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Should You Offer Free Shipping?

Every single business is different, it’s hard to say one size fits all. I would like to share my humble opinion about free shipping and what data says. Online clients have expectations about websites and e-commerce website. There are thousands of websites that charge for shipping and then there are thousands that advertise Free Shipping. Now Free Shipping definitely shouldn’t be used as your main marketing message, just to get that out of the way.

If you’re a consumer, the benefits of free shipping are obvious. But for merchants, there are a couple of ways to look at it. I always like looking at it from a consumer point of view. I like free shipping and I would definitely order more products online if they had free shipping. I respect every single business decision because I understand that every single brand needs to look at their profit margins. I would just add that sometimes free shipping is necessary to simply remain competitive in today’s e-commerce economy.

It’s hard to argue the significance that shipping discounts can have on e-commerce sales. Study after study has shown that higher than expected shipping and handling fees is one of the top reasons that consumers abandon shopping carts.

ComScore (in December 2011) released the results of a holiday survey that reported 36% of online shoppers do not make a purchase online unless free shipping is offered. Another 42% of online shoppers said that free shipping was “somewhat important,” and actively sought out free shipping deals.

In early 2011, Zappos and L.L. Bean upped the ante for retailers when they began offering no-strings-attached free shipping for all online orders. This “all free, all the time” approach to free shipping is nice for buyers, but not always an option for sellers, especially small and mid-sized retailers that may not have the negotiating power that big box stores do with wholesalers and manufacturers, and thus have slimmer margins on the products they sell.

Look I understand that we are not Zappos or Apple, but we are all competing in a way against them. There are different ways to go around it. Free shipping with orders more than €/£50 or Free Shipping in the UK or Europe.

We had a client in the past where they didn’t offer free shipping and we decided to test drive free shipping. When we announced free shipping sales blew up by around 30% (don’t remember the exact number) but sales increased. Now a competitor of that client offers free shipping 12 months a year; their sales are higher than our client.

I think we have to think if we want to win the long game or the short game. If we are playing the long game then free shipping if the short then charge for shipping. It all comes down to what you want to achieve and of course your profit margins. Just a side note: if you don’t provide free shipping and decide now reading this article to offer free shipping please see your profit margins. If after 6/12 months you will email me saying that you read this article and decided to implement and know your profits are low, I will be devastated. Have a look at your profit margins!

 

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