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The Curse of the Holiday Free Shipping Offer

Last Updated on Nov 12, 2012 by Jenna Scaglione

The holidays are fast approaching and Ecommerce stores are shoring up their offers in preparation for the gift-giving frenzy.

Over the years, the discount offers have evolved as competition has become more and more fierce. Stores are giving away even more than their shirts and as a result, the offer that comes out on top every year always involves a free shipping incentive.

Free shipping offers have become some of the most tantalizing discounts for consumers. They rival percentage sales and even cash coupons. And with stores like Zappos offering free shipping both ways, 365 days a year, it can be difficult for Ecommerce stores to compete while still making enough money to survive.

Why are free shipping offers so valued?

Consumers must substantiate ordering a product online versus getting in their cars and driving to a store to purchase it. Ordering online equates to additional costs and free shipping offers ease consumers’ minds and gives them permission to purchase online.

A comscore study performed approximately one year ago revealed an interesting statistic. It reported:

One of the more prominent incentives for online purchases is free shipping. When asked how important free shipping is for making an online purchase this holiday season, slightly more than three-quarters (76 percent) of consumers indicated it was important and 47 percent indicated they would abandon a purchase if they got to checkout and found that free shipping was not included. In addition, comScore behavioral data indicate that 40 percent of retail e-commerce purchases in Q3 2011 included free shipping, and that percentage peaked in Q4 2010 at 49 percent.

Free shipping offers can land you in a conundrum. While your competition is busy handing out free shipping offers like they are candy, you may feel more hesitant because of the resulting profit losses.

But, don’t give up just yet. You can still offer free shipping or some form of the discount without losing a ton of profits…

It’s not as Glamorous as it Seems

While your competition may boast about its free shipping offers, if you look closely, they may not be as magical as they seem. Most free shipping offers accompany minimum purchase amounts or exclude select items. But, consumers still flock to those enticing offers because it sets off an emotional connection with them immediately.

Save Money on Shipping

If you store and ship your own goods, consider the USPS flat rate shipping boxes. Offer free shipping on whatever items fit in those flat rate boxes since they are inexpensive and will not cut into your profits too much.

Flat Rate Shipping

If you are really strapped for cash and cannot offer free shipping, consider offering a flat rate shipping for all of your products. Numbers like $3.95 and $4.95 are usually effective.

Select Groups

Another option is to offer free shipping to select people such as first-time shoppers (you will gain repeat customers), optin subscribers, customers who responded to an ad, etc. By coupling the free shipping offer with a stipulation that benefits your store, you will not feel the sting as much because you will gain future customers or subscribers.

Free shipping offers are some of the highest-converting Ecommerce discounts. They lead to a high order volume, higher order amounts, repeat customers and a reduction in abandoned shopping carts. Test a free shipping offer to see if it makes sense for your store. A few dollars lost in shipping can equate to increased profits months and years after the offer.

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