Are You Offering Free Shipping? Latest Trends On One Of Your Greatest Promotion Opportunities

If you are not offering some level of free shipping to your customers, chances are you are losing sales to your competitors that do.   During Q3 2009, 42 percent of all e-commerce transactions completed in the U.S. included free shipping, up from 31 percent in Q1 2008. This was according to ComScore and can be seen in the following graph:

Free Shipping Transactions

ComScore recently surveyed customers and asked them “When making a purchase online this holiday season, which of the following statements best describes how important free shipping is to you?” :

As you can see, nearly three-quarters of all respondents felt that free shipping was important or somewhat important in their buying decision. Notice that 34% would not make a purchase without free shipping. You have got to find a way to promote this is your stores.

One way I do it is to take my average order amount and set the free shipping threshhold at about 10% over that amount (or rounded up to the nearest $25 increment). For example, my average order is around $42 on one of my sites. I set my free shipping threshold at $50 on that site. On another site, my average is $78. I set my threshold on that site at $100 to get free shipping. The threshhold encourages a lot of people to add an additional item to their cart to get to the free shipping level.  It can encourages impulse buying in some cases.   Sometimes, I change the threshhold to test what I can get away with,  but I found that setting it too high, causes sales to drop a little.  ( Since sales fluctuate normally for a lot of reasons, I tend to not track it as closely as I could since its hard to tell what causes people to abandon the shopping cart, or even go away after visiting, so its hard to tell how many leave for this reason alone)

Often, merchants are hesitant to offer free shipping as they feel it cuts into their margins, or they feel they have to raise prices to cover the costs. Obviously, these costs need to be recouped somewhere in your business. But keep in mind studies also show that overall, orders that include free shipping are an average of 15-20% higher than those that do not. This probably has to do with the set thresholds to get the free shipping. Obviously, more sales helps cover some of the costs of shipping.

If done right, free shipping can give the retailer more sales or sales that would have been lost to your competitor, but even more important is the customer comes out of the sale feeling like they got a good deal. And that, can bring them back to you over and over again.