Should You Use Free Shipping On Your eCommerce Site?
The main goals business owners usually have for their eCommerce websites are increasing conversions, making more sales, and decreasing abandoned carts. There are many strategic things you can implement on your site to sell more products.
Eliminating shipping costs to the customer is one thing you can do to increase checkout conversion rates. There’s a psychology at work that makes this offer more appealing to customers.
Why Free Shipping Works
A 2010 study by Forrester Research showed that 44% of customers abandoned online shopping carts because they thought shipping costs were too high. The psychology is customers get an idea of what their total price of checkout will be. When unexpected shipping costs are added, many of them balk at completing their purchases.
An October 2011 study by e-Tailing showed unconditional free shipping was the #1 factor in deciding to make a purchase from online retailers. 73% of customers listed free shipping as important when making purchases. Free shipping was also the #1 reason customers would buy goods through a social network.
A similar report by Compete reported that 93% of customers were more likely to buy additional items online if free shipping was included on their order. Retailers like Amazon use free shipping on orders above a certain threshold to encourage additional sales.
Consumers hate surprises when it’s time to checkout. A Webcredible study showed that 44% of customers abandoned carts because they did not expect shipping costs when they got to checkout. Shipping costs are a barrier that you can eliminate on the checkout page to increase sales conversions.
How To Recoup The Cost Of Shipping Products
As an online retailer, obviously you still have to pay to ship orders. Here are some ways you can diffuse these costs.
One way is to add the shipping cost into the price of individual items. If you know how much it costs to deliver each product via standard USPS or UPS, you can simply add it in and make shipping free.
Another method would be to average the cost of shipping all items in your store and adding a set amount to each item. If you have products of varying sizes, this would require you knowing how many of each you ship in an average month, to split the cost efficiently.
Another strategy you can use is to offer free shipping when customers spend a certain amount on each order. This also requires some behind-the-scenes math. The idea is to calculate how much profit each item brings on average × how many extra items you expect to sell. This number needs to be enough to offset the cost of shipping those extra items for free.
When Free Shipping Might Not Work
Bulky or large items are almost always extra shipping. If you items like this, you must raise the price of each item significantly to offer free shipping. You may also need to limit the geographical area to which you offer free shipping with large items. The alternative is to make it clear that these items are exempt from free shipping, because of their weight or size.
Every retailer is slightly different, and faces their own shipping considerations. But if there is a way to offer your customers free shipping, it should significantly increase your checkout conversions.
