Offering free shipping can drive business by increasing sales through a growing customer base.
It may seem contradictory to a business owner, but offering a service like free shipping can actually increase sales and profitability and contribute to a larger customer base.
This service is not just for the holidays and busy shopping seasons, either. In statistics released by freeshipping.org, a hub for consumers seeking discounts on merchandise and shipping from over 4,000 online retailers, the numbers speak for themselves:
- 52% of customers abandoned their online shopping carts when they found out there wasn’t free shipping
- 30% average percentage increase in customer spending when free shipping was given as an option
- 20% of customers that say the most important factor in online shopping is free shipping
- 19% of customers that say if the retailer offers free shipping, they’ll pay full price for the item
There’s no “one size fits all” model for offering free shipping. Here are some questions to ask yourself to see if it’s a fit for your business:
What am I spending now - what's an average shipment costing me?
If you tend to send items that are light or frequently use flat rate boxes, consuming an expense under $10 or $12 may factor out to breaking even on profit, especially if your customer is one out of the three who will spend more knowing the shipping is free.
How important is the method and timing of shipment to my customer?
Let’s say you sell a perishable item - like cake - and getting your goods to your customer is hugely impacted by time. Knowing that you will most likely always choose Express Mail, it may not be feasible (or wise!) to cover over $30 in shipping yourself. For something else - like clothing or household items, you can choose more cost-effective methods that take just a day or two longer than Express or Priority Mail - like first class mail or regional rate boxes - but cost less, giving you less to cover out-of-pocket.
What’s my average sale?
If you tend to hit a high-dollar amount for your average transaction, it will probably be easier to cover shipping costs. On the other hand, if you sell items with a price tag that wouldn’t even allow you to break even on shipping, free shipping could actually deter profit.
Remember, you can always add or remove a feature like free shipping. The only way to really know how it will impact your business is to offer it as an option.
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Selling Tips: Offering Multiple Shipping Options
Selling Tips: Offering Same-Day Shipping
Selling Tips: Setting up Shipping Rates for an Online Store
Selling Tips: Using Shipping as a Promotional Tool