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I’m debating which method to pick for my website; if I should offer free standard shipping or not. Do you offer free standard shipping on your website? What do you guys think are the pros/cons of offering free standard shipping?
If I DO offer free standard shipping:
Pro:
- The customer might feel more enticed to buy; seeing the total final price they will have to pay if they pick the “free” shipping method.
- Advertising free shipping might generate more traffic to the website.
Con:
- My product prices will be higher because I have to build into the product price my shipping price.
- The shipping price I build into the price will have to be the same for all products no matter where the delivery destination is.
- Product prices will be set higher than competition because shipping rate is built into the price.
If I DON’T offer free standard shipping:
Pro:
- Product prices will be lower and will be able to match closer to the product prices of my competitors.
- I will be able to offer the based possible shipping rates to customers because they will be calculated based on location and weight of the order.
Con:
- I don’t know if by not offering “free” shipping customers won’t bother entering the checkout stages of the website to see what their shipping amount would be.
- Might generate less traffic to the website; since I’m not offering free shipping.
I’m leaning towards NOT offering free shipping; it looks like the better method when you look at the pros/cons, but I do like being able to advertise “free” shipping to customers…
I don’t know which method to use and would still entice customers? What do you guys recommend?
Thank you,
olimits7
I will offer my experience with free shipping opposed to standard shipping. Shortly after (within 18 months) launching my first ecommerce site I started another that offered free shipping. Same products but as you mentioned different pricing structure to accomade the free shipping.
Both of these sites were advertised via Google Adwords but the standard shipping web site received much higher Google, Yahoo and MSN organic rankings. Through the first 5 years (2001-2006) the free shipping site earned about 10% of total revenues on a pretty consistent basis. Since that time the free shipping site has fallen to about 3% of total revenues.
In the beginning, after Gore founded the internet, people seemed to be very conscious of shipping costs and therefore advertising "Free SHipping" drew more response than I believe it does today.
Hope this helps and of course this is just MHO.
Have the same debate with myself. What I have found works in the past is to target specific products. Recently, I offered "Free Shipping on all Widget X's From July 1 to September 30" and it was a smashing success. Now, these were my big ticket items where I still made a great margin by offering truly free shipping -- I didn't raise my purchase price, I simply changed the shopping cart to have Free Ground Shipping display as the freight charge. I mean, I honestly ate the cost of shipping...
But, my asset turns were great and I was able to clear inventory 5+ times. I ended up using it as an excellent bargaining chip. "Oh, well since you want two of the most expensive Widget X's, I'll give you free shipping even though its October 3..." etc. Call volume increased, sales increased, all signs were positive. It made me think that consumers are getting wise to our tricks; they know when they are just not seeing the cost of freight as opposed to getting an actual deal on shipping.
I think you should show your shipping costs and have them be as close to the actual cost of shipping as possible. Then, target specific products with free shipping to improve sales on slow products; or use free shipping to boost your best sellers in slow times.
Show shipping as a general rule, and offer if free instead of a discount on multiple units, or as a promo weekend (take it out your marketing budget for eg).
If a typical order consists of more than unit and/or more than one item, you're doing your typical customer a disservice by making them pay over the odds for shipping- you're actively DISCOURAGING large orders.
That said, as soon as you view the basket, the shipping charge should be detailed there. I abandon MANY online orders when they ask for my details before showing me a full break-down of costs.
My thoery, is that shipping charges can be a deal breaker. So that a person will add to cart and start the check out process, if the shipping charge is over a certain percentage of the price of the goods, the customer will abandon the cart and look elsewhere. What percentage is the deal breaker ? ... depends on the customer, depends on the product and finally, depends on how desparate the customer is for your product.
I would love to offer free shipping on everything but we have thousands of products from stuff that fits into an envelope to equipment that needs to be shipped on a pallet. So it would be impossible to eat the shipping cost.
So welcome to the great ecommerce dilema, what to do with shipping charges.
[edited by: Rugles at 3:36 pm (utc) on Oct. 24, 2008]
I was reading in Internet Retailer a few weeks back, that Amazon will continue to offer Free Shipping. They have no current plans to change that policy. They said that even though the cost of oil was extremely high.
Also, they have multiple warehouses located around the USA and one of the reasons for having these very expensive warehouses, was so that they can keep shipping costs to a minimum.
So if you are hoping that Amazon will end Free Shipping ... give up hope, it aint going to happen.
