Why Your Ecommerce Business Success Might Rely On Offering Free Shipping

By April 14, 2015E-Commerce

Offering Free Shipping At Select Times May Be The Key To Your Ecommerce Success

The online retail industry is competitive and, dare we say, cutthroat. Whenever an e-retailer can find an edge, it’s worth looking into. But sometimes that slight edge isn’t what we all necessary expect.

Sometimes it can be as straightforward and simple as free shipping.

Now, let’s not get ahead of ourselves here. We’re not suggesting offering free shipping all year-round, on all of your products (regardless of the price). There are certain parameters that need to be factored in. But once factored in, you may be surprised at how a simple free shipping order will help your future online sales soar. Let’s break it down.

When Any Holiday Rush Is Coming

As last year’s holiday rush began (sometime in early November), most of the top 1000 e-retailers offered some type of free-shipping offers on their homepages, according to Internet Retailer’s survey of top ranked merchants. The 644 retailers that opted to include a free shipping offer was a 3% increase from 2013, where 623 opted to go this route.

Offering free shipping all year-round will likely not boost your bottom line. But by offering it as a special feature when consumers are most motivated (any holiday season), you’ll likely be satisfied with your return on investment.

Free Shipping On All Orders, And A Minimum Purchase Threshold?

267 of these retailers offered free shipping on all of their orders (rather than just on pricier items or items they were pushing). But they also required a minimum requirement to be spent before the free-shipping offer kicked in. This minimum threshold ranged, depending on the type of products sold by that merchant.

For example, SamAsh.com’s minimum purchase was $9.99, while AusTexAppliance.com required a minimum of $1,999 spent.

However, when looked at globally, of the 377 e-retailers that required minimum orders for free shipping, nearly half required a purchase of $70 or less, while the other half required $74.95 or more – it was an even split.

In other words, there’s no one true formula for what your minimum purchase threshold is. It’s entirely dependent on the type of products you offer (which, in turn, dictates the spending habits of your target audience). But what a minimum-spending requirement does is encourage consumers to do all (or most of) their shopping on your site in order to benefit from the cost-savings of free shipping.

The Power of Cutoff Dates When Offering Free Shipping

Consumers are attracted to limited-time offers (think of things like “Sale good through Sunday!”). Use that consumer behavior by offering a cutoff date for your free shipping. Most of the top retailers offered a cutoff date after Christmas (such as Dec. 31 or Jan. 16), and some even extended their offer to include free shipping for any returned items (you know how much people love to return their gifts!).

The point here is that as clearly as you state, on your homepage, that you’re offering free shipping, you also want to be clear that this offer won’t last forever. This will instill a sense of urgency in the consumer, and encourage them to act now (funnel down the buy cycle faster) rather than continue shopping around.

How Do You Determine What Kind of Free Shipping Offer You Should Promote?

There are so many things to factor in when considering a free shipping offer, including:

  • When should you launch this offer?
  • How long should it last?
  • What items should be included?
  • Do I require a spending minimum?
  • Do I include free shipping on return items?

Coming up with the answers to these questions requires thorough data analysis and market research, combined with a strong foundation of what your consumer wants and expects. That’s why so many e-retailers turn to OperationROI for help. We use our experience in online advertising to create customized strategies for each of our customers. Call us at 1-888-277-5429 or fill out our contact form to learn how we can help you with your free shipping offer.

One Comment

Leave a Reply