Sometimes an online purchase all comes down to the shipping cost — which is why major retailers like Amazon and Walmart are trying to beat out the competition with fast, free shipping. But is free shipping right for small businesses? What should businesses consider before offering free shipping? Make the right choice by considering the pros and cons of free shipping.
Free Shipping Pros
Free shipping can encourage a purchase.
Savvy customers compare shipping costs when comparing prices at online stores. If the product costs less at your store, but costs more with shipping, customers will buy from your competitor instead. Customers will consider the total cost, including shipping, when determining if a product fits in their budget.
Free shipping can encourage a larger purchase.
Free shipping typically has a minimum order. If you set the free shipping minimum at $50, and the customer has $40 worth of items in their cart, they will likely buy more products rather than pay for shipping. Setting a minimum encourages customers to spend more on products in order to get that free shipping.
Free shipping can make your business more competitive.
Finally, if a competitor offers free shipping and you do not, who do you think customers are going to buy from? Free shipping helps businesses stay competitive, when other businesses are offering free shipping. And when other businesses are not offering free shipping, it makes your company look even more lucrative.
Free Shipping Cons
Nothing is ever free.
Free shipping really just means the shipping cost is built into the price of the product — you wouldn’t stay in business if you covered the cost of shipping but your prices aren’t high enough to cover that cost. When you have to build in the cost of shipping, that can inflate the prices of your products.
Free shipping is no longer special when you offer it 24/7.
While free shipping all the time has its perks, offering free shipping like a sale — i.e. for a limited time — can encourage more customers to place their order within that window. Free shipping isn’t going to encourage extra orders when you have free shipping all the time. A happy middle ground would be to lower the minimum order amount during a sale, if you want to offer free shipping all year round.
Free shipping may encourage fewer in-store purchases.
If your business has a brick and mortar location as well as an online store, free shipping may encourage even local customers to order online instead. When customers order online, you don’t gain that face-to-face interaction and customers don’t see your in-store promotions or walk by that item that catches their eye.
Free shipping has several perks for small business, such as encouraging a purchase, upselling, and standing out from the competition. But free shipping can also get expensive, and mean fewer in-store purchases, while offering free shipping 24/7 means free shipping no longer feels like a deal to the customer.