The Free Delivery Phenomenon: 11 Pros & Cons Every Business Should Consider
11 Pros & Cons Every Business Should Consider
Have you ever asked yourself if offering free shipping is really worth it? It's an important question to consider in this modern shopping landscape, where customers expect both complimentary delivery and returns. In today's piece, we'll explore the advantages of gratis shipping along with alternative methods that could be just as valuable. Together let’s evaluate when a no-cost approach makes sense for your business.
Why offer free shipping? 5 Benefits to Consider:
1. Customers LOVE it:
Free shipping has revolutionized the way people shop online. Overwhelmingly, customers prefer free delivery to any other type of discount - a trend that continues to grow each year. In 2017, 68% expected free shipping even on orders below $50; this number grew dramatically in 2018 when 75% held the same expectation from companies they shop with.. As such, businesses must offer free shipment if they wish for their customer base to remain engaged and loyal.
2. Gain a competitive advantage:
ASOS has created a competitive edge with their unbeatable deals and free shipping packages. This bold move inspired other online fashion retailers to up the ante when it comes to delivering customer value - leading many in this market space down the path of providing cost-free freight options for buyers. It's no secret that offering customers a good deal can be invaluable, especially in highly contested industries like eCommerce; not being able to match your competitors may lead customers to make purchases elsewhere as most people shop around three sites before deciding where they want to buy from.
With the rise of eCommerce, businesses now have an opportunity to gain a unique edge over their competitors by offering free delivery. This has become a key component in search engine optimization strategies as it allows these companies to dominate SERPs and build loyal customer bases. By utilizing this approach, you could be well on your way to success.
3. Helps you compete with High Street shops:
Consumers appreciate the convenience of online shopping, but there is still one huge advantage that traditional retail offers - allowing customers to try before they buy. No commitment or consequence returns mean shoppers can touch and feel a product in real life without incurring any extra fees like cart abandonment. Free shipping could help bridge this gap between eCommerce and High Street stores by providing an incentive for consumers to shop with confidence from their own homes.
4. Free shipping reduces basket abandonment:
At Reviews.io, we understand that shoppers are hesitant to part with their hard-earned money and may experience guilt when spending it - this is why extra charges at checkout can be so detrimental for a business's success! Unsurprisingly, research shows us that shipping costs have the most notable effect on cart abandonment rates due to customers feeling discouraged after additional expenses arise during payment processing. In contrast, offering free delivery eliminates any excuses potential buyers may have in hesitating or abandoning their purchase altogether - leading to fewer frustrations as well as an increase in sales levels overall.
If you're looking to reduce basket abandonment, save yourself some cash by sprucing up your checkout page with customer reviews. Weird Fish has taken advantage of Carousel Inline Widgets to encourage customers - displaying their total review score and several glowing testimonials in full. Not only do these establish trust, they can be the difference between an abandoned purchase or a satisfied shopper!
5. Free Delivery may increase basket size:
Free shipping is a powerful eCommerce marketing tool, having been consistently proven to increase basket size and order value. A study by UPS found that almost 60% of customers added items in order to qualify for free delivery while BigCommerce reported an impressive 30% lift in average order values when they implemented the strategy - likely due to its appealing prospect: 'why pay £5 if you could get something tangible instead?'. With such convincing results, it's no surprise why this persuasive discounting technique remains so popular.
6. Drawbacks of free shipping:
Free shipping could affect your bottom line:
Though free shipping may seem like a great way to get customers in the door, it can also lead you down dangerous paths. If not factored correctly into product prices and delivery costs, huge expenses could be incurred - sometimes greater than what is earned from customer orders! Furthermore, consumers don't always respond positively when price increases are necessary due to hefty overhead fees; Pets.com found this out first-hand after falling victim to an unsustainable business model based on unfettered pricing practices. So if free shipping looks too good to pass up, make sure all its associated factors have been fully taken into account before proceeding further...
Increased product prices:
When making the difficult decision to offset shipping costs by increasing prices site-wide, smaller businesses are placed in a precarious position. Unfavorable economies of scale mean larger companies can spread their lower shipping expenses across wider business operations and product offerings - leading to an unwelcome discrepancy between them and smaller competitors. It's therefore essential for small businesses to find ways they can remain competitive while still staying afloat.
