Should My Business Offer Free Shipping?

In a online marketplace dominated by Amazon, free shipping is critical. Over 60% of eCommerce sellers offer free shipping. But more importantly, 66% of consumers expect free shipping for all online orders. If you do not offer free shipping you will be disappointing a huge percentage of buyers. 

Disappointment with shipping options is the main reason shoppers abandon their carts. It is an important piece of closing the sale and creating customer loyalty.

Are you willing to risk customers taking their business elsewhere?

If not, it’s time to think about offering free shipping.

Is It Really Free?

It may sound obvious, but offering free shipping doesn’t erase shipping costs. Unless you find ways to compensate for the cost of shipping it will eat into your profit margin. 

How to Make Free Shipping Work for Your Business

In spite of this, it is still possible to offer free shipping to please customers while making it profitable for your business. 

1. Have a free shipping threshold.

Customers often opt to add more items to their cart to qualify for free shipping. This decision can save money, especially if the additional item's cost is lower than the shipping fee. However, even if the extra purchase doesn't decrease the total cost, customers enjoy purchasing an extra item instead of paying for shipping.

If you can incentivize larger purchases this will increase your overall profits while meeting customer expectations. 

2. Build shipping into your pricing.

Marking up products to compensate for shipping cost is another option. This will allow you to offer free shipping on every order, no matter the size. 

A disadvantage of this is that shipping costs vary widely depending on destination, package size, weight, shipping method, and carrier. It would be helpful to analyze shipping costs to find a markup value that will cover shipping.

You may also consider a smaller profit margin. While this may minimize the profit from each order, it can increase overall profits by boosting sales. 

3. Free shipping promotions.

Another approach is to offer free shipping as a promotion. Whether it is for first time customers or for a holiday, once you convince a customer to purchase the first time it is much easier to convert them to a repeat buyer. 

Offering free shipping as a promotional may be the incentive a potential buyer needs. Even if they do not intend to purchase a second time (without free shipping) your product may win them over. They will not have that chance if you do not offer free shipping. 

Conclusion

In conclusion, free shipping has become a critical piece of customer satisfaction. Most customers expect it. If you do not offer free shipping you are risking those customers shopping elsewhere. 

You can offer free shipping without jeopardizing your profits. We shared a few of them but here are a couple articles for further reading. 

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Shipping Chimp

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