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Should I Offer Free Shipping?

By May 30, 2019 No Comments
If you run an online store, you may want to reconsider the delivery options. The majority of consumers said that free shipping has a number one incentive.

There are a few factors to consider before changing to offering free shipping, the most important being is being able to afford it. Many companies offer free shipping on orders over a set amount, which would be a good option to encourage a consumer to purchase more.

Here are a few things to consider before offering Free Shipping
  • Are you charging enough for your products? You need to run the numbers to ensure your product price is sustainable for your business. If shipping costs aren’t free is your business able to afford them with your profit.
  • Will you still be able to make a profit after all costs are considered? There are several financial factors to take into account when offering free shipping. Does your product price allow you to make a profit, with the new added cost of free shipping?
  • How will you use free shipping as a marketing tool? Think of your long-term marketing strategy. Do you want to use free shipping year-round or during certain times of the year such as holidays and sales? Determine your goals: increasing average order value, increasing number of orders, increasing number of return customers, increasing profit, etc.

If other brands in your niche are offering free shipping, you should offer it to stay competitive. However, even if they don’t offer free shipping, you might be able to have a competitive edge over competitors if you do.

According to AdWeek, 81% of shoppers research before buying a product. They’ll also browse three stores before making that purchase. Don’t make the mistake of thinking that you don’t have any competitors, because potential customers can easily find them.

A few Statistics about Free shipping:
  • According to Red Door, when they offered a free shipping threshold, such as ‘free shipping on orders over $75’ they were able to increase orders by 90%.
  • According to Marketing Land, they found that 9 out of 10 customers were incentivized to do their shopping online when offered free shipping. They also found that about a third of of online shoppers were making purchases weekly.
  • According to David Bell, people find a free shipping offer that saves them $6.99 more appealing to them than a product discount of $10 despite saving more money with the latter option.
  • Free shipping is a good idea if it fits into the budget as it can boost sales but you should also consider offering other shipping options such as express delivery of sorts. 50% of frequent online shoppers reported using one-day shipping and 85% reported using 2-day shipping.
  • The consumers that shop online frequently, use the pick up in store option four times more than the consumer who seldom (only a few times a year) shop online.
Should you offer Free Shipping?

The easiest way to find out if free shipping or conditional free shipping works best on your store is to try one condition for a couple weeks and compare it to another condition shortly after. For example, you offer free shipping on all products and run an experiment until you reach 100 customers.

Once you hit 100 customers, you can run a second test where you offer free shipping on orders over R500 (or whatever number makes the most sense for your store) and you collect the data from those 100 customers.