Should your Business Offer Free Shipping

Through much of the new millennium, shipping costs were just something that consumers had to pay. However, with the introduction of eCommerce websites, that’s changed. Large companies began offering free shipping to customers who bought a certain amount of goods.

Over time, this became the norm to the point that customers almost always expect not to have to pay for shipping. However, for small businesses, this can be a real problem. The following list describes how offering free shipping can affect your store. 

It Encourages Purchases

What is better than free? Few things are more enticing to a customer than only having to pay for the product rather than both the product and its shipping cost. Free shipping is essentially the Holy Grail of eCommerce, and thanks to Amazon, people are very used to it.

Thus, a vast majority of consumers will take the cost of shipping into serious consideration when deciding whether they want to shop from you or look for the product on another site where they offer free shipping. Not offering free shipping can turn customers toward your competitors.

Free shipping can help to boost sales outside of the holiday season when business slows down. Retargeting old customers with this promotion can be a simple yet effective way to boost sales and revenue!

Consider How Shipping Cost Affects Your Profit Margin

When it comes to deciding how free shipping will affect your profit margin, it all comes down to the math. If you offer free shipping, will your profit margin stay within the positive and be enough to cover other monthly expenses? If you come to find out that you can afford to offer free shipping, then the type of that shipping must be taken into consideration.

The primary downside is that it does impact profit margins. Extra fees are used to cushion any shipping and handling costs. In the long term, losing this cushion can have a negative impact on your business’s bottom line.

To compensate for the cost of shipping, retailers are often forced to increase product prices. This, in turn, could turn cost-sensitive shoppers away and negate the positive sales gains that come from offering free shipping.

After all, long wait times, no matter how good the product is, will irritate customers. It really comes down to what your product is and the shipping options for it. An excellent example of a workaround for small items such as clothing is the ePacket. Speaking with your suppliers about providing cheaper shipping can also help you find the wiggle room you need to make free shipping feasible for your company.  

Increase Order Value

Customers often keep an eye on their carts while shopping online. They not only take into consideration the number of items they have but the added shipping cost of a large box. However, what if they didn’t have to worry about high shipping prices? Data has shown that consumers who see that shipping will not be an added cost tend to add extra items to their cart.

You can also increase order value by setting a minimum order amount for a customer to qualify for free shipping.  This benefits the customer as well as the business. With enough volume, your shipping costs begin to decrease, and your profit margins become better over time. 

Is free shipping worth it?

Offering free anything as a small business can be a very intimidating venture for anyone. However, with the right research and execution, free shipping can be possible. The practice of free shipping also provides a plethora of benefits to both parties. As with any aspect of a business, conduct your due diligence as every company is different.

 

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