Whether or not your business decides to offer free e-commerce shipping is a big decision. You are faced with customer demand and increased competition from other e-commerce businesses already offering free shipping, but you also need to worry about your bottom line. Free shipping can be a great way to increase online sales, but it’s up to you to figure out at what cost.
And for every business, deciding on free shipping will come down to factors specific to their company. But there are some pros and cons that should be weighed out before any final decision is reached. This way, you are fully prepared for the process and the outcomes.
What are the Pros and Cons of Offering Free Shipping?
Okay, so you’re ready to go online, or you’re already online and you’re contemplating whether or not you should charge your customers for shipping or let them have it for free. In either case, you’re most certainly wondering what the benefits and setbacks of each would entail. Here are a few of the most important aspects on both sides of free shipping that you should definitely be aware of.
Pros of Offering Free Shipping
- Increased Order Volume: If customers know they can get it at no cost, they are encouraged to order more items. More items mean more sales for your company and it gives customers peace of mind knowing they don’t need to add any cost to their final bill.
- Higher Conversion Rate: When a customer is adding items to their cart, a big turnoff is seeing that final number plus the shipping costs. Sometimes, high shipping costs are enough to turn them away from completing the order. By offering free shipping, this is not an issue.
- Increase in Customer Retention: Any shopper who knows they can order whatever they want without having to worry about shipping has a high chance of coming back. So long as the product does what it’s supposed to, they know they can continue to make orders on your site.
- Marketing Edge over Competitors: Once you do make the decision to offer free shipping, be sure to let all your customers know about it. No-cost shipping is a huge advantage and should be promoted throughout your online platforms.
Cons of Free Shipping
- Significant Decrease in Operating Margins: If your customers aren’t paying for the shipping, that means you are. And if you’re paying for it, it means it’s an expense added to your operating costs. This is why it’s important to work out the numbers before making a decision because the costs can become high. And if your business isn’t prepared to absorb those costs, problems can arise pretty quickly.
- Increases Fulfillment Complexities: This can include costs and packaging prices. If you do offer free shipping, you have to make sure you’re covered. You don’t want your business to take a big hit, so you really need to figure out how everything is going to work and where you can make up the ground. This takes time, planning, and a system cohesive enough to get it done.
- Delivery Time May Vary According to Preferences: Shipping volume plays a more significant role when you offer it for free. You have to plan it out so that you aren’t constantly shipping large orders which can negatively impact your bottom line. This is something small businesses in particular need to consider.
- Difficult to Reverse Free Shipping Once Implemented: Once you open Pandora’s Box, it’s tough to turn back. Customers will get accustomed to what is definitely a benefit for them and almost come to expect it. Closing that door may impact your customer’s shopping behavior. It’s a risk.
APS Fulfillment, Inc. has the tools to manage any shipping priorities. Whether you offer free shipping or not, we can handle all logistical aspects from start to end. Learn more about our e-commerce shipping solutions by contacting us today.
