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To go totally "free", I could see my costs rise by over 1K a month.
Having said this, my competitors websites leave a lot to be desired in terms of presentation and ease of use, additionally, I'm the only shop stocking the entire range while the others miss out the slower selling items. So I have the edge in these areas, but I really need to stay at the top.
Your thoughts and ideas are greatly appreciated!
We stopped doing free shipping altogether a few months ago. I was a bit concerned, and might not have done it if it was my call. A few regular customers have asked about it, and accepted our position. The new customers don't seem to mind a bit. Our previous offer was free shipping over $35.00. I still wince when I see some of these shipping costs, and wonder when the shoe is going to drop; but so far I can honestly say it hasn't hurt our business.
Having heard people recently discuss shipping charges ($40 from <furniture store> no matter how much you order? that's great!), predictability might be just as important a factor as cost.
That said, FREE shipping has worked extremely well for some e-tailers, and it might be worth running a trial. I would e-mail all my customers telling them about it, but also keep track of the difference in conversion rates for new customers.
My point is, is this a competitive move because his clock is being cleaned or just a trial.
If his clock is being cleaned the move to free shipping may not address what his site lacks (easy of use, information on the products, post sale support, .....) Therefore, no response may be needed.
If the competitors move affects Phils sales by a large enough percentage then a response may be warrented. Until you know that you are giving something away for free.
Other issues like site and product loyality can also play a role.
Just my humble opnion.
Thanks for all your help guys, it's been difficult to decide what to do!
E.g. I expect free delivery on cheaper items like CDs and DVDs, but I would expect to pay a courier charge for delivery of a PC.
I would think most people would have the total opposite opinion on this. If its a small item I would assume I would have to pay shipping as there must not be much room for profit. If I drop $3000 on a computer, well theres more room for profit so I would think free shipping should apply.
But really free shipping is a no brainer and easy conversion booster. Its been proven many times.
People do love getting something for free, but a lot of it has to do with customers scared that they will get all the way through the checkout - only to find out that the must pay some huge amount for S&H.
Of course don't give away expensive fast shipping for free - make your free shipping option your cheapest and slowest shipping. If they want to upgrade, give them the option.
This may not apply to all markets, but I offer free shipping on all items over $99 - it only costs 5 bucks.
I even notice that people will add in a few small items just to get their total up to $99 so they can get the free shipping. So no doubt it will boost conversions - and if your lucky it might just boost the size of the orders also.