Alters customer behaviour:
Offering free shipping is a great way to attract more customers and inspire impulse buying. Nonetheless, the lack of delivery costs can lead shoppers to become carefree when it comes to making multiple purchases, which could end up costing you in terms of returns or refunds. The good news? By charging customers for their orders' shipment, they will be more likely not just to do bulk buying but also to keep their goods as well! So think about how your business can benefit from this; with low-cost deliveries that encourage larger purchase sizes and reduce wasteful spending.
Increases returns:
Offering free shipping has the potential to bring in customers who aren't yet ready to purchase, leading them to buy something they probably won't keep. This can easily turn costly for a business; being on the hook not only for product delivery but for return costs as well is an unwise strategy. Even if it seems like no-risk shopping from your end customer's perspective, businesses should carefully consider whether this option will benefit their bottom line before taking advantage of it, especially since some industries come with large amounts of returned items and impulse buyers are prone to changing their minds.
Free delivery could harm your High Street performance:
Nowadays, having an online presence as well as a physical one can be crucial for success. Offering free delivery is a great way to make customers feel more attracted and connected to your store; giving them extra options in terms of size and convenience with no additional costs! If this doesn't align with your goals, however, then you will want to focus on making the experience unique instead by offering services such as "try before they buy" at no cost—creating that tasty USP (Unique Selling Point).
Bad for the environment:
How your online brand handles shipping is an important part of the customer experience—and one that could have a significant impact on how you're perceived. Choosing to offer free delivery, for instance, encourages customers to buy more but in turn, creates a higher demand for packaging materials and fuel resources, which can be detrimental if green-mindedness makes up a large portion of your value system or those held by fans of your business. It's essential then to ensure any decisions regarding shipping reflect what matters most: sustainability at every step.
Should You Offer Free Delivery?
When it comes to offering free delivery, only you can decide which is the most suitable solution for your business. Weigh up all elements of this decision carefully; how large are you? And what kind of goods do you provide compared to competitors in your space:
1- Consider your funds:
Offering free delivery is an attractive customer perk, but don't lose sight of the potential costs. Before you take this risk, fire-proof your budget and evaluate whether such a move will benefit or hurt your business - because it can swallow up capital faster than hay in a bonfire! To help weigh out the pros and cons properly before making any drastic changes to the pricing policy, Return Logic offers a handy calculator tool available for free. Don't let unchecked ambition compromise long-term success; proceed with caution when considering adding new incentives like free shipping.
2- Competitor Analysis:
To stay ahead in the ever-evolving eCommerce space, it's important to analyze your competition. Whether they change their website content or add a new product line, you should have an understanding of these changes and decide whether adjustments need to be made on your end as well. Additionally, when considering delivery strategies for competitive advantage, don't forget that problems such as increased returns can arise from seemingly successful decisions, so weigh all options carefully.
If you're looking for ways to stay competitive in the online market, there are several options worth considering. Offering a temporary promotion could help drive customers your way without having to introduce free delivery right away, or adding reviews can give consumers more insight and sway their decisions toward your company's offerings. On the other hand, why not get ahead of your competitors by being first-to-market with free shipping? Doing so will show potential buyers that they don't have to choose between quality products and budget-friendly prices – they'll get both when choosing yours!
3- Consider your brand & audience:
Before deciding whether or not to offer free delivery, you should start by considering your brand and its target audience. If the goal is to provide exclusive products at a premium price point, then it may be wise for customers to pay those extra shipping costs - but if fast-fashion and wallet-friendly items are what you're after, it makes more sense to offer them in a cost-free package! Understanding who will purchase your products can help make decisions that keep both parties happy.
In Summary
Offering free delivery may sound appealing, but it can come with a lot of potential risks. Before you commit to the cost and effort that delivering this perk entails, make sure it's right for your business. Don't forget other methods, such as reviews, which could be even more effective in generating conversions than free shipping alone! Verified customer testimonials provide social proof about your product or service; hearing from others who have had positive experiences is often enough to give someone the confidence they need before making their purchase.
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