Free Shipping: To Charge or not to Charge?

BY: HUNTER HARTMAN

Have you ever added something to a shopping cart at an eCommerce platform website and abandoned the cart when you saw the exorbitant shipping cost? If your answer is yes, you’re not alone. This is a recurring question for eCommerce merchants: “Should I offer free shipping? Perhaps, after a certain threshold?” I recently had a conversation with a client who was offering her customers an API to FedEx and USPS to choose a carrier they preferred. When I asked her what her abandoned carts percentage was, her response was simply, “Very High!”

Studies have shown time and time again that adult shoppers will add items to their shopping carts in order to satisfy the free shipping threshold. As price continues to be a top consideration for consumers, merchants are looking for new ways to provide shipping promotions to earn the business.

When I spoke with this customer of mine, I asked her if she had considered ‘Free Shipping’ after a certain threshold. She said she would rather sell the product and lose some money in shipping than not sell the product at all. I recommended she make a business decision to test threshold based Free Shipping and how that affected growth. I did warn her, however, that once she offered Free Shipping, there likely was no going back without the risk of losing customers.

I caution my customers before going directly into Free Shipping to consider the following.

  • Offer shipping after a certain threshold. If you offer Free Shipping altogether, you will notice your order value go down.
  • Some products do not require free shipping due to their niche or value. Consumers may be more influenced by discounts than Free Shipping with these products. You must understand your consumers.
  • Remind customers they are saving money on their shipping cost. One of the foundations of economic concepts is there is no such thing as a free lunch. Someone has to pay for shipping, whether it is the merchant or the consumer.
  • Build the price of shipping into the price of the product. You may be surprised to see consumers will be willing to pay more for a product if it has free shipping, even if it would have been less expensive to pay for both the product and for shipping.

Other areas to improve shipping consumer relations are detailed below:

  • Present the shipping transit times for customer. Setting the expectations accordingly will make customers happier, even if it’s a slower delivery.
  • Some customers are happy to pay a nominal fee to get the product faster. This is an opportunity to offer “Express Shipping” for an upgraded cost. This may create another profit center, as the price of Express Shipping is more than the cost to the merchant.

Finally, to create the most value for each consumer experience on your eCommerce site, merchants need to know when to expect the package. Consumers should receive a tracking update from their shipping software with an expected delivery date. This should limit the customer service calls and help give the consumer a great overall experience.

Hunter Hartman is an eCommerce consultant for Move Method and is based in Orange County, CA. His focus is on small-to-large eCommerce companies that are shipping business-to-consumer. Through his shipping expertise he has helped hundreds of companies save money shipping small parcels and helped to integrate a more automated solution. For more information and a free consultation, please visit us at www.MoveMethod.com.