Tuesday 22 April, 2014

Ecommerce Basics – Should You Offer Free Shipping?

Nothing screams ‘deal’ in the eyes of your customers like free shipping. As many as 50% of all ecommerce stores now offer shipping for free and that number is only rising. It seems to be a growing trend and if you can swing it, it’s a good idea for your commerce store.

Unfortunately there is no such thing as free shipping. Somebody has to pay whenever something gets shipped. If it’s not the customer, guess who it is.

How Free Shipping Helps Your Business

For your shoppers, free shipping is like finding buried treasure. Surveys say that well over 90% of customers consider it a major determining factor in the brands they choose. In addition to saving them money, it takes some of the trouble out of online shopping. They don’t have to wait until checkout to see what the damage is. The stated total on the website is the total they will pay.

Free shipping offers benefits for your ecommerce store as well. Offering free shipping can boost your sales and customer loyalty, as long as you do it in such a way that you don’t go broke.

How to Offer Free Shipping

And that last point is the key to making free shipping work. The way to do it is to include the cost of shipping in the prices of your products. This means raising your prices a little, but it can mean much more in the way of sales so it’s totally worth it if you can absorb those costs. Consider it a part of your product cost like raw materials and storage.

If you’re going to offer free shipping, you should also think about your return policy. If you choose to offer free returns, make sure your return policy is strictly stated. Decide under which conditions you’ll allow returns. You’ll have to pay for those as well. It’s good to offer as generous a return policy as possible, as long as you’re not seeing a large volume of returns. Monitor and reconsider if it starts costing you.

Almost Free Shipping

One way to offer free shipping without absorbing the costs entirely is to set a threshold. This is a certain dollar amount over which shipping becomes free. For example, you may offer it for orders over $40. What this does is encourages shoppers to make larger orders, saving you on shipping. This is a highly effective strategy. People will have $35 worth of goods in their cart and pick up one more item just to save on the shipping costs.

Finally, one more way to offer ‘almost free shipping’ is to offer it as part of promotions or special deals. Offer it occasionally to your email list or as a reward for referring new customers. Make it a seasonal thing or offer it for certain items you’re liquidating. You can control how much you pay and how much the customer pays.

Two Magic Words

The words ‘free shipping’ are magic words to online shoppers. If you can offer it, even on a limited basis, you can give them a better deal, get yourself more customers and stay ahead of the competition.

Bob Steele

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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