The rise of online stores and an increasingly budget-conscious consumer have resulted in a much more competitive market. Consumers are no longer willing to pay a lot of money for a product. Now they are shopping to find the best deals. Companies have had to make a number of marketing changes to attract customers. One of those changes is implementing a free shipping policy.
A recent survey by PayPal and comScore revealed that “43% of people surveyed did not pay for items in their shopping carts because shipping charges were too high.” Additionally, according to a Harris Interactive (2008) survey, “60% of respondents say free shipping is a reason they are more likely to shop online.” Offering free shipping can dramatically increase store sales. In an attempt to lower their shipping costs, many retailers will stock their products in multiple warehouses in various locations around the country and ship their orders directly to customers. Other companies are negotiating shipping prices with companies in an effort to get better rates.
There are a number of ways that companies use free delivery as an effective sales and marketing tool. A business may offer free shipping for orders where the total purchase price exceeds a specified amount. Another fee shipping option that companies will employ is to offer the customer a shipping refund in the form of money, a discount on their next order, or a coupon or gift certificate. They may also offer free shipping on specific items. Some retailers will even offer free shipping on all items. The goal is to increase sales, which will offset the loss in delivery costs. Other companies will offer free delivery to their members or as part of a rewards program. Sending electronic coupons to a customer’s email that provide shipping deals on a customer’s next order is another effective method of increasing sales. In addition, companies can offer free delivery throughout the country, even directly to one’s doorstep.
Providing free delivery is an effective way to get repeat customers. Most online retailers and a growing number of brick-and-mortar retailers that offer free shipping offer it as free ground shipping. However, now there seems to be a new trend of offering a better free delivery service. Some companies offer free 2-day shipping and free next-day shipping.
The benefits of offering free shipping include a reduction in the number of abandoned shopping carts, help in marketing a new product, improve customer loyalty, encourage shoppers to make a purchase, and help sell excess products.
Internet shopping is one of the fastest growing retail sectors. Online shopping is one area of retail that hasn’t been affected by a slow economy and rising gas prices. Consumers are drawn to shipping deals because they feel they are getting a good deal compared to driving to a local store. Studies have shown that customers are more likely to make a purchase if free shipping is offered. More consumers are not just demanding free shipping with their orders, they are expecting it. Offering free shipping in a variety of forms is an effective sales and marketing technique that most businesses are now using. To compete for your business, retailers that have never offered free shipping will have to start offering it. It seems that the free shipping trend is here to stay.