Whether it’s the holiday season or any other time of year, you may want to consider offering free shipping as a perk to your customers. Here are some pros and cons to help you decide if — and when — free shipping is right for your business.
Free shipping vs. fee shipping
Like the proverbial free lunch, there’s no such thing as free shipping. Shipping involves many costs — from picking to packing to physical transportation. Ultimately, somebody must foot the bill for getting products from point A to point B.
Nonetheless, the prospect of free shipping remains a powerful draw. Shoppers go out of their way to secure free shipping, even if it means spending a little extra on their shopping cart.
According to the UPS Pulse of the Online Shopper™ survey, four out of every five shoppers say that shipping fees are an important factor during their product search.
Additionally, more than 50% of shoppers surveyed had abandoned a cart because the cost of shipping made the total purchase more expensive than expected. Whichever way you cut it, that’s a lot of lost sales.
How to offer free shipping
As a business owner, offering free shipping can be a compelling prospect, particularly for eCommerce transactions. However, free shipping carries a business cost that you need to plan for.
The most obvious way to offer free shipping without breaking the bank is to price it into your product. How you present pricing to shoppers can have an impact on how they feel about their purchase.
Take the example of a product that costs $15 to manufacture, retails online for $25, and carries an average shipping cost of $5 per item. If you start by giving the total price of the product as $30 inclusive of shipping, the cost is clear in the shopper’s mind.
However, if you list the same product as $25, only to add $5 for shipping at the point of purchase, it’s easy to see why a shopper might reconsider their purchase, even though the total purchase price is $30 in both scenarios.
That doesn’t mean you should simply price shipping into your product automatically. There are different ways you can use free shipping to nudge your customer into doing other things along the purchase pathway. For example, consider these free shipping offerings:
- As a limited-time promotion. The urgency factor (“Get it now before it’s gone!”) can encourage orders that may otherwise linger in carts for days or weeks.
- If your customer reaches a minimum order value. This is a way of getting shoppers to add to their shopping cart.
- As part of tiered shipping options. If a customer requires express delivery, give them the option to pay for it. At the same time, offer them free shipping if they are happy to opt for a longer delivery window.
- As a perk of your customer loyalty program.
- As a one-off reward for subscribing to your company newsletter or other marketing communications.
Whatever you do, don’t simply give free shipping away without considering how it fits within your overall strategy.
The case for fee shipping
Don’t dismiss the option of fee shipping, where the customer pays separately for the cost of transportation. Here are some situations in which fee shipping might make sense:
- For higher-value goods where the cost of shipping is proportionally lower. In these cases, paying for the shipping may feel like less of an issue for the customer. (That said, if someone is buying a luxury item with a high markup already built in, do you really want to risk losing that customer over shipping?)
- For heavy or large goods where the cost of shipping is such that a shopper would reasonably expect to incur some level of shipping cost.
- For international shipping, where the landed cost (the total cost of getting your product to its final destination) is subject to a range of additional factors.
Finally, remember that free vs. fee shipping is not an either-or. It’s entirely normal to offer your customers a mix of free and fee shipping options. However you approach it, price shipping into your total cost of doing business.
UPS is here to help you execute your strategy
No matter whether you’re offering free or fee shipping, how well you ship reflects directly on your brand, which ultimately affects your bottom line. Let UPS help with all your shipping needs this holiday season and beyond.
Through Square Online, you can buy and print UPS shipping labels, plus you have access to discounted UPS rates up to 55% off.
If you don’t have a UPS account, it’s easy to set one up. Simply go to your shipping settings in your online store and click “Create account” under the UPS logo.
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. UPS was awarded America’s Best Customer Service company for Shipping and Delivery services by Newsweek magazine; Forbes Most Valuable Brand in Transportation; and top rankings on the JUST 100 list for social responsibility, the Dow Jones Sustainability World Index, and the Harris Poll Reputation Quotient, among other prestigious rankings and awards. The company can be found on the web at ups.com or pressroom.ups.com.