The eCommerce market has become incredibly competitive over the past few years. With endless possibilities available, shoppers always search for the best value possible.
But, when it comes to grabbing the customer's attention, sometimes the little things matter the most.
Yes, having good branding and advertising campaigns is incredibly important.
But there's something incredibly more valuable than both of them combined…
Shoppers Love Free Shipping
Free Shipping - shoppers, just love to see these two words in your online store. It just fills them up with excitement and joy.
A study performed by comScore has proved that 36% of all online shoppers won't make a purchase online unless there is a free shipping offering.
So, should you implement this technique in your store as well?
In this particular blog post, we will be moving through all the advantages and disadvantages of employing free shipping.
Thanks to this, you can decide whether the free shipping technique suits your business needs.
So, without wasting a second, let us jump straight in!
Does free shipping make a difference
What Is Free Shipping?
BEFORE we get any further down the article, let's quickly explain what "free shipping" really means in the world of eCommerce.
In short - free shipping is a marketing technique used by online vendors as a sales strategy to attract customers.
It can have a notable impact on your businesses and can improve your overall sales conversions.
Can Any Business Use The Free Shipping Technique?
Brands like eBay first announced free shipping a few years ago. Back then, this was only suitable for bigger merchants with thousands of customers daily.
But, right now, free shipping is everywhere, and any type of business can get the advantage of this trend - bigger or smaller, clothing or health, dropshipping or B2B.
You can implement free shipping in your store in a few ways, but it's crucial to create the right strategy depending on your target market.
It can be a bit hard at first, but with proper instructions and guidance, you can figure out everything in absolutely no time.
How to market free shipping
You can display on your website that you offer free shipping or free shipping over a certain dollar amount!
A free shipping widget allows you to intelligently advertise your free shipping to shoppers. It can also let your customers know how much more they need to spend to get shipping for free.
What Are The Advantages Of Employing Free Shipping?
To start, we will look at all the benefits of offering free shipping in your store.
Let's dive in - shall we?
1. Reduces shopping cart abandonment
A study performed by Baymard Institute has revealed that the average cart abandonment rate is around 68.8%. This represents that nearly 7 out of 10 users add their products to the cart, but after several seconds they decide to leave.
When consumers were questioned why they decided to abandon the cart during the final checkout procedure, over 60% mentioned additional shipping fees costs. At the same time, the rest said that the site required account creation.
So, it's simple: customers don't enjoy shipping fees or further complications and want the best value for their money.
But, most businesses avoid mentioning any kind of transportation fees beforehand. And, when the customers click "add to cart," they are surprised with a huge price.
Offering free shipping can make the customer feel like they are receiving a good deal. And because of that, they are more likely to finish the whole process and make the purchase.
Not only will this reduce your overall shopping cart abandonment rate, but it will also improve your consumer experience.
Speaking of which…
2. Boosts your customer retention rate
It's a fact: finding new customers is incredibly hard and might cost you too much money (and by too much, we mean a lot). This is why retaining your current customers can do magical wonders for your business's bottom line.
As we mentioned, offering free shipping can boost your customer's experience. So, chances are, they will probably return for more as well - thus, increasing the retention rate.
But wait, these are only the two main benefits; we have a few worth mentioning - keep on reading.
3. Improves order size
Believe it or not, free shipping can improve order sizes. Why? Well, the psychology behind that is simple!
For instance, if you have a free shipping threshold of $20, then the consumer will do whatever they can to get close to that price range.
Such as, adding multiple products to their cart that they don't necessarily need!
So, in the end, the customers acquire their free offer, and you gain more revenue - now that's a win-win situation for both of you.
4. Help you stand out from the crowd
As you might know, thousands of stores compete in the same niche as you are.
To stand out from all the others, you will need to offer some sort of incentive to your consumers.
Well, here's where free shipping comes in handy. Not only can it offer more recognition to your brand, but it will also provide a competitive advantage.
This can be a big opportunity for you.
Just make sure that your profit margins are still in green; Why?
Well, most businesses are trying hard to bring in more customers without paying attention to statistics, and that's why they experience massive losses in the end.
So, while we're at it, let's look at the drawback of offering free shipping in your store.
What Are The Drawbacks Of Offering Free Shipping?
Even though there are a lot of advantages to offering free shipping, there are some drawbacks as well.
Here are some of the most considerable ones:
1. Negative impact on profit margins
Free shipping isn't perfect as it might seem. The most notable drawback is, of course, the increased cost.
To recover the cost of free shipping, you will need to lower your profit margins, and this can be a severe problem in the future.
There are two ways you can go here - stomach the loss and continue with your business or increase the overall value of the products.
2. Increased product prices
Most smaller-sized or medium-sized companies that want to provide a free shipping deal to their customers might need to increase their product prices to recover their expenses.
This can be risky since most of the bigger eCommerce brands will even provide the same product with free shipping and at a significantly lower rate with free shipping.
If the consumers find out, you can lose a lot of potential sales. So, you should honestly think twice before doing this!
3. More returns
As we stated above, when a business offers a free shipping threshold, consumers will probably purchase items they don't necessarily need.
Well, the good side is more profit - right?
But, the negative side is - increased returns. These push orders can leave your business with additional expenses on shipping and returns - this no longer becomes cost-effective.
4. Slower delivery
And, if you still offer free shipping without increasing the product price, you will probably go for a more affordable shipping courier. Even though this can reduce the overall expenses, it can lead to a worse customer experience.
Most customers expect the shipping to arrive in 3 or 4 days. But, with budget shipping - the entire procedure can take weeks...
In these circumstances, it's better to charge for shipping. Adding additional fees upfront is better than disappointing your loyal consumer later.
Just imagine - the customer is purchasing a present and needs it in like 3 days (the average delivery by most standard courier options).
But, instead, they receive it after 2 weeks. Not so pleasing - isn't it?
Ultimately, they might even leave you negative feedback on your site. So, this is not worth it.
That's all for today, folks. It's true; many innovative ways to generate revenue and keep customers returning. Free shipping is one of the most effective marketing tools you can use.
Offering shipping for free doesn't have to mean you lose money. A lot of companies include shipping costs in their prices and then market that they have ZERO shipping costs for their customers.
For some reason our brains as customers see the word FREE and we're more likely to spend. We like deals and we like to shop.
So, even if it doesn't work for you, don't worry. You can easily remove it and proceed with your business. Remember - trying out things is always crucial.
You never know when you're going to create a new trend.