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Shipping and handling charges: necessary evil

New York based Jupiter Media Metrix reports that while shipping and handling (S&H) charges have dis­suaded 63 percent of consumers from completing online purchases, nearly half (45 percent) of retailers say they are losing money on shipping and han­dling costs. New Jupiter retail infra­structure research reveals that compa­nies need to gain their customers' trust regarding S&H charges because the majority of consumers are looking at these costs before making purchases. To minimize both customer distrust and merchant risk, Jupiter analysts advise retailers to view S&H charges as a breakeven proposition and to base S&H charges on the weight of pack­ages, rather than on order size.

"The latest Jupiter research suggests that consumers are wiser to the true costs of shipping than retailers think. Consumers who have mailed packages via UPS, the USPS, or some other shipper, are well aware of the fact that shipping costs are driven by weight, rather than by the value of the pack­age," says Ken Cassar, Jupiter senior analyst. "Online retailers must begin basing their shipping charges on weight and distance because that is what they are familiar with. Retailers that believe that they're simplifying matters for their customers by charg­ing based upon the dollar size of the order or on the number of items in an order are making a mistake that may undermine the relationship that they're trying to build."

Key findings and forward-looking analysis from the latest Jupiter retail infrastructure research include:

  • According to a Jupiter Consumer Survey, 46 percent of consumers intu­itively believe that shipping costs should be based on the weight of packages, while only 10 percent believe that price/order size should drive S&H costs. A Jupiter WebTrack Survey of the top 50 Media Metrix online retailers, however, reveals that 54 percent of retailers base shipping costs on order size, while only 30 percent base costs on weight.
  • Jupiter analysts have found that companies that charge on any basis other than weight risk either losing money or robbing their customers. For example, Pets.com went out of business because it subsidized the high costs of shipping pet food. On the other hand, Jupiter analysts cite CDNOW - which charges $2.99 in S&H for the first CD and 99 cents for every additional CD - as a compa­ny that has used a dangerous per-item based pricing model. A purchase of 200 copies of Journey's Greatest Hits would cost a customer $200 in S&H, while CDNow would only incur about $28 in shipping cost.
  • A Jupiter Consumer Survey reveals that 73 percent of consumers evaluate the total price of products, including S&H, before making an online purchase. According to Jupiter analysts, companies that are profiting on S&H run the risk of increasing distrust among consumers.

"Across online retail and catalog, there is an even split between retail­ers that make money on S&H and those that lose money on S&H. As profitability becomes increasingly important, it is perfectly understand­able that retailers would seek new sources of profit, including S&H charges," says Cassar. "However, the long-term interest of the retailer is best served if its customers trust it. The latest Jupiter research shows that S&H is not perceived as a product - but as a necessary evil."

Study looks at leisure trends

Americans plan on doing more jogging, but their interest in playing ice hock­ey is on the decline. Active vacations such as swimming and hiking are on the rise, but Americans' interest in racquetball and surfing is not as great as it once was. Americans are using the Internet more as a leisure activ­ity, but they also have an increased desire to remain physically fit. Those are just some of the findings of Bear Stearns' leisure trends sur­vey. The survey, conducted in con­junction with Yesawich, Pepperdine & Brown, attempts to shed light on how Americans spend their leisure time and money and predict leisure trends moving forward.

The Bear Stearns leisure survey polled more than 1,000 American con­sumers above the age of 18. The questions focused on past and future partic­ipation levels for a variety of leisure activities. Using the data, the analysts were able to calculate an anticipated "net gain" for each activity. For a given activity, the net gain is the difference between the proportion of American adults who expect to participate more frequently minus the proportion of American adults who expect to participate less frequently. The difference is expressed in percentage terms.

According to the survey, the majority of Americans feel they do not have enough leisure time, want more pleasure out of life, and say they try to engage in new experiences. About one-half of the adult population reported that when they have spare time, they like to relax and do nothing at all.

The majority of Americans tend to enjoy more passive leisure activities, such as watching television or going to the movies, as opposed to vigorous activ­ities like aerobics, jogging and weight training. However, the survey did find participation levels for physical activities could increase significantly during the coming years.

The survey also evaluated which spectator sports are well-positioned for future growth. Professional football and basketball top the list, while sports such as college baseball, women's professional basketball, and professional soccer could face a decline.

The majority of Americans responded favorably to the concept of travel and made it clear that they do so whenever they get the opportunity. Americans also hunger for new experiences, which could lead to significant increases in the travel business.

The survey found active vacations appear to be on the rise for many Americans. Swimming, jogging, hiking, fishing and boating should all expe­rience net gains, according to the survey. However, nearly 50 percent of all other sporting activities studied will have an expected loss in participation by adults on vacation during the next two years, including many popular sports, such as snowmobiling and surfing. Finally, the survey found most Americansrank visiting a beach or a lake or just spending time with family and friends at the top of their lists for vacation activities - a trend that bodes well for  companies that serve those needs.

Turning money machines into marketing machines

There are opportunities for ATMs as delivery channels for advertising and coupon dispensing, according to a recent consumer research study by Synergistics Research Corp., Atlanta, entitled "Re-Inventing ATMs." The study, conducted in July of 2000, is based on a telephone survey of 1,002 consumers age 18 or older with household income of $15.000 or more. Results reveal that almost half of the ATM users in the survey say it would be useful if ATMs dispensed coupons for discounts on general merchandise or services. Close to four in 10 ATM users respond posi­tively to ATMs dispensing coupons for discounts on financial services. The survey also measured reaction to on-screen advertising at ATMs. One-third of the ATM users found on­screen ads for financial services use­ful. Advertising on the ATM for gen­eral merchandise and services is use­ful to one-fifth of the ATM users. In general, younger and lower-income ATM users are more likely to respond positively to advertising and coupon dispensing at ATMs. For more infor­mation contact Genie M. Driskill at 800-423-4229 or visit www.synergisticsresearch.com.

