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Is free shipping right for your business?

There is no one-size-fits-all answer to offering free shipping. It really depends on the size of your margins, the country that the product is getting shipped to, the weight, dimensions and the fragility of the products and more. Having free shipping on everything is a great way to get your business to stand out from your competition, however, it’s not always financially viable.

The benefits of free shipping

1) It makes you competitive.
It’s a bit obvious that offering free shipping makes you stand out over a competitor that doesn’t offer it. If customers know that there are no hidden add-ons when they get to the checkout stage, then it’s such a big plus. You have to always think from the customer’s point of view and if they have come across two websites to potentially buy the same priced product from then they will, of course, go to the store that is offering free shipping. Everyone loves a bargain and you are adding more value for the customer by offering something in return for them buying off your store.

2) Customers will more than likely come back.
Once you have provided a customer with a great overall experience they will more than likely keep returning to your store. By offering free shipping the customer knows that they will get that same service every time they shop with you (Hopefully). They know that when browsing your products that the price that they see is the final price that they will pay with no hidden charges at checkout. It really is as simple and as basic as it sounds.

3) It decreases shopping cart abandonment.
One of the biggest problems for online business owners is shopping cart abandonment and believe it or not it comes from customers not liking surprise charges at checkout. A survey shows that 61% of cart abandonment is from shipping prices being added. By offering free shipping then you will get fewer people dropping off at the last stage. Even though as business owners we know that the customer is only saving a very small amount of money, customers love it and everyone else is doing it. There’s so much competition out there these days that you need to give the customer a reason to shop with you. Offering your products and a great service is all good but you have to give them something more if you want a customer to keep coming back for more.

Should you offer free shipping?

Usually, I would always recommend any online business to offer free shipping to your domestic country. But in some cases, it is totally not viable from a business point of view. For example, if you sell heavy items that are also fragile then your shipping rate will be quite high and to add that cost to the product could mean you become the most expensive business in your market. So as much as I would love to say that everyone should offer free shipping, it has to make sense for you and your business.

My advice to any business struggling to figure out if they should or shouldn’t offer free shipping would be to just try it. Even if it’s just for a weekend. See if you get more sales from doing it and see if people spend more with you.

How to do free shipping?

So, if you know that you need to start offering free shipping, how do you get started? There are a number of ways that you can offer free delivery to your customers. Some are really obvious and some only really work when you do it right.

– Offer free delivery on everything.
The best practice when offering free delivery on everything is to add the shipping cost to the product price. Determine how much you need to sell in order to be able to provide free shipping. In other words, factor the shipping cost into your cost of the product, and find out if it’s realistic. By doing the maths first you will be able to know if you can offer free shipping, otherwise, you may end up losing money. One thing to point out here is that you want to only offer free domestic shipping. If you promote free shipping on your website but don’t specify which country then you could end up having a customer wanting free shipping to a country on the other side of the world.

– Set a minimum order value.
This is probably one of the most used techniques when offering free shipping. In order to qualify for free shipping, the customer must spend X amount. I see this a lot on websites and it does make you want to add more to your cart so that you qualify for free shipping. A good example would be for UK customers to spend over £20 for free delivery and over £50 for international customers. Of course, make sure that you do the maths first before implementing this.

– Use free shipping as an incentive.
You don’t have to offer free shipping all year round. If you’re going for a seasonal push, then maybe try free shipping for a week or a month and see what it’s like. With this one, you might not want to use it all the time as people will get bored and it’s not really the greatest deal offering someone a saving of a couple of pounds when your competition is probably already offering free shipping. Maybe you’re having a clear out of certain stock that you want to get rid of, whatever it is, make sure that the customer is getting some kind of value in return for them buying through your site.

So is free shipping right for your business?

There is no doubt that offering free shipping is an incredible incentive to customers, and that it increases sales dramatically. The question is, does it increase sales enough to be worth it?

Shipping costs typically make up 5% or more of the total cost, a significant dent in profits. Depending on the type and weight of product being shipped, the value of offering free shipping can be prohibitive, and some retailers have actually lost money through such promotions. Still, more than half of small to mid-sized businesses say that offering free shipping increases their profits.

The key to correctly utilizing this kind of promotion is to find the sweet spot between costs and increased sales. This model is not for everyone, for some retailers, due to the type and weight of items they sell, offering free shipping will never be profitable. For those that it is, however, done properly, offering free shipping can boost sales, profits, and customer satisfaction.

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