I have not tried free shipping, but I did recently redo my cart so that shipping now is based on weight, and I am cutting it pretty close--shipping is 75 cents more than the actual postage. This makes my shipping less than a lot of my alleged competitors. In the past, I had the shipping go to a percent after a certain amount, but this cart allows me to keep it to the weight, which seems to be helping sales. It meant I had to redo all my pages, but it was worth it. People can buy a lot of stuff and still pay only $5.50-$8.50 for shipping. My competitors seem to all have their shipping start at $6.95.
I also use a flat rate for certain widgets, and it is the same whether it is US or international. This I have found encourages larger orders on those widgets.
That is interesting about offering free shipping for a limited time and not raising the price of merchandise. I will try that.
I only do this for products with a margin large enough to support the cost of shipping -- 95% of what I sell does not fall within this category. It works wonders for volume (I advertise with banners on every page of my site and with my AdWords ads, etc. so no one can miss the deal. I start my campaign advertising the free shipping at least 2 weeks before it kicks in).
To be honest, the only items I have done this with are seasonal sellers, and I use this tactic out of season to drive sales. EX: I run free shipping on items meant for the fall/winter during the mid to late summer months when people begin their research. They, in turn, purchase immediately rather than delaying until the need arises. I've also found that free shipping gives me great lee-way on my turnaround time. If you are willing to extend a good deal to a customer, they are willing to wait.
Unless an individual widget can be posted at normal letter rates I think a value based threshold is best. It always encourages the customer to buy that extra widget from you rather than elsewhere.
There's usually a time element involved with those shipping specials, so it encourages a faster buying decision to take advantage of it. That decreases the latency factor in online shopping, reducing the number of days between arriving at a site and placing an order.
Don't lie. Rule #1.
"SHIPPING INCLUDED" and final price. Your clients will trust you and come back for more. Your competitors will hate you for telling the truth.
Customers KNOW tanstaafl. (There Ain't No Such Thing As A Free Lunch) and when you SAY FREE SHIPPING they will be wary...and have that in the back of their mind should questions result. Why give them ANYTHING?
Don't lie. Shipping ain't free, UNLESS YOU REALLY MEAN IT.
See ya, Country Joe
Don't lie. Shipping ain't free, UNLESS YOU REALLY MEAN IT.
Con:
- My product prices will be higher because I have to build into the product price my shipping price.
- The shipping price I build into the price will have to be the same for all products no matter where the delivery destination is.
- Product prices will be set higher than competition because shipping rate is built into the price.
That is not Free Shipping.
We just switched one platform from 20% off across the board to Free Shipping on orders with a certain dollar value or more. Its still a bit early to give any solid feedback but I'm not 100% certain it was the best idea, we'll see as the holiday season starts here shortly.
Free Shipping means that you are "eating" the cost of the shipping. If I'm out price shopping and I know the product cost is $100.00 and you are offering free shipping but are selling at $120.00, I know what's up and so does the average consumer. It has been a common ploy in product marketing.
Another common tactic is to add "handling charges" instead. So, you checkout and get to the final stage to see that a $5.00 or $10.00 handling charge is present, bad business!
Free shipping is just that. I've seen a lot of free shipping offers that had additional handling charges. I've seen offers that make the shipping methods seem less than satisfactory if you choose the free method. In many instances, free shipping is a ploy and it is not free as many know.
When we advertise free shipping we also state "no handling charges" so that visitors know our free shipping offer is real and not a ploy to get their business. We also have a full page explanation about the free shipping/no handling charge offer. Any time that word free shipping appears, it is linked to the offer. We see visitors reading the offer quite a bit and then ordering shortly thereafter. ;)
I also sway toward advertising your real shipping.
I incorporated free shipping on a couple of occasions only because a certain entity, twice, invited me into their free shipping promotion. I accepted only because I received a lot of free/extra traffic, ie., customer's were going to buy from me based on the lead anyway. After the promo's were over, my sales dropped because I left the free ship calculator in place just to see what happened...What happened was now my prices were out of line with the competition and traffic dropped.
Also, don't forget returns. My customer's (normally) pay shipping both ways. Some items are defective but most of them just order the wrong part. With free shipping, I have to refund the price of the item and immediately absorb a loss on what would have been the customer's initial shipping fees. Also, what is your limit. I have items that I charge 100 - $400 freight. I'm happy those items don't sell well when free shipping is active. If you are going to offer free shipping, definitely make sure you're charging restocking fees to make returns less painful.
[edited by: lorax at 1:36 pm (utc) on Oct. 27, 2008]
On the other hand, if I had a lower return rate, I would re-consider free shipping. It's all the same. There is no free shipping. Higher Prices/free shipping vs. Lower Prices/Calculated shipping.
Most of my items are under 1 or 2 lb., I just threw that up because it came right after I posted.
