The Pros and Cons of Offering Free Shipping
Almost all online retailers have weighed up the possibility of offering free shipping to their shoppers, if they haven’t done so already. It is one of the most appealing incentives for shoppers, with 9 in 10 saying free shipping would make them shop online more often, according to a Walkers Sands study.
However, offering free shipping is not an easy task by any measure, and eCommerce logistics managers will know these complexities better than anyone. Unfortunately, someone has to pay for the shipping, whether it’s the shopper (via an inflated item price) or the retailer. And while free shipping may work for some brands, others may suffer greatly if they cover the cost of shipping on their own.
Many online retailers want to offer free shipping however don’t want the additional issues that come with it.
One way to decide whether your brand should be offering free shipping to your online shoppers is to weigh up the pros and cons.
- Increased conversion
The most obvious reason for retailers to offer free shipping is because it will increase conversion. The fewer obstacles to checkout, the better, and free shipping is a high converter. However, this only works if the shopper can see that free shipping is available, so brands need to clearly state there is free shipping (and under what conditions) as soon as a shopper lands on the site.
- Repeat customers
Customers who have experienced a great online shopping journey have a much higher chance of returning to your online store, and a higher likelihood of purchasing more. According to Adobe, customers making a second purchase may spend 3 times as much per visit as first time shoppers. Therefore, if your shoppers know you offer free shipping, you will come to their mind the next time they want to buy, granted the prior experience was stress-free for them.
According to National Retail Federation’s Consumer View quarterly study, more than 73% of online shoppers browse shopping sites with a specific purchase in mind, which means they are looking for the right deal, therefore an incentive like free shipping could incentivise them to buy off you instead of another retailer selling the same thing without free shipping.
- Word of mouth business
Word of mouth is still one of the strongest forms of marketing for a brand – especially now that shoppers can share their thoughts in real time. KPMG reports millennials are 50% more likely to have talked to a friend about their most recent purchase, and in likelihood would mention that there was free shipping. Clearly, both online and offline channels are effective in creating consumer awareness and demand for retailers.
- Increased returns
If a retailer already offers free returns, adding free shipping to the equation could been bad for business. Serial returners could take advantage of the ability to buy and return freely, in turn leading to a loss for the retailer who has to foot the bill of the deliveries.
- Advertising costs/time
Offering free shipping is not as simple as displaying the promotion in the checkout, retailers also have to ensure they advertise that they offer free shipping in multiple places across the website. This can take a substantial amount of time if done in-house, from coding to email promotion.
- Slow delivery
It is often not viable for a retailer to offer free express shipping on orders, therefore the majority will offer free standard delivery. Depending on location, a shopper could be waiting over a week for a package if they select the free standard option, which can lead to a poor shopper experience. If a shopper experiences long delays with their order, they are less likely to shop with a brand again.
After weighing up the pros and cons of offering free shipping, if a retailer decides they would like to trial a free shipping period, there are a few ways they can implement it:
- On everything (standard shipping only)
- With minimum threshold i.e. spend $50 or more
- As a special offer
- Via free returns