More consumers are going online to make their purchases rather than go to traditional retail shops. Similarly, an increasing number of companies are offering product sales online through e-commerce web stores – which means competition to win this growing percentage of the sales pie is intensifying. Savvy online retailers are doing everything they can to close the sale, from offering distinctive products to providing additional incentives. One of the most common incentives that companies offer to help push the consumer over the edge of the purchase is FREE SHIPPING.
If you haven’t offered free shipping on your e-commerce website, you may be feeling pressure to implement this tactic. After all, it’s all over the news and seems to be such a common tool that online retailers use. But before you jump in with both feet, it’s important to understand all of the ramifications. Below are some things to consider when pondering free shipping discounts.
DON’T BE PRESSURED INTO THINKING YOU HAVE TO DO IT!
Some business owners or companies feel obligated to offer free shipping because it seems like everyone else is doing it. This isn’t necessarily true! While many companies are using this strategy, quite a few others are choosing not to use it. Most importantly, perform an in depth analysis in order to determine if it is a good fit for your business. There is a definite cost associated with this kind of a discount, so make sure that it will work with your business model.
IS FREE SHIPPING ABSORBED WITHIN THE PRODUCT COST?
It’s fairly common to think that free shipping is absorbed within the product cost – but this isn’t necessarily the case. Many companies that use free shipping discounts don’t absorb the shipping within the product cost, which means that they are actually having to ‘eat’ the free shipping costs. Bottom line – financial planning is important in order to understand the ramifications of the costs.
FREE SHIPPING ISN’T NECESSARILY CORRELATED WITH SHIPPING TIME
Oftentimes, consumers get confused with shipping options and may mistake a free shipping offer with an expedited shipping offer. Expedited shipping is more expedient shipping, such as overnight or 2 day shipping. Expedited shipping is more expensive, and is less likely the best alternative for free shipping. Therefore, if you roll out a free shipping discount, make sure that you explain the details of the offer, including whether or not it will be regular ground shipping.
SEASONAL VERSUS OTHER TIMES OF YEAR
One important decision to make related to free shipping is “when to use it.” For some online retailers, free shipping discounts are given during holiday seasons. For other merchants, discounts are offered during non-peak timeframes to try to give an incentive for consumers to purchase from their site. Be sure you plan when you’ll rollout your discount. As a final note on timeframe, be sure that your freight carriers are onboard with this timeframe as well. Especially during the holidays when their resources are being tapped, and shipments may not arrive as timely. The last thing you want is for your free shipping discount order to be remembered as a bad experience.
MINIMUM PURCHASE AMOUNT
Most retailers that use this method will require a minimum purchase amount for the order. This is a great idea because it helps your company absorb some of the shipping costs over a larger order. If you need some ideas on the best minimum purchase amount to use for your business, check out some of the top online retail sites and see what they use as a baseline and decide if that amount will work with your customers.
MAKE IT TIMEFRAME SPECIFIC
Sometimes consumers just need a little push in order to click the “Buy” button. Nothing works better in this case than making the incentive appear scarce. In other words, by adding a timeframe, you’re giving your customers only a limited time to obtain the offer. This will be enough incentive to push some over the edge to purchase.
OFFER IT AS AN INCENTIVE FOR THEIR NEXT PURCHASE
Another great way to get more people to purchase is to offer a free shipping discount on the next purchase. Especially if your customer enjoyed their first purchase, free shipping on the next order will be a benefit that many decide is well worth the offer.