It seems like the holiday shopping season starts earlier and earlier every year. Meaning online retailers have to battle it out for the attention and business of a ravenous global shopping community nearly all fall and winter long.
In addition to that, the struggling economy has made consumers more inclined to pinch pennies and keep an eye out for the best deal. For the last few years, one of the best ways to close the deal with online shoppers has been by offering free shipping.
Free Shipping As Great Promotion
Businesses have always used promotions to hook in shoppers. “Buy one, get one free,” “free gift with purchase,” and “one-day-only sales” are just a few that have stood the test of time and have carried over to the world of e-commerce. So when Stamps.com did a survey to discover the most effective holiday sales promotion, surprisingly it was not one of these staples that took the top spot. 90 percent of online businesses said that some type of free or discounted shipping was their most effective holiday sales technique. The reason so many companies have used free shipping to draw in consumers is that this type of promotion increased the average order by over 4 dollars for over 52 percent of the companies surveyed. Customers are willing to add to their orders to get the shipping discounts since it usually leads to an overall savings due to the normal costs of shipping.
Free Shipping Adds Edge To Competition
As the world of e-commerce becomes more competitive with an unprecedented amount of retailers adding shopping cart platforms to their websites, the need for an edge is more important than ever before. Companies that find a way to improve customer satisfaction will find their repeat business increasing due to the loyalty of online shoppers. A 2010 study by comScore revealed that 55 percent of respondents would be at least somewhat likely to abandon their shopping cart without a free shipping promotion. Combine this with the effectiveness of such promotions and it is easy to see that free shipping can help greatly improve a consumers shopping experience and, in turn, their buying behavior and brand loyalty.
Free Shipping Always Wins In Comparison
Online customers shopping around for the best deals also love to use comparison websites. Free shipping promotions are typically highlighted on these websites and any company not offering this service is usually eliminated from consideration immediately. Now that it seems obvious that free shipping is crucial to having a successful e-commerce platform, let us take a look at what types of shipping discounts are the most common:
- Free Shipping with a Minimum Order
Free shipping with a minimum order allows customers to get free shipping on orders of specified amounts. For example, offer free shipping on orders of 25 dollars and more. This type of free shipping offer is the main driver of higher purchase amounts since consumers will typically spend a few dollars more to hit the minimum amount.
- Limited-Time Free Shipping
This type of promotion is perfect for the holiday shopping season as it allows businesses to stay competitive during peak times without hurting their bottom-line the rest of the year.
- Free Shipping on Specific Products
Businesses like to use this promotion to help deplete excess inventory by offering free shipping on products that may not have done as well as they hoped. Conversely, e-commerce companies will use this free shipping offer on their most popular items in order to drive traffic to their website and to increase average order size.
In the competitive world of e-commerce, free shipping is a tool that can help to drive traffic, improve customer satisfaction, and increase the size of orders. An analysis of return on investment, costs, and profit margin should be performed before making the decision to offer free shipping for any e-commerce platform, but it does seem to have become a permanent fixture in online shopping. Consumers will continue to look for the availability of the option and if the competition is offering it, they will certainly have the edge.
Brandon Turner writes for various eCommerce and industry blogs across the Internet.