In the world of ecommerce, nothing captivates customers quite like the magic words “free shipping.” This phenomenon, known as the “zero price effect,” taps into a universal truth: the irresistible appeal of getting something for nothing.
In fact, a recent report found that over two-thirds of consumers wouldn’t even consider purchasing from a retailer that didn’t offer free shipping, underscoring its powerful influence on purchasing decisions.
In this exploration, we will unravel the appeal of free shipping (the good), navigate through the pitfalls (the bad), and guide you in putting a plan into action (the strategy).
The Good
Attract more customers drawn to the idea of getting something for nothing. Perks include:
- More Customers Coming Your Way. The lure of free shipping is a strong one, drawing in customers who can’t resist a free offer.
- Reduce Cart Ghosting. A big reason for abandoned carts is shipping costs. With free shipping you may see a drop in those last minute cart bails.
- Bigger Buys, Bigger Profits. When there is a free shipping mark, customers tend to buy more to reach it, bumping up your average order value.
- Increase Customer Loyalty. Free shipping can lead to a better shopping experience, increasing customer satisfaction and loyalty that will have customers coming back for more.
The Bad
This can be a big hit with shoppers, but it’s not without its challenges for businesses. Here’s a heads up on some of the tricky parts:
- Impact on Profit Margins. Offering this can reduce a business’s profit margins, especially if the cost of shipping isn’t offset by increased prices or higher order volumes.
- Not a Fit for Everyone. For certain business models, maybe those with lower priced items or high shipping costs, free shipping might not make financial sense for you.
- Price Tag Juggling. If a business includes shipping costs into product prices, this could lead to inflated prices, which may drive away those budget conscious customers.
- Setting Expectations. Continuous offers can lead customers to always expect free shipping, making it harder for businesses to go back to charging for shipping.
The Strategy
You have heard the good and the bad, now it’s time to talk about mastering the free shipping game. Here are some strategies to think about:
- Set Your Own Rules. You are in charge. Decide who gets the pass on shipping. Maybe it’s for those in certain areas or for buyers snagging special items.
- Limited Time Offers. Create some buzz with time limited offers. Perfect for holiday rushes or flash sales.
- Flexibility at Your Fingertips. Make sure to have the right tools in place for flexibility. You want to be able to switch up your shipping strategies on the fly if free shipping is not working for your business.
- VIP Email Signup. Think of this as an exclusive pass for signing up with your site. The customer feels the “free” love and you gain valuable contact information.
If you’re nodding along to this blog thinking this is your next big move, ShipperHQ is here to back you up.
