beats me, maybe someone else has a better idea of how Nielson collects this data and how accurate these numbers might be, but some of its results are certainly surprising and have raised my eyebrows on a number of instances.

Take what you will from this data, I think there were some interesting results and I think it’s a good practice for everyone who runs an online store to walk through the checkout process of these sites just for the experience.  Where are your shipping and tax costs being calculated?

by Founder & CEO
Kevin is the Founder & CEO of Blue Acorn, and he also serves on the Magento Certification Advisory Board. Kevin has worked with a number of companies with online needs: banks, IT companies, consumer packaged goods manufacturers, various software companies, and finally, starting his own eCommerce business. His roles included that of a web developer, a business development manager, a technology evangelist, and a consultant.  When Kevin founded Blue Acorn in 2007, he didn’t want to be all things to everyone who wanted to be on the web. As an eCommerce entrepreneur himself, he wanted to focus on helping other online retailers achieve their goals. At the time, the world of eCommerce “solutions” for online retailers was an overcrowded space of web development generalists that left many online retailers yearning for more – more expertise, more value, and more love. So Kevin started Blue Acorn and blogged about his thoughts and approach towards eCommerce. Those thoughts were well-received, and the demand for services to accompany them would soon follow.

DISCUSSION

10 Comments

  1. I’m surprised you didn’t list Amazon, considering they’re the poster child for ecommerce do’s and don’ts. They also show shipping and tax at checkout.

    Great article though, was interesting to see some other ecommerce sites, especially Schwan’s (which I just signed up for last month).

    Personally, while shipping is kind of important to me, once I’ve made a decision to buy something, it’s a trivial detail. I’m already in buying mode, so leaving it at the end is really the best place for it.

  2. To further that, what about ecommerce sites that have programs similar to Amazon Prime?

    I signed up for that service about 6 months ago, and because I get free 2-day shipping now, I buy a lot more things through Amazon, and even purchase items that I used to get at a regular store (like Q-Tips, food, toothpaste, shampoo, dog food, etc.).

    Perhaps more ecommerce sites should consider similar programs, especially if they rely on repeat business. They would certainly see an increase in repeat business and more sales, guaranteed.

  3. Great tips Kyle, it’s surprising to many that Amazon isn’t included in the list of the top converting online retailers – especially with Amazon Prime like you indicated having a dramatic impact on increasing conversion and repeat customers.

    I think there are a lot of lessons to learn from some of the best in online retail, and all of these sites, along with Amazon (and many others for that matter) do a lot of great things to maximize conversions.

  4. Awesome article. Quixtar’s conversion rate is probably due to its MLM nature – distributors come to the site often to place orders – they have no choice but to bear with the site as it is if they wanna get paid ;)

    I’m not sure that tax/shipping calculation would improve conversion rates although it should reduce cart abandonment as it eliminates that “sticker shock” effect. People still abandon the site if they don’t accept the add on charges – whether they see it on the product page or the cart. I would still advise retailers to offer the calculation on the product page.

  5. I’m surprised to see how many provides the tax and shipping costs on the checkout pages. But I guess there’s only one thing to do: Test!

  6. holly

    i’m so glad to finally see some information on this. i am furious with what used to be my favorite online retailer, anthropologie.com. apparently, i never noticed before(because they say they’ve been practicing this way for years.) that the final cost they give you before you click that final submit order button is just an estimated total. then i get my email confirmation and it’s $5.00 more because the tax was increased after i agreed to purchase the product for another price. i am livid. i have emailed and talked to countless customer service reps, each who tell me that customers are explicitly warned that it’s not a guaranteed final cost before they choose to purchase the item. i have scoured their website and policies and nowhere does it state their estimated tax policy. what they call an explicit statement is the letters “est.” in parentheses beside the tax amount. wtf? i’m just furious. i shop online all the time and never have i received one total before i clicked the submit order button only to see a different total in the email confirmation. why the hell would you operate like that? i even spoke to them today about an order i placed a few months ago where i was charged $5.00 for tax on and item that was $138.00 compared to an item i bought 2 days ago that was $128.00 where i was charged $9.28 for tax. looking at my order history, the woman told me i was actually charged $10.32 for tax on the first order. so that means i was give one tax amount before i chose to buy the item, a second total when i received the email confirmation, and then charged even more after the item was shipped!! was i ever informed about that final tax increase? nooooooooo. how is this not illegal?

  7. Wow, something I never would have considered so seriously. Thanks!

  8. Paul

    How are you defining “conversion”? These conversion rates are astounding…I’m used to seeing conversion rates in the 1-5% range for most clients, if we’re talking about the percentage of unique visitors that buy.

  9. Sean

    20%+ conversaion rate is something we are dreaming off, right now our website is at 2%. We are using magento’s standard shoping cart page and see most customers abandoning the cart before checkout?

    Can you provide any advice on how to increase this, (we dont calculate shipping on the cart page only in checkout)?

  10. Sean – while the most common advice you’d hear from anyone in the industry is “test it”, there are certainly many things that affect cart abandonment. Everyone has different methodologies for CRO but when you break it all down you want to make sure you instill confidence to the shopper, provide all the information they need to make a purchase decision, and reduce friction in the process. So look at your pages and analyze each step in the process from that approach. Or, better yet, ask your customers through feedback tools or user testing.

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