As ecommerce continues to gain popularity among consumers for convenience, web pricing incentives, and other reasons, trends are emerging that separate some online retailers from others. One of these biggest trends is offering free shipping and free returns to customers. With huge ecommerce sites like Zappos.com and Nordstrom.com offering not only free shipping but also free returns, the competition is compelled to adjust to the changing demands of the customer. ATAK Interactive explores this phenomenon, and offers some tips on how to get your ecommerce business in on the action.
A recent survey conducted by Canadian software company Hybris indicated that 47% of online shoppers in the United States are deterred from purchasing a product because of high shipping prices. Further, research from comScore, a U.S.-based analytics company, revealed that 76% of consumers said it was important to have free shipping and 47% said that they would abandon a purchase upon checkout if they discovered shipping was not included. These powerful statistics show that online businesses need to adapt to the demands of the customer if they want to continue to stay in business.
SHIPPING ISN’T FREE
We all know that if you start offering free shipping to your customers the cost needs to go somewhere. Here is when ecommerce business owners need to get creative to determine where costs can be absorbed. One tactic that may sound ironic but is proven to work is to slightly increase the price of the product to accommodate for free shipping. A comScore survey in 2010 of holiday spending indicated that the average order value on free shipping websites was $110, while the average on non-free shipping websites was $95. Here are some other strategies that can work for your ecommerce business.
1.) Free shipping with a minimum purchase. Macys.com offers shoppers free shipping on purchases over $100, incentivizing shoppers to buy more, and also ensuring that the shipping costs Macy’s is absorbing are worth it.
2.) Free ground shipping with expedited options. By offering free ground shipping, you are appeasing your customers who are looking for the free option. However, by offering the opportunity to expedite it for a few more dollars, there is a good chance customers may spend the extra bucks to get the product faster.
3.) Free shipping for a limited time. Using the “buy now or it may be too late” tactic, advertising free shipping for a limited time motivates your customers to buy now.
MAKING THE SHIFT MANAGEABLE
If your ecommerce site is going to make the shift to free shipping, there are some things you want explore to make sure you won’t put yourself out of business.
1.) Analyze your customers’ shopping trends to see if you truly do need to make the change. Using Google Analytics to track where in the sales process customers left your website, you can illustrate a bigger picture of which purchases may have been affected by your shipping policies.
2.) Check with shipping companies for lower rates. Major shipping providers like FedEx, UPS and even the U.S. Postal Service have different shipping options that can work in your favor. Flat-rate shipping with FedEx and the U.S. Postal Service can save you a lot of money when shipping heavier products. FedEx also offers shipping on Saturdays at no additional cost, which means that you can offer your customers shipping on Saturday for a small charge, off-setting some of your shipping expenses.
3.) Start with e-mail only or VIP loyalty club free shipping promotions. To avoid being hard hit off the bat by offering free shipping to all of your customers, try starting with a campaign to your repeat customers with a free shipping promo code. This will allow you to make educated decisions about how much free shipping is costing you so you can adjust gradually.
As free shipping and/or returns are becoming a standard in the ecommerce world, it is inevitable that your business needs to take the time to determine if it should also conform to this expectation. ATAK Interactive can assist in advising your ecommerce business on the necessity of free shipping and how to implement it into your website’s shopping basket. Exploring how different shipping options affect your sell-through will help you strategize for a bigger profit.