In a world where free shipping is becoming more and more prevalent, it’s important to be aware of the hidden costs that come along with this customer service. With so many options for online shopping these days, you might not even realize how much a few dollars can add up over time. We’ll take a look at some of the ways in which free shipping costs money and what you can do to save on your next purchase.
How does offering free shipping actually work?
Before we look at the costs associated with offering free shipping, it’s a good idea to know how it actually works.
Typically, when retailers offer free shipping they need to increase their prices to cover the costs. This is what’s known as the “hidden cost” of free shipping. As a result, you may find that your purchase price ends up being just as much or more than it would have been had you paid for shipping in the first place.
Why do customers like free shipping
It’s pretty easy to guess why customers like free shipping. It’s such a popular option that it’s rare to see retailers who don’t offer this service. According to one study, 86 percent of online shoppers say they want free shipping and 71 percent of those want it as soon as possible. 15 percent say they’ll abandon the transaction if the retailer doesn’t offer free shipping .
According to another study, 97 percent of customers claim that free shipping is important when deciding whether to shop with a given retailer.
Is offering free shipping a good idea?
One of the biggest things to consider when it comes to free shipping is whether or not this will actually affect your sales. It’s important to remember that you still need to attract customers through your pricing and marketing strategy, otherwise they won’t know that your store offers free shipping!
There are brands that offer free shipping with no minimum purchase required.
This gives shoppers and idea of the value of what they will get and the store’s commitment to superior customer service. However, this may not be a better option if you’ve already lost your sale with high prices and hidden costs. Is it really worth it?
Free shipping vs paid shipping?
The main difference between free shipping vs paid shipping in the minds of customers is the simplicity and convenience. When they are shopping online, they don’t have to worry about calculating the additional costs of shipping into their purchase if they know free shipping is offered. On the other hand, they often don’t mind paying for shipping if that means they will receive their order faster.
What can you do instead?
Instead, try offering free shipping on orders over $x. This could be enough to encourage customers to make larger purchases and still stay within budget for shipping costs.
This is a great way to increase the average order size of your store, ultimately leading to increased revenue.
Be aware that this option may not be available with all shopping carts and you’ll need to check before trying to implement it.
How can I ship for free?
If you’re looking to offer free shipping without losing your shirt, there are some options available.
There are certainly benefits to choosing a third-party order fulfillment provider including the likelihood that they can offer lower costs on shipping. You can also look into ecommerce software providers that will integrate with USPS and other carriers to ensure you get the best deal on your shipping rates.
ShipBuddies can help you make sure you are getting the lowest rates on shipping, providing savings that you can pass on to your customers.