Workers preparing for layoffs

Although 73 percent of working adults feel secure in their current jobs, according to the February 2001 Xylo Report: Job Security Within the U.S. Workforce, more than half of the respondents (58 percent) are tak­ing precautions to prepare for the pos­sibility of layoffs in the midst of con­cerns that a recession may hit the U.S. economy in 2001.

The Xylo Report is a national sur­vey on work/life issues conducted monthly by Wirthlin Worldwide for Xylo, Inc., a Bellevue, Wash., provider of Web-based work/life solutions used by companies to attract and retain employees. The company commissioned Wirthlin Worldwide, McLean, Va., to survey 1,006 U.S. adults during the period of February 2-5. Sixty-five percent of the 1,006 respondents qualified for this survey by being employed (mar­gin of error was ±3.9 percent, n=647).

The report provides insight into how the average American worker perceives the impact of a slowing economy and explores some of the mitigating factors that shaped their opinions. Nearly three-fourths (73 percent) of employees surveyed feel that their job is secure in light of talk about an economic slowdown and company layoffs, with more than half (56 percent) saying they feel very secure. While the survey found that working women are only slightly more inclined than working men to feel very secure about their jobs (58 percent and 54 percent, respective­ly), the results illustrated clear trends based on age and gender. Thirty-one percent of employees over the age of 55 feel insecure, while only 19 per­cent of those under 34 years old feel insecure. Based on gender, a stagger­ing 42 percent of men over the age of 55 were concerned over losing their jobs, compared to only 19 percent of women over age 55.

Although the majority of workers feel a sense of job security, 58 percent of respondents are taking precautions for the possibility of layoffs. Improving personal finances topped the list, with 26 percent indicating that they are saving money. Fifteen percent are taking steps to improve their position in the job market by interviewing for other positions, going back to school for a degree, increasing skills through job training courses, working harder to increase job security, updating their resume, and looking at want ads. Eight per­cent are altering their finances by cut­ting personal expenses, investing money, paying off debts or taking a second job.

Although a majority of the respon­dents were optimistic with respect to their job security, 34 percent believed they would be laid off or have their pay reduced if their company made staff reductions. One-fifth (20 per­cent) of workers believed they would be the individuals laid off if their company chose to make cuts, while 14 percent said they would be affect­ed by pay cuts. Summaries of this and other Xylo Reports are available at www.xylo.com.

Couch potato-ettes?

It's not just men who love to watch TV sports. Women around the world are getting in on the act, too, accord­ing to research firm Ipsos-Reid. A survey of adult consumers in 34 countries reveals that 93 percent of men who watch TV tune in to sports. Among women, the number isn't all that far behind, at 83 percent. (This study looked at TV sports preferences only; a similar study will be repeated this summer with additional questions about sports participation and interest in sports around the world as a lead-in to next year's Olympics.)

What men and women are watch­ing, however, is rather different. Men are attracted primarily to soccer, American football, car racing and boxing. Women are more likely than men to watch figure skating, tennis, gymnastics, athletics, volleyball and swimming, although some women are also tuning into soccer and American football. But both sexes share the same passion for baseball and basketball, as well as hockey and golf, the research found.

"While there are some sports that appear to have broached the gender divide, women and men in living rooms around the world may still be fighting over the remote when it comes to televised sports," says Melanie Dowe, a senior vice presi­dent with the company in San Francisco. "The fact that women pre­fer watching sports like figure skat­ing, tennis and gymnastics may high­light the appeal of female role mod­els in sport - something lacking in the American football, car racing and boxing coverage preferred by men.

"The study also highlights the wealth of opportunity for advertisers to target both genders via televised sports coverage. Sporting events around the world have captured the attention of a vast majority of people. While baseball and basketball appeal to men and women alike, advertisers can accurately tailor their messages to specific audiences across a much wider variety of sports than ever before."

Overall, soccer reigns as the world's favorite TV sport, notes Ipsos-Reid in its quarterly study of international trends and opinions, Global Express. Soccer ranked high­est in 24 of 34 countries and is espe­cially popular in the urban markets of Brazil, Colombia, Saudi Arabia, and Thailand, as well as in Turkey and Egypt, where at least half of respon­dents named soccer as their top TV sports choice.

The greatest TV sports fans are in South Korea (96 percent are armchair athletes), urban China (95 percent), urban Russia (95 percent) and urban Thailand (95 percent). In urban Colombia, Germany and the United States, the figure is slightly lower at 91 percent.

In contrast, in Taiwan and Turkey one-third and one-quarter of adults respectively don't tune into televi­sion sports at all.

What's hot where soccer is not tops? Cricket is the favorite choice in urban India (watched by 64 percent of TV sports enthusiasts); basketball is tops in the Philippines (59 percent); baseball gets top mention among the Japanese (45 percent); swimming is the TV sport of choice in the Netherlands (34 percent); American football ranks highest among Americans (33 percent); figure skat­ing tops the list in urban Russia (26 percent); ice hockey is favored by the Swedes (25 percent) and Canadians (23 percent); tennis (13 percent), rugby (11 percent), and soccer (10 percent) rate almost equally in terms of popularity among TV sports fans in Australia. For more information visit www.ipsos-reid.com.