Free Shipping…The New Normal?
To offer free shipping or not…that is the question. As the ecommerce space continues to grow and develop into a major shopping portal for consumers, online retailers are left with a decision to make about free shipping. A compete.com survey stated that free shipping would encourage 93% of consumers surveyed to purchase more products online. Shoppers are also reported to spend approximately 30% more when free shipping is offered. 52% of shopping cart abandonment is due to shipping and handling costs. In general, consumers are more at ease when they do not have to worry about paying for shipping. More than half of the past year’s orders from 30 of the biggest e-commerce merchants were shipped free of charge. This is compared to 33% two years ago. All of the data points to free shipping now being a requirement and almost an afterthought for ecommerce orders. The other end of the spectrum involves the “logistics” of free shipping. When offering free shipping, brands must also factor in the likelihood of returns and the most effective way to manage that process. Outsourcing your order fulfillment is the most logical decision. In many cases this will allow online retailers to save more than the cost of “free shipping”. In addition, the money that a logistics company saves you, will turn the free shipping conversation into an advantage that can help grow revenue. Most companies offset the added cost of free shipping by increasing the price of the item. Oftentimes free shipping will only be available when an order reaches a certain price point. This is particularly beneficial to smaller companies who have niche products and significantly smaller profit margins. Consumers will usually add items to their shopping cart to qualify for free shipping which will increase the average order size and result in more bottom line dollars for the business. We believe free shipping will continue to evolve until it becomes the norm for online retailers. How long will it take? And what adjustments will be made? Leave us your thoughts in the comments section below.
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