Should You Offer Free Shipping?

For FREE, or not for FREE? That is the question!

The current eCommerce landscape is getting increasingly competitive. As more retailers incorporate eCommerce into their overall business strategy, new challenges arise.  Free shipping is a key strategic decision that can affect an online retailer’s bottom line.  Here are a few things to consider before offering free shipping to your online customers.

Take the Time to Research

Identify all available shipping companies and determine what they have to offer. Choose a shipping carrier that reflects your budget, profit margins, and company policies.  Be sure to evaluate them with care.

Choose the Right Shipping Strategy

1. Ship for FREE on All Online Purchases
This option is guaranteed to boost your online sales and increase conversion rates, but it is likely to allow for smaller profit margins.

2. FREE Shipping With Conditions
Example: ‘Spend $75 and qualify for free shipping’. This strategy allows your customers to reap the benefits of free shipping while encouraging them to buy more from your online store.  The more they buy the more they save! This is great for you as a business owner because it increases a customer’s average order value while enhancing your bottom line.

3. Prime FREE
Find a way to receive some type of commitment from your customer and in exchange offer free shipping.  A great example of this is Amazon’s subscription program Amazon Prime. Customers subscribe to a service and receive free shipping in exchange as part of the programs perks.

4. Flat Shipping Rate
A great alternative to offering free shipping all together.  By offering a flat rate, customers can shop all they want and not worry about shipping costs increasing with their order size.

5.  Consumer Pays
This is an obvious option, however if it is not in your budget to offer your online customers free shipping, it may be advantageous to have your customers simply pay for carrier services. CAUTION! Be aware of price gauging and be sure to offer a fair rate for shipping.

Pros and Cons to Free Shipping

Before you decide to offer free shipping there are a few benefits and drawbacks to free shipping:

Benefits:
– Levels playing field and allows your business to be more competitive in your industry
– Increases conversion rates and minimizes shopping cart abandonment
– Encourages large orders
– Allows you to offset the negative consumer perception of sales taxes

Drawbacks:
– Increases costs if you have lower margins
– Free shipping is not a strong differentiator
– Delivery times vary according to shipping preferences
– Increases fulfillment complexities such as costs and packaging prices

Conclusion

At the end of the day 78% of shoppers will choose the cheapest form of shipping whether that is relying on a shipping courier or simply driving down to the local store (practical eCommerce).  So look at your KPI’s and see if you can implement free shipping . It will entice customers to checkout on your site and keep them coming back for more!