Free shipping, YAY or NAY?

According to a recent survey, 9 out of 10 consumers consider free shipping as vital. Many of them have abandoned a shopping cart when the shipping and handling fee is higher than expected. Of course customers love free shipping, and you should always try to satisfy customers. But the question is: can you offer free shipping?


Pros of free shipping
The answer is obvious - to attract customers, but as a retailer it can mean much more than that. First of all the number of orders should increase, which boosts sales and profits. Moreover, many online stores have set up a minimum purchase value for free shipping, which can encourage larger orders per customers, which again can boost profits.

Another pro of free shipping is that it can help building up brand loyalty. As mentioned before many customers only buy from online stores that offer free shipping. Hence when it is offered, retailers should expect to acquire new customers and also retain customers. Customer retention can result in repeat purchases which is far more valuable than short-term gain. To conclude, free shipping make your store more competitive.

Cons of free shipping
Obvious answer - it costs! Shipping expenses can be more than you think since it includes postage, packaging, time, labour etc., The cost of shipping parcels have been rising these years (e.g.: fuel surcharge), and it also takes time and effort to consider, design, programme, and advertise the free shipping policy on your website. To conclude it can be quite dear for retailers to absorb all these costs.

SO, free shipping or not?
I would say try your best to offer this if you can. Of course you need to consider your margins - calculate how much are you going to lose from offering free shipping, and how much more profit you need to cover this. This can help setting a minimum order value to offer free shipping. Then consider your product type - some products are just too heavy or too big, so it is much more expensive to ship. One can consider establishing restrictions when offering free shipping. Lastly consider your customers' location. You can only offer free shipping to certain areas.

This is just a brief evaluation and the actual consideration process can be much more complicated. A lot of retailers offer a wide range of varying products so it is difficult to standardize. Moreover, customers can still abandon their shopping carts even if you have not offered free shipping, which makes the impact difficult to measure. One thing to bear in mind is that there are a lot of competition out there which are already offering free shipping. Hence when you offer the same thing, it may just bring you up to their level, and your sales level may remain the same.