Prospective customers love free shipping, and in many cases these days, have come to expect it on online purchases, even from independent retailers. Choosing not to offer free shipping ups the total cost for your customer and may increase the frequency of abandoned shopping carts. But how exactly does free shipping encourage customers to complete their purchase and, for e-commerce businesses, is it worth the extra money to grow your sales base?
4 Reasons To Offer FREE Shipping:
1) E-Commerce Customers Prefer The Cheapest Shipping Option
When choosing between online retail outlets, one survey found that two thirds of respondents selected the one with the cheapest shipping option, and 73% of them expected to see free shipping at the checkout.
2) Shipping Costs Increases The Number Of Abandoned Shopping Carts
Abandoned shopping carts are a huge problem for online retailers, accounting for over 75% of shopping carts, according to some sources. Businesses can calculate their own abandoned cart rate by dividing the total number of shopping carts created each month (or day/week etc) by the total number of completed purchases. Results are rarely encouraging, but the reasons for cart abandonment reveal areas for improvement. While the top reason for cart abandonment, according to an e-commerce software provider, was consumers simply browsing or bookmarking possible future purchases; surprise shipping costs, or higher than expected shipping costs, were cited as a reason by 60% of people who abandoned online purchases at the checkout.
3) Free Shipping Is A Strong Incentive To Make More Purchases
The 2016 Walker Sands Future of Retail report had some interesting stories to tell about online shopping trends at the beginning of the current boom. 90% of participants said that free shipping was the number one incentive for them to make online purchases. Furthermore, when there is a threshold for online shipping (e.g. free shipping over £75), 58% of shoppers admitted to increasing the value of their shopping cart to qualify for online shipping, even if it meant spending more. This makes free shipping into not only a great customer conversion tool, but also a powerful strategy for up selling and cross selling.
4) Free Shipping Is A Better Sales Incentive Than A Purchase Discount
Interestingly, free shipping may have a greater psychological impact for customers than a straight discount, which is good news for both consumers – who feel they are getting a good deal and being treated fairly with free shipping – and for businesses, who often save more by covering shipping costs than by discounting products.
Commercial shipping costs, especially for domestic items, are now far more affordable than they used to be. Small consumer items, when shipped in bulk, may cost less than £2- £5 per package. Directly discounting an item by such a small amount is unlikely to incentivise many sales, and may even backfire, as the small discount may appear stingy. Due to a quirk in human psychology, saving £4.99 in package may have a greater appeal than a purchase discount of £10!
To obtain the same incentive effect as free shipping, an item may need to be discounted by 30% to 50% or more, in which case it is normally cheaper to simply cover the shipping cost and sell the item at full price – gaining the benefit of an increased sales uplift at a higher profit margin.
Find Out More
At Kudos Giftwrap, we provide bespoke packaging and shipping materials for e-commerce retailers, with carefully designed branded boxes and wrapping to increase the appeal of your products. We also have regular Free Carriage offers, so why not reach out to receive our email offers and be the first to hear! To find out more, or to request a free quote, please give us a call today.
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