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Selling products as a wholesaler, retailer, or even a dropshipper often comes with some stiff competition. So in order to properly compete, you take a look around at the opposition and see them offering something you’re not: free shipping. So, eventually you might ask yourself — should I offer free shipping to my customers in order to keep pace?
The answer to the question “should I offer free shipping to my customers?” is not a hard one: if you can, you should. Still, you must examine if you can while hitting your profit goals. Also, knowing the different kinds of free shipping promotions that are available and finding the best fit for what you’re trying to accomplish is very important.
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First, it’s important to define what free shipping actually is in relation to why a retailer or wholesaler would be compelled to offer it. Strictly speaking, it is considered a technique or tactic in the marketing of your business to attract customers as a strategy to increase sales. Thinking about it from the customer’s perspective, the idea of part of a purchase being free even if it’s just the shipping can be enticing to consumers.
If you don’t think free shipping is a draw, you haven’t been paying attention. Shipping costs for a consumer when free shipping isn’t available can be substantial depending on the item. It can add a substantial amount of money to the final cost to the customer and turn them off from purchasing goods.
The entire reason for this article is to answer the question about offering free shipment to your customers. To be a viable option in a sea of competitors, offering free shipping can seem like a standard thing to make available. And if you’re able to charge a high enough price for your goods to maintain a healthy profit margin while still being able to offer free shipping, then there’s no reason not to make it an available option.
But that’s the key caveat: you really have to be in a position where offering “free” shipping doesn’t cost you more than you can afford. Because while the shipping is “free” to the customer, it still is factored into the overall price you will be able to afford to sell a given product.
While the offering of free shipping might sound like a one-size-fits-all proposition, it is usually anything but — especially in online shopping. In this section, we’ll cover the exact reasons providing free shipping can benefit your ecommerce business.
The first benefit to offering free shipping is to either differentiate yourself from your competitors or to keep up with them. On its face, that sounds like two dissimilar things but both have the same goal: driving sales your way. If you have the ability to offer something other businesses don’t — in this case, free shipping — then that can be a big advantage for you.
Similarly, if your competitors do make free shipping available and you don’t, that can be a major disadvantage when people are shopping. Even if you offered cheaper overall prices, customers might be lured to another business with shipping included in the cost.
Also, free shipping can help engender consumer loyalty to you. A case in point is Amazon. The online retail giant doesn’t always have the lowest prices but has customers inside its ecosystem and conditioned to expect that Prime free shipping. Also in the same sphere is that customers tend to love free shipping, so you’re giving them something they absolutely want and in some cases have come to expect.
Another way free shipping can benefit your business is in not just battling fellow ecommerce entities but traditional brick-and-mortar locations. There are no shipping charges for a customer to walk into a store and buy a product, so in order to further entice customers to buy from you online, nixing the shipping costs might be necessary.
The last two reasons to offer free shipping have to do with what happens once customers actually add items to their cart online. First off, many customers will go to check out online with an item they want at what they feel is a very reasonable price. But once they go to pay for it and the price of shipping is included, they balk and abandon the cart.
The other trend that is noticed is by offering free shipping, customers are emboldened to then buy more items. Instead of spending $10 on shipping, for instance, consumers will use the free shipping to get extra products with their money. That’s a win for you since you are likely able to ship all items in the same order and sell more in the process.
If you're sold on the idea of offering free shipping to your customers, check out our blog how to offer free shipping to your customers. In the blog, we provide helpful tips for finding the best approach to doing this for your unique situation.
While the benefits of free shipping are well documented above, there are still scenarios in which offering this perk to your consumers can have a negative impact on your business — namely if you stand to lose money.
First and foremost, it might not work out financially for you. You can’t offer free shipping if it costs you too much and negates any chance at profit. The only way you could offer free shipping on a slim or non-existent profit margin is by budgeting a great amount of resources upfront until your business is up and running.
Another couple of things to consider is how free shipping can affect customers in a way that can financially impact you. As an example, when shipping is free, consumers might be less likely to always order many items that can be shipped together and instead order single items that end up costing you more in the long run. Also, free shipping and free returns usually go hand in hand, which can also be expensive to an online business. That’s basically free shipping twice AND a loss of a sale if impulsive customers order and return an order.
Also, if your business cares about the environment, free shipping can actually have an adverse effect on it. It stands to reason that free shipping puts more non-biodegradable packaging products like plastic or styrofoam into circulation, which is compounded by the fact that more shipments also burn more fossil fuels during delivery.
So you shouldn’t be completely turned off of offering free shipping based on what could potentially go wrong. But it’s important to do a full analysis of your own operations and make sure you can afford to make it available.
Now that you’ve seen the different ways that offering free shipping to your customers could potentially give your e-commerce business a boost, it’s an opportune time to find out how allowing R+L Global Logistics to be your 3PL and fulfillment provider can really elevate your operations.
With strategic warehouses set up all over the U.S., R+L Global Logistics can store your products until you’re ready to sell them. Taking it a step further, if you want to utilize our warehouse space, we can even handle order fulfillment and then shipping for you. Utilizing pick and pack services is a popular way to have your goods packaged up as the orders come in and no one is better at handling that for you than us.
So once you’ve answered the question — should I offer free shipping to my customers? — give R+L Global Logistics a call at 866.989.3082 to request a free fulfillment warehouse quote.
