THE BLOG
10/20/2014 05:46 pm ET Updated Dec 20, 2014

I Want It NOW, But I'd Rather Not Pay for It

Tell me if this has happened to you before. You're shopping online and are ready to check out when a screen pops up asking you how you want the items shipped to you. Typically, there are three options facing you. The first is standard shipping. It's cheap (maybe even free depending on the website), but it'll take seven to 10 business days for you to actually get the package. That might as well be a decade in a world where consumers start abandoning a video if it doesn't start within two seconds. So expedited shipping then? But it costs so much more! It seems almost wasteful to spend money on getting something sooner when there's no real urgency. The last option involves buying something else so that your total purchase qualifies for free shipping. On the one hand, this option lets you get your purchase sooner for free, and your money is going toward an actual purchase rather than just shipping. On the other hand, your virtual cart probably already contains what you intended to buy. So finding something else that is just the right price for meeting the minimum required can sometimes be difficult.

I've been in this predicament countless times, and I was curious about whether other consumers were experiencing something similar when they shopped online. In order to find out, I ran a simple experiment at the Georgetown Institute for Consumer Research. I gave participants a scenario in which they had just purchased something online for $30 that they'd wanted for a really long time. At the checkout screen, they were presented with three options:
  1. Standard shipping: This would cost them $5 and the product would take seven to 10 days to get to them.
  2. Expedited shipping: This would cost $7, but they would get the package in two days.
  3. Buying something else: This would mean buying something for $10, which would qualify the total purchase for free standard or expedited shipping. Importantly, participants were told that this item would be something they're not "terribly excited" about getting, but wouldn't mind having either.
The last two options were the ones in which I was really interested. Buying something else would mean spending more money, but at least the money would be going toward an actual product rather than just shipping. On the other hand, opting for expedited shipping would mean saving $3 (that's 10% of the purchase).

Standard shipping was the most popular option, with 40% of the participants opting for this shipping method. However, buying something else was a close second, and was chosen much more frequently than expedited shipping. These data suggest that, indeed, consumers would rather pay more to get an actual product than pay for expedited shipping. What's particularly interesting is that this is true even though the additional product is not something they particularly desire. Thus, it looks like there are a lot of consumers like me out there; we all prefer paying for some thing rather than paying for shipping.

But does this hold true for everyone? Millennials are notorious for seeking instant gratification. Might this mean that they would be more likely to opt for one of the faster shipping methods? When I looked at the data comparing millennials to non-millennials, I didn't find substantial differences.

Older respondents were about 5 percent more likely to opt for the slower shipping methods (i.e., standard shipping) than younger respondents. Younger respondents were a little more likely (about 6 percent) than older respondents to opt to pay for expedited shipping. However, the two groups were similarly likely to opt to purchase something else in order to get free shipping. Perhaps this indicates that our culture as a whole has become more impatient?

While age doesn't seem to have a large impact on how we choose to get products shipped to us, gender does. When I looked at the data separately for men and women, I found some interesting differences.

Women preferred to go with standard shipping, or buying something else in order to qualify for free shipping. Paying for expedited shipping was not a popular option among them. In contrast, men seemed similarly comfortable with all three options. Moreover, men were more likely than women to opt for one of the faster shipping methods.

These data patterns suggest that when we are shopping online, we're not merely trying to save money. If that were the case, then everyone would opt for standard shipping. It's also not the case that we're all impatient and seeking to enjoy our purchase as soon as possible, regardless of the cost; the percentage opting for expedited shipping would be much higher in that case. Rather, we're trying to do some combination of both. We want to enjoy our purchase as soon as possible, but also need to justify the additional expenditure involved in doing so. Consequently, spending a few more dollars of hard-earned money seems worth it when it is going toward something material, even when the additional item may not be something we particularly want.

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The Georgetown Institute for Consumer Research receives funding from KPMG. However, research activities are determined by the interests of the Institute's researchers and trending topics.