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Does Free Shipping Work for Online Stores?

To online shoppers, the phrase “free shipping” is like finding buried treasure. As consumers, we love free anything, but nothing is completely free. Someone has to pay that shipping charge, and if you’re experimenting with the phrase “free shipping” in your marketing plan, that someone is bound to be you.

Still, it’s an enticing strategy. ComScore reports that 72 percent of online shoppers prefer free shipping. You’ll be tempted to tap into that chunk of the market, but you’ll have to come back to reality first and consider both the positives and the negatives.

For small shops, the unfortunate truth is that free shipping can put a heavy burden on your profit margins or, when you reflect that shipping price in the price of the product, you’ll actually drive smart shoppers away from your store. And that’s because smart shoppers know that comparison shopping is a key part of making a safe buy.

If you can integrate free shipping, jack up the price of the product and still beat out the competition, you’re in great shape. But we don’t live in a perfect world, and your competition—where the customer will finish his or her comparison shopping—is bound to have a comparable price. If you draw the customer in with free shipping, that comparison shopping journey will almost always end with your competition.

So what’s the best way to incorporate free shipping? If you can afford it, a short-term promotion to current customers or a “free shipping” coupon code posted on coupon websites is a great way to drive more traffic and convert more sales.

Another way you can incorporate free shipping into your sales process is to develop complementary shipping strategies for large orders. Again, this is simply a process of weighing your profit margins and how free shipping on large orders affects your rate of returning shoppers.

The big stores will always be able to offer free shipping. Remember that there are benefits to buying through a small-to-medium size shop for the customer; you can always tout those benefits in your marketing to beat out big-store competition.

by Gonzalo Gil Google