It's actually getting frustrating for me because somewhere there is a post that I am offering free shipping. Customers are actually reporting this, but they don't disclose where. This customer, I specifically asked how she found me. She probably won't tell me unless I ship that fridge for free :(
...if I had a lower return rate,...
As for shipping, I have my own thoughts, which I consider logical by the way, but then I observe how my non-techie wife shops on the net, and what she considers when making a purchase (and logic goes by the waste side :) )
- she absolutely hates that on some sites she will have to go through most of checkout process just to find total price (i.e mostly shipping)
- After a while of comparison shopping through different sites, she will try to estimate shipping charges because "she had enough" of going through checkout process. At this point a site with competative price and 'free shipping' usually wins...
- Amazon, and some other sites, have a shipping deal that if you spend over certain amount you get 'free' shipping - most of the time she will actually add cheap item in order to get over the 'shipping threshold'
- Zappos have a free shipping and return model, but their prices are a bit higher - for a long time she avoided them because of price. As a present I got her pair of sandals from them - of course they did not fit right. She loved the 'free back ship' policy - rinse and repeat two more times and she finally got ones that she likes. And by the way she looovvveeed their phone customer service. Now she orders from them and there are barley any 'back return trips'. Long winded but moral of the story - Zappos 'ate' few shipping charges but, with help of customer service, got repeat customer - it's not always best to be short sited and look at individual sale, it takes a little investment to get repeat customer (and usually those are best for your business)
- as for me, I usually consider how much it will take me to find good deal, and if time spent looking to save few bucks is worth my time...
[edited by: Tastatura at 9:14 am (utc) on Oct. 27, 2008]
Give your customers the same courtesy. I kid you not, they will love you for giving ALL COSTS (including shipping) UP FRONT.
The VAST majority of folks out there are NOT FOOLED by "free shipping". They will always question what part of the "deal" they got was hidden shipping costs. If you don't play that game and give a good price and reasonable shipping fee, they'll be repeat customers.
I would try to keep costs lower and charge a reasonable shipping fee.
But unless you are shipping single unit, high value orders (antiques, fridges, collectables), you are best itemising the shipping.
Above all, let the buyer know the shipping cost BEFORE they need to enter ANY personal info. As noted by others above, there is nothing more annoying than discoving high shipping costs late into the transaction.
Research shows that "FREE!" is a more powerful motivator than most terms, and I would always use it in preference to the much weaker "included."
I agree with the members who suggest using free shipping for special promotions. In particular, it's great to motivate people to quicker action, like, "Place your holiday order before November 20, and get free shipping on your entire order!" Targeting specific products is good, too, if your software can handle a mix of free and paid shipping and you want to push particular items.
The only other caution is to not do the "free shipping" promo too often. If you do, you'll train your customers to not place orders until the next promo.
My main point though was that its better to seperate shipping if you ship multiple items- otherwise you normally end up being more expensive for larger orders, pushing potential customers to competitors.
If you do a short-term promo with free shipping, eat the cost and put it on your marketing budget. Like others here, we've found well-trailed, short term offers a powerful sales tool. Or a deal-maker on larger orders.
(1) Number of Orders increase - 40-60%
(2) Average order size decreases
(3) I make less money on that day, and swear I'll never try it again.
The 'make less money' part is worse every time - as shipping costs continue to increase.
This is one of the places I will gladly let my competitors shoot themselves in the head.
The 'make less money' part is worse every time - as shipping costs continue to increase.
You can always minimize the impact of the "make less money" part by using the most cost effective shipping methods. You also have to sit down and really look at your profit margins before jumping into a free shipping model. I've only done it with U.S. based websites so our free shipping only applies to the 48 Continental United States. Alaska and Hawaii do not qualify for the offer.
Shipping from California via UPS Regular Ground, we take the furthest zone and use that as our loss on the free shipping offer. In most instances, you make less money but you also increase in other areas. You may be securing a returning visitor. They've told others where they "got it at" and that you offered "real" free shipping and great customer service. < That's an important part of the overall equation. If you can combine "reasonable" prices along with shipping and discount offers and last but not least, great customer service, I think you'll do well from an ecommerce perspective. It seems to work for the few clients that I have who delve into this area. :)
Oh, and do stay on top of all automated communications in regards to customer order status, tracking, etc. Those emails with confirming shipping information and a copy of the invoice are always appreciated, particularly when they have a clickable tracking link. Its going to save you a whole bunch of time in regular email communications, I promise.
Keep in mind that you can also upsell in your confirmations. :)
Our free shipping promos never last longer than ten days to two weeks, and so far anyway, they've always been UPS type items, as opposed to the stuff that goes out on pallets.
