Effects of Having Free Shipping to your eCommerce Store?

June 8, 2015 Written By Hemant Parmar

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Why FREE Shipping is best for ecommerceThe success of an ecommerce store depends greatly on the number of conversions the business has seen. One common area where we see sales drop-out is at the checkout point where they actually come to know that the shipping rates are either too high or the customer needs to pay from his pocket. When these rates are found to be too high over the store, shopping cart abandonment rate will increase. So, if a business wants to have more numbers in terms of sales, they need to devise a plan in such a way that the abandonment rate will decrease. When we take a closer look at the surveys, we will understand that the abandonment rates percentage has clearly stayed more than 68%. Losing out a sale at this stage would definitely pinch the business as there is a lot at stake…in terms of money, time and resources.

What is the effect of having high shipping rates in sales?

It is the psyche of people…when they pay less; they feel absolutely happy with the purchase they have made. Anything ‘free’ will make them feel absolutely happy about the entire purchase. That is the reason why the ‘free shipping’ option is able to win so many customers when compared to the ‘no free shipping’ option. This immediately reflects on the number of conversions and the quantity of sale the business can actually achieve.

The business owner will then understand that it is his shipping strategy that is not paying the expected dividends. So, he has to arrive at a plausible solution which will be beneficial to the shop owner and the buyer as well. Surveys have proved that shipping charges and handling fees are the two main culprits or driving forces for high incidence of shopping cart abandonment.

Recommended Read: What is shopping cart abandonment 

What are the benefits of free shipping?

Let us take a look at the kind of benefits that will be there for the store owner when he offers free shipping facility to his customers:

  • There will be an immediate dip in the abandoned cart transactions. So, you will definitely have more conversions. It is generally at the end of the shopping that they can find out information about shipping costs. So, if they find it to be high, they will abandon their shopping cart. Majority of the online sales are because of the attribute that the shoppers do not have to go out of their house and still get the choicest of goods delivered at their doorstep. So, when it is coupled with high shipping rates, the motivation to make an online purchase is lost.
  • With free shipping, the order size will also increase. If there are no shipping charges, it will only motivate the shopper to buy more. Therefore no shipping charges will work out to be a big draw for the customers. It is considered as a huge bonus and entices the customers to engage in more buying.
  • With free shipping service, you can retain your customers for a long period of time. For majority of the shoppers, free shipping is one extremely important factor that will help them decide whether to buy or not buy from a specific store. You will stop your customers from visiting your competitor’s store. So, if you wish to stay ahead of your competitors, it is essential that you include offers like this.
  • The business owner can see short term as well as long term gains. It will help in boosting the sales immediately and will retain the customers in the long run. So, both the goals are achieved with one technique.

What are the cons of free shipping?

  • Needless to say, it will definitely have a blow on the margins you can make and the profits you can make. Keeping in mind the way costs have escalated in the recent times, this offer may prove to be extremely costly for the business owners. So, the only way out would be to choose economy shipping methods that will lessen the burden on them.

But, there is going to be slower delivery which may be the reason for losing out on those customers who are in an urgent need of the product. Therefore, one has to give a clear indication of the time it would take for the shopper to receive a specific product. This information will help him decide if he wants to place an order or no.

  • Most of the customers opine that free shipping is their birth right. Along with it, they also want superior customer service. As business owners will have to find more economic ways of sending the items, it will incur only slow deliveries which will cause more number of queries that need to be answered by the customer service department.

Evaluate your Shipping Process

You obviously do not want to lose out on your customers and at the same time compromise on your margins. It is definitely a double edged knife that you have on hand. Free shipping may sound extremely musical to the buyers but definitely not for the sellers when the business in case is a small sized or a mid-sized business. So as to strike a perfect balance you will have to evaluate your shipping process.

  • Keep the margins in perspective. Consider how much you will have to spend and how much you will be benefited from the bargain. The prices may vary from one product to another. So, try finding out the best way out that is advantageous for both the parties involved.
  • Keep the weight of the products in perspective. As mentioned earlier, heavier products would be more expensive to ship. As there would be more cost here to be incurred, the sellers need to take care that they do not spend out of their pocket in an effort to give the free shipping facility to their customer.
  • Free shipping may be possible if the customers are located in the same area as you are. But, when they are located far off, you will have to consider the simple fact that there will be some costs you will incur.

How can you offer ‘free shipping’?

  • Regardless of the magnitude of the item, you may decide to offer free shipping to your customers. This will prove to be extremely beneficial for those businesses where the products are absolutely light in weight.
  • Rather than having a free shipping option on all the items, you can have a minimum threshold that would say free shipping for a minimum order value of so and so amount. This would keep the shop owner on a safer side.
  • You could also offer free shipping only for certain items. For those items where the margins are huge, the shop owner can afford to send them free of cost.
  • You could announce the free shipping offer only at a certain time of the year. To have free shipping offer periodically is a clever tactic as one can stay ahead of their competitors during holidays. For instance, boxing day, Mother’s day, Valentine’s Day and other such occasions can definitely see such an offer.
  • If the buyer is a member with your store, you offer him free shipping. This will not only act as a major draw for most of the customers, it will also assure you of a customer bank. You could however charge a little bit of annual fee from them which may not be pinching at all.
  • There are loyalty programs which offer incentives to repeat customers and repeat purchases. You could offer free shipping to such kind of customers as it will build great good will between the two parties involved.
  • The most common tactic that shop owners follow is to add the shipping price to the cost of the product that is being sold.
  • You could have flat rate shipping. You may ship to any part of the country or world; you are going to charge them a flat rate. This would encourage more sales from the world across too.

There are different types of offers that will help this ‘free shipping’ strategy work. You, as a shop owner, may consider striking a good bargain with the shipping carriers. A rapport struck here will save a lot of money there.

If you have an E-Commerce store and facing shopping cart abandonment because of the shipping costs, touch base with our experts who can incorporate the right strategy for your online store. This will definitely help to establish a good rapport with your customers and build a bank of them too that will help in multiplying your sales and there by enhance your revenue.

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  1. Free shipping is really an awesome strategy to sell more but no one gives free!!! They have different tricks to recover that amount. They add either in product price or their products are already over priced. So, the best strategy to have more sales on my shop is to give quality product and quality service, they will definitely come to you.

    1. That’s true Eve. Quality comes first but as an online shop owner, you need to adopt new techniques to boost your sales. What you say?

  2. From day one I’ve offered free delivery within my country but international postage is not as there is no way i as a business could afford it….Great advice though.

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