What Is Free Shipping, and Is It Worth Offering?September 1, 2021
If you’ve ever shopped online, you’ve likely already run into the headline “FREE SHIPPING” hundreds of times. However, the old saying “Nothing in life is free” still holds true for this shipping tactic.
Read on to find out what free shipping is and whether Ecommerce businesses should consider offering it.
What Is Free Shipping?
Free shipping is a marketing tactic typically used by online retailers as a sales strategy to attract shoppers. However, free shipping is not offered under the same conditions by every retailer.
Here are a few different qualifiers for free shipping you might encounter (or likely already have) online.
- Free shipping for all purchases: Buy any item in any quantity and get it shipped to you for free.
- Free shipping for members: You only get free shipping if you join the member’s club.
- Free shipping after minimum purchase: If your order meets or exceeds the minimum purchase value set by the vendor, you qualify for free shipping.
- Free shipping promotional events: You qualify for free shipping if you purchase during a certain time. For example, free shipping for all orders made during the holidays.
Free shipping qualifiers are not limited to the ones above as they can combine many different factors.
Is Offering Free Shipping Worth It As An Ecommerce Business?
If you’re an Ecommerce business, offering free shipping can be a great idea. Be sure to keep in mind the following factors if you’re considering offering this service:
- Profit Margins
Before offering free shipping, it is vital to consider whether you can actually afford it. In general, you won’t be able to absorb the cost of shipping for cheap items. For example, if your item costs $5 and the cost of shipping is $10, you are going to lose money offering free shipping.
It’s also important to keep in mind your margins will vary depending on your product, manufacturing costs, and the size and weight of different items. It may also change depending on where your customers are located. For example, if you ship internationally, it will be more expensive for you.
- Increased Product Prices
If you’re thinking of providing free shipping, it’s important to know there is a good chance you’ll have to raise prices to offset the money you might lose from free shipping.
This leads into the second consideration for increased prices, which is whether you think a higher price will result in you losing more customers than your business can afford to miss out on.
- Paid Shipping
If free shipping is a tough decision, it’s important to consider whether your customers will pay the full cost of shipping. While there is a chance some customers will abandon their shopping carts due to the costs, charging customers for shipping is the only surefire way to ensure that shipping costs don’t eat up your budget.
Although abandoned shopping carts may seem scary, there are some slight adjustments you can make to mitigate risk. For example, you can provide real-time shipping estimates by connecting your checkout to your shipping provider. With this, your customers will be given a shipping quote based on the products in their cart as well as their zip code.
- Minimum Purchase
Another option to offset the costs of free shipping is setting a minimum purchase qualifier. By using this tactic, you can increase your average order value and make your customers feel like they are getting a great deal.
For maximum efficiency, you should try to make the minimum amount spent to qualify for free shipping larger than your average order size.
3PLs Can Help You Find The Best Solution
If choosing a free shipping strategy sounds overwhelming to you, no need to worry. Third-party logistics providers (3PLs) can help you to find the best fit for you. Consider enlisting the help of a 3PL like Fulfillment Works. We have the experience, staff, and technology required to find a shipping solution that fits your business needs.