Why offering free shipping is a must for Online Stores? How to remain competitive and still earn profits?
Benefits of free shipping for consumers are obvious but how does it benefit the organizations?
Customers will opt to pay for shipping only in case they have an urgency like last minute shopping, last minute gifts purchase, a unique item which they don’t mind paying for.
In most cases, they abandon the cart and don’t visit again. It has a log ripple effect on his buying behavior and refrain visiting that shopping site again.
Why Offer Free Shipping?
A study conducted by comScore reports some interesting facts about free shipping and online purchase behaviour of the consumers. It reports, ” 4 out of 5 consumers feel that free shipping is an important factor while making an online purchase. ”
While consumers are willing to wait to get their order but not willing to pay to receive order earlier. 83% consumer say they will wait two days more to get a free shipping.
1. To Beat Competition
2. To Boost Sales
Usually, customers when they see something free even if it is not truly free they are grasped by the psychology and affect their buying behavior to a large extent.
3. For Customer Retention
Where Free Shipping Hurts?
1. Low – Profit margins
Giving away shipping for no cost always brings down the profit margins which gets exhausted in paying for the shipping cost.
2. Low Profits from Price Insensitive Consumers also
How to Control the Shipping Costs?
1. Limit on Fee Shipping
By limiting free shipping, you at least secure the basic cost of shipping from the profit margins and don’t end up paying from your pocket. Set up minimum order value depending upon the distance and cost incurred for shipping.
2. Reduce Packaging Cost
Use the packaging offered by the shipping companies instead of wasting on your additional wraps. Just keep the bare minimum for branding purpose.
3. Use Fulfillment services
4. Choose and negotiate with Carriers
Choose the best carriers depending upon the area and region you are delivering to. Some carriers have good rates and services for domestic and some for international. Within country also some do better in some areas. Speak to many before finalizing upon one after negotiating and get the best rates.
5. Association Discounts
Some carriers give association discounts if you use their services exclusively. Find out the one who is offering the best association discount but do check their services are good in all areas.
So, if customers are trying to save time and money doing online shopping and not get the value for their money they will move to a better option or website offering value for their money.