Free Shipping Day, the online shopping day when merchants guarantee free delivery before Christmas, wasn't the brainchild of corporate America. The credit goes instead to an ambitious 30-year old entrepreneur named Luke Knowles.
He created Free Shipping Day in less than two weeks in 2008. Sales totaled $942 million last year, surpassing Black Friday, according to the online data tracking firm comScore. Free Shipping Day didn't quite catch up to Cyber Monday, which pulled in more than $1 billion in sales last year, or Green Monday, another popular online shopping day, with $954 million.
But the exponential growth of Free Shipping Day has made it quite a cash cow for Knowles: His company raked in more than $100,000 in revenue from the project last year. In addition to this year's Free Shipping Day in the U.S. on December 16, Knowles is working on similar promotions in other countries, including a Free Delivery Day in the U.K. on December 9 and a Free Shipping Day in Canada on December 12.
Here is an edited excerpt of our interview with Knowles, now 34, who is CEO and founder of Fort Collins, Colo.-based Kinoli, a group of websites that provide online coupons, free shipping and discounted gift cards.
How did you come up with the idea for Free Shipping Day?
I came across a statistic that said online shopping peaked December 10 or 12, and I thought it was really early. After that, shoppers start heading to the malls because they don't have the confidence their gifts will arrive in time for Christmas. We run a website called FreeShipping.org, and we work with merchants all year. We knew that merchants could deliver in time for the holidays, in less time than consumers thought.
How did you turn the idea into a nationwide event so fast?
I had the idea on December 5, and the shopping event happened on December 18. We did it in 13 days. And at the time, it was just me and one other employee. When I told my press guy that we wanted to do this idea this year, he said, "You are crazy." I said, "I know we are crazy. That is why we are doing this!"
I had the idea on a Friday. We worked all weekend. By Monday, we had a press release, a website and 25 merchants signed up. We reached out to retailers that we had really good relationships with on FreeShipping.org. By Tuesday or Wednesday, we were up to between 50 and 100, and it just kept going. The first year, 250 merchants participated. We used public relations and social media to raise awareness among consumers.
Were you surprised when Free Shipping Day overtook Black Friday in single-day sales last year?
It happened more quickly than I thought it would. Most people hate paying for shipping. Statistics show that free shipping is pretty much the most important thing to online shoppers. Free Shipping Day is competitive, so merchants are offering way better deals than normal. We push them to do that. That could be free shipping on all orders, plus an additional percentage off. We want merchants to give us something better than they regularly offer shoppers.
How does your company make money from Free Shipping Day?
We sell advertising on the site. Merchants also can pay to have their name placed higher up on FreeShippingDay.com. Thirdly, some of the bigger retailers send us a commission on each sale. We have affiliate agreements with many large and mid-size retailers because of FreeShipping.org, and these relationships carry over to FreeShippingDay.com. If a larger company has an affiliate program, we require they pay us an affiliate commission for participation.
But for the most part--for 60% to 70% of businesses--it is free to participate. And I don't plan on charging the smaller retailers to participate in the future. Many small businesses have sent us an email telling us that was the most traffic they have ever had in a day. Last year, over 1,750 merchants signed up with the Free Shipping Day site.
Do you think some small companies are squeezed out because they can't absorb the cost of free shipping?
It matters more what you are selling. If you are selling refrigerators, you are probably not going to participate. If you sell beads and jewelry, it is not that much of an expense to pay for the shipping.
How does a business owner participate?
They can go to FreeShippingDay.com, and click on the "Merchant Sign Up" link. Our main requirement for participation is to offer free shipping on December 16 with delivery by Christmas Eve in the continental U.S. Within a day or two, they will be up on the site.