How Companies Can Afford To Offer Free Shipping Author: Rich Harkey
May 13, 2015

Is offering free shipping to your customers worth it? Absolutely! Recent research by Accent has shown that 88% of consumers would be more likely to make a purchase from an online shop if they were promised free shipping. That’s a huge number. If you’re shipping B2C, read on – this is important.

The benefits of offering free shipping to your customers are numerous and impactful. Recent research shows that most companies (who offer free shipping) experience an immediate boost to online sales, which in turn drives top line revenue and profitability. Typically, consumers will place larger orders when presented with free shipping. Long-term customer acquisition and retention are also improved, as consumers tend to gravitate to and make repeat purchases from shops that offer free shipping. So, why doesn’t every B2C business offer free shipping? The answer is different for everyone, and lots of factors need to be taken into consideration when determining if offering free shipping is feasible for your business.

Every shipper’s situation is unique, so the list of factors that must be considered will be different depending on your industry, shipping spend, customer base, etc. At a minimum, shippers need to consider their margins, products, qualifying thresholds, and customer demographics.

  • Margins – profit margins will need to be maintained. Chances are your margins vary by product, so offering free shipping may or may not make sense across your entire product mix.
  • Products – with the recent DIM weight changes, the size and weight of your products are more important than ever. Large, heavy items are more costly to ship, but a large, light item could be just as costly. Be sure to evaluate your standard packaging sizes when deciding if offering free shipping is right for you.
  • Qualifying Thresholds – setting a minimum order threshold to qualify for free shipping is a must for most shippers. After determining your average order value, consider placing your minimum free shipping threshold slightly higher. This may entice your customers to increase the size of their order.
  • Demographics – shipping a product from one side of the country to the other is expensive! Be sure to consider where the majority of your customers are having their items shipped. Otherwise, you’ll have to eat some costly shipping charges.

There are a few different ways to be able to offer free shipping to your customers. One of the best ways is by renegotiating your carrier shipping contracts. By entering into an agreement for carrier contract negotiation services, you can help preserve your profit margins by minimizing your carrier shipping costs. Once your costs have been reduced, you’ll be able to offer free shipping to your consumers, thereby increasing sales, profitability, and customer retention. Looking for more info on negotiation services? Drop us a line, we’re here for you!

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