When it comes to free shipping, there is no one size fits all solution. Of course, customers are always very appreciative of getting their packages delivered for free, but does this mean you should be offering free shipping in your business?
In this guide, we’re going to take a look at the pros and cons of offering free shipping so you can decide whether this is something you can or should be offering to your customers.
The pros of offering free shipping
There are several clear benefits of offering free shipping to your customers, and often just one of these reasons is enough to convince you to include this as a delivery option. The key pros for offering free shipping to your customers include:
- Customer satisfaction: Customers love free delivery, and what’s more, many have come to expect this delivery option as standard. Interestingly, 93% of customers say they prefer free shipping to any other type of discount or incentive.
- Competitive advantage: Did you know that consumers check up to three websites before making a purchase? So, if your site offers free delivery and others don’t, this could give you a competitive advantage.
- To stay ahead of the high street: Think about it, why would a customer shop with you and pay for delivery if they can just pop to the shop and get it themselves? Well, free delivery can help to eliminate this decision and incentivize them to shop online rather than deal with the hassle of going in-store.
- Reducing basket abandonment: One of the biggest causes of basket abandonment is additional or hidden charges at the checkout process, such as postage. As such, offering free shipping lowers the risk of basket abandonment in the final stages.
- Boosting sales: Free delivery can also help to increase basket size. In fact, a study from UPS found that 58% of customers will add extra items to their shopping basket in order to qualify for free delivery.
It’s clear that not only do customers appreciate free shipping, but this can be a powerful tool in driving sales and reducing cart abandonment.
The cons of offering free shipping
Free shipping makes customers happy, so it’s a no-brainer, right? Unfortunately, this is not always the case.
As with everything, there are always two sides to consider, and there can be some downsides to offering free shipping to your customers. Some of the key concerns or issues you might come up against include:
- It costs you money: Free shipping could affect your bottom line if your packaging and/or shipping is quite costly. You don’t want to be losing money on products just to offer free delivery to your customers.
- You have to raise prices: Similarly, if you’re having to raise product prices to cover free shipping fees, this can backfire. Customers might find a cheaper alternative and therefore go elsewhere to get their goods.
- It causes careless buying: Free shipping can also alter a customer’s buying behavior and lead to more careless shopping. This, in turn, can lead to more returns. So, while paid delivery might mean fewer orders, it could also mean fewer returns and a higher profit margin.
- It impacts your store: If you’re operating both on and offline, free delivery could harm the performance of your high street store, so you need to take this into consideration as well.
As you can see, there are some important points that you must carefully consider before you choose to offering free shipping to your customers.
When you should be offering free shipping and when you shouldn’t
It’s all well and good looking at the pros and cons of free shipping, but how do you decide if this is something you should be offering to your customers? In this final section, we’re going to take a look at the criteria you should meet before offering free delivery.
So when should you be offering free shipping?
When you can afford to
Firstly, you should only offer free shipping when you’ve calculated the costs of your delivery strategy, and you can afford to do so. And this doesn’t just include the postage itself, you also need to take into consideration every aspect of your strategy, so this includes the picking, packaging and posting of your items through a courier partner.
So when working out the costs, you need to make sure that you’re going to be able to cover delivery on your orders as well as still making a profit on the product. This will ensure you don’t end up losing money by offering free delivery.
When your supplier offers free shipping
If you have a dropshipping business, or you buy your products in bulk, and your supplier offers free delivery, why not share the love. Providing you save enough money on these transactions, you can extend these savings to your customers.
When all your competitors do
One of the key driving factors for many is that their competitors offer free shipping. If you hope to stay ahead of (or at least on par with) your competition, sometimes this calls for free shipping. But of course, you must take into consideration whether you can afford to do this. If you can’t, then perhaps it’s better to find other ways to beat the competition, such as additional customer service practices, branding, exclusive offers, etc.
If you’re sure it won’t lead to careless purchasing
As we mentioned earlier, free shipping can cause a lot of careless purchasing, and so sometimes it might not be the best option to offer this delivery service.
That being said, these consumer behaviors will very much depend on what it is you sell. For example, if you sell furniture, people are unlikely to order several different tables and send back the ones they don’t want.
Whereas, if you sell clothes, people are more inclined to order several different outfit choices to try on at home and send back those they don’t want.
As such, you need to make sure that offering free shipping isn’t going to lead to huge orders with most of the items being returned a few days later. If you think this might be the case, often it’s best not to offer free delivery as this generally means consumers will be wiser in their shopping decisions.
