3 Ways to Be More Savvy About Free Shipping Used strategically, free shipping can be a valuable marketing tool to influence customers and increase sales.
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If you're feeling pressured to offer free shipping, blame Amazon. The online marketplace pioneered the concept sparking an ecommerce sea-change. Free shipping is now the "new normal for the majority of top online retailers," according to comScore's analysis of online retail sales behavior in the first quarter of 2014. "Most online transactions now include free shipping, which is by far the most important online shopping factor among consumers," says comScore.
Online retailers that offer free shipping have built that cost into the cost of a product. So "free shipping is more of a marketing tactic than a benefit," says John Haber, CEO of Spend Management Experts in Atlanta.
For small ecommerce entrepreneurs, in particular, free shipping can be expensive because companies can't build 100 percent of the shipping costs into the product, Haber notes. Further, a company that's established a free shipping policy is stuck with it," he adds. "There's no going back."
So how can a small ecommerce business compete? Here are three strategies to help keep up with competitors and others that offer free shipping:
1. Offer free shipping for a limited time only. Most small entrepreneurs can't afford to provide free shipping on all sales, but they don't need to. Customers of small retailers like those found on Etsy generally assume they have to pay for shipping, so a free shipping offer is bound to catch shoppers' attention, notes says Jason Malinak, an accountant in Colorado Springs, Colo. After advising his wife on her own Etsy venture, Malinak wrote the e-book Etsy-preneurship (Wiley, 2012) to help Etsy sellers run their businesses.
Instead, small entrepreneurs can take advantage of the free shipping allure by offering it as a promotional event, which could last one day, several days or one week, or for a special holiday sale, he says. The limited-time free shipping offer should be advertised as much as possible, such as by putting a notice in the website's banner and in email communication to customers, Malinak says.
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2. Tie free shipping to customers meeting a certain condition. Requiring customers to purchase a certain dollar amount in order to get free shipping is a great way to encourage shoppers to buy more, says Haber. Another option is to offer free shipping for at least one delivery option. In fact, Haber says even small ecommerce businesses should offer free shipping for standard U.S. Postal Service ground shipping. Customers who want their products shipped faster are willing to pay for it, he notes.
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3. Offer a different "free" incentive. Realistically, some small online retailers simply can't afford to offer free shipping. But they can still capitalize on the idea of getting something for nothing, says Hal Altman, president and co-founder of Motivational Fulfillment & Logistical Services in Chino, Calif. "It's hard to pass up the word "free.'" For example, as an alternative to free shipping, a small ecommerce business could offer a limited-time "buy one, get one free" deal and then charge shipping and handling on both items, Altman says.
