November 3, 2020 Blog

Is Offering Free Shipping Beneficial For Businesses?

Undoubtedly offering free shipping helps to drive conversion toward your eCommerce. The concept of free shipping is something that every consumer would like to have. Therefore they often select an eCommerce platform for shopping, which has this service available. One can experience significant consumer behavior when offered free shipping. 

Although free shipping is beneficial on the customer side, a bit, on the other hand, someone has to pay for that shipping. With the holiday season around the corner, providing customers with a good shipping experience is the top priority of every business. In such a situation offering free shipping can be a successful promotional strategy and can give your eCommerce an edge. 

Considering all these benefits, it often becomes a question that you, as a small business, should go with the free shipping trend or not? It is also one of the marketing tools utilized to boost profit, but it also has some drawbacks. As a small scale business, it is crucial to consider the pros and cons equally to avoid any loss. Here you can take a better look at the pros and cons of free shipping.

Benefits Of Offering Free Shipping

However, free shipping provides several merits, but it can bring you a lot of profit when the holiday season knocks on your door. Here are a few of them:

Entice Buyers

One of the most significant reasons to offer free shipping is that it attracts the eyes of buyers. As per the 2016 Walker Sands Future of Retail Study, 90% of online consumers consider free shipping as their incentive to shop online. No one wants to lose an offer where something is free and makes them feel that they are saving some money.

Reduce Cart Abandonment Rate

7 out of 10 shoppers online abandon their cart for several reasons, and not getting free shipping is also among them. Yes, for an eCommerce owner, an abandoned cart is no less than a bad dream. The shipping fee can turn down many shoppers, and they eventually leave their cart without making transactions. 

Therefore, offering free shipping can help you overcome this issue. If your customer does not face any added fee to the products they are ordering, then they will rarely abandon the cart. A study by Stitch Labs 2014, free shipping can increase revenue by 10 percent!

Increases Average Order Value

If you have a certain limit fixed to provide consumers with free shipping, it will eventually improve the average order value. As per the studies by UPS and comScore, 60% of online shoppers in the U.S. tend to add the products to their cart until they reach the free shipping threshold. 

Consumer Satisfaction

For a small scale business, it is very important to gain some loyal customers. The concept of free shipping can help you to meet this goal of getting good loyal consumers. It boosts consumer experience and makes your eCommerce platform reliable to them. The customer starts to perceive your platform positively and consumer-friendly. 

Furthermore, with this free shipping strategy, one can retarget these old and loyal customers to enhance revenue. So, even if the holiday shopping season ends, you do not have to worry about the sales. 

Negatives of Offering Free Shipping

Like every coin has two sides, providing free shipping also has some pros along with a set of cons. Furthermore, it is never smart for a small business to look on one side and ignore the drawbacks. Hence here are some of the demerits of giving free shipping that you must consider:

Lack of impact on the profit margin

The foremost disadvantage of free shipping is that it does not influence profit margins. Additional fees are utilized to cushion any handling and shipping costs. In the long-run, losing this cushion can negatively impact your business’s bottom line.

Price increases

Since the retailers have to bear the free shipping cost, they are often forced to increase the product price to get a fair value. On the other hand, a little bit increase in the product cost can turn down-sensitive consumers and negatively influence sales.

Poor customer satisfaction

Low customer satisfaction is also an outcome of free shipping and the long process behind its execution. Customers’ dissatisfaction occurs when they have to face a longer delivery time for the products they ordered. It happens because the eCommerce’s are required to turn to economy shipping routes to cut shipping rates. 

Additional charges

Free shipping also welcomes additional charges, such as special IT programming, advertising, marketing, etc. Furthermore, these steps are also crucial, and one cannot ignore them. Therefore, it adds to the total cost and expenses. If you are running paid ads on social media and search engines, this cost increases even more.

Helpful Strategies To Consider For Free Shipping

Are you going back and forth in mind and unable to decide whether you should give free shipping or not? If yes, then do not worry because, with the right strategies, you can successfully implement this scheme and enjoy its benefits. Here are some of them:

  • Set a high minimum order quantity. The first effective strategy that one can follow is setting a high minimum shopping or say purchase amount. The minimum shopping amount means a threshold that the customer has to reach to access free shipping. It helps to enhance the average order value. Furthermore, it is effective because the consumers keep adding products to their cart to reach the minimum amount to qualify for free shipping. 
  • Offer free shipping only on certain items. The second amazing strategy is to offer free shipping on certain products or items. It assists you in deciding whether it is beneficial to roll out your whole product line or not. In addition to this, it also reduces the shipping charges on your end. It provides the customer with great incentives. Therefore, this strategy is just like killing two birds with one stone!
  • Consider offering free shipping only during holiday and clearance sales. Another effective strategy to implement successful and profitable free shipping is offering it only during holiday sales. Yes, it would be best if you never missed a chance to offer free shipping to your customers when sales of the holiday season are around the corner. It welcomes more customers, and they love to purchase with this little incentive from your end. The revenue will increase during the holiday season, so giving free shipping will be worth it. 

Conclusion

In the final accounting, offering free shipping can be beneficial in reducing a barrier for buying items online.

However, free shipping doesn’t come without a cost, contrary to what “free shipping” implies – particularly if you haven’t carefully considered and properly calculated the best way to offer it.

It’s all about striking a balance – the right balance between boosting conversions and keeping your prices competitive without having to burn a hole in your pocket or have your items age in their respective warehouses.

In need of an experienced eCommerce consultant with decades of experience? Give us at Syncoria a call. We’ve helped countless merchants scale their business and optimize their operations to deliver a better result in terms of revenues, improved synergies, and more efficient supply chain management.

Syncoria specializes in creating Odoo ERP integration solutions including one that automates orders and inventory between your online marketplace and Odoo. E-commerce integration with ERP, CRM and EDI is our specialty and one of Syncoria’s strongest offerings. We create a fast and efficient synchronization bridge that works to bring value to your business.

Contact us today for a no commitment, 100% free price quote – there’s nothing more we’d love than to help you achieve your organizational goals. Get started with success and call Syncoria today at +1 (416) 628-5522, or send us an email at odoo@syncoria.com.

About Syncoria

Syncoria is a full-service digital agency based in Toronto, Ontario, Canada. Since 2004, Syncoria has helped small and medium businesses across North America and the world in leveraging technology to transform process, customer experience, and organizational culture to meet the challenges of a rapidly-evolving market. 

Whether it is custom solutions or system integrations across a gamut of industries ranging from telecommunications, real estate, manufacturing, wholesale, retail, eCommerce, and customer service, we have technical expertise to help you achieve your goals.

Regardless of the size of your business, we will work with you step by step in order to tailor our solutions to your organization’s specific needs – no matter how complex they might seem to be. Our team consists of highly-trained business analysts, solutions architects, software developers, quality assurance engineers, and delivery managers, all who have vast experience with Odoo. We leave no stone unturned in trying to achieve a successful result in every implementation we make via a fully transparent and iterative process.

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