Posted by Alex Jackson on 11th Oct 2019
Online sales platforms have, in recent years, been really ratcheting up the pressure on sellers to offer free shipping. It’s become almost a mantra to some “Free ship! Ship fast! Repeat!”. We get it; consumers like to get their stuff fast and preferably with free shipping, but just how important is free shipping in online retail today?
The inherent problem with free shipping is that it’s never really free, and it cost’s both the buyer and the seller money. The buyer may think that they are getting a great deal with their free shipping purchase, but in most cases, that cost of shipping is built into the price. The seller, our readers in this case, now has to decide whether to sacrifice margin and offer free shipping or to build the cost of shipping into the cost of the goods sold. It’s a bit easier to swallow the cost of shipping if it’s a light and relatively small item to ship. But if it’s a big and bulky item, it could end up costing you big bucks to ship.
Let’s be clear here, free shipping is simply a marketing ploy, and it’s becoming increasingly apparent that the ploy is not as effective as some sales platforms may lead you to believe. A recent survey by media outlet Internet Retailer & Toluna looked at just under 1000 online shoppers and their spending habits and discovered some interesting facts. At least one In three shoppers pays for shipping on at least half their orders, and a relatively paltry 14% of shoppers get free shipping on all of their online purchases. While the survey clearly demonstrated the consumers preference for unconditional free shipping, they can and will pay the cost of shipping in the right circumstances. The survey also indicates that there is clear evidence that consumers are catching on to the free shipping marketing ploy and are now looking at the total cost of ownership(cost + shipping vs. Cost +free ship) so building the cost of shipping into the cost of the item may not be a viable option these days.
What’s a seller to do? Offer free shipping on everything and take a hit? Or just simply not offer free shipping at all? When presented with two options, always choose option three, and that is be selective with providing free shipping. Offer it only when it makes sense, low-cost items may not be a good fit, since it will probably take a significant bite out of profits and large or heavy items can cost you big bucks to ship. Focus on offering free shipping on those items selling in the $20-$100 range that are relatively light and easy to ship. Items over this dollar threshold should also be considered as long as you are also shipping with insurance.
Consumers want a good deal and are now catching on to the free shipping gimmick. You know too that those great deals on quality liquidation merchandise you get from foxliquidation can net you some big profits. Independent retailers just need to realize that offering free shipping is a nice perk, just not the deal-breaker that so many sales platforms make it out to be.