E-commerce: Does Free Shipping Increase Sales?

Offering free shipping isn’t always a good idea; you should know its advantages and disadvantages before making this decision. It may not always help you to drive sales. In fact, free shipping is a marketing expense! To provide free shipping, always evaluate your product like its size, weight and bulkiness. Heavier products would carry larger shipping charge; so light weight products are advisable in offering free shipping. You should always consider the financial cost before you ship free. Make sure it is a good fit for your business model. Below are the Pros and Cons of free shipping that you may want to consider.

Pros in free shipping:

  • Allowing you to build extra visibility and is a marketing edge over competitors.
  • Displaying the total price (with no hidden-charges), will automatically encourage the customers to pay upfront. Hidden tactics like increasing the product price to cover the free shipping cost may tend to spread negative publicity about your online store.
  • Offering free shipping will results to less shopping cart abandoned rates. Online shoppers tend to abandon their cart because of knowing the shipping fee right after adding their product to the cart. This will increase the total product price that will result to customer’s annoyance and may turn to stop shopping from your site.
  • Increased order volume. Because the shipping is free, shoppers didn’t worry about the shipment of their product whether it is heavy in weight and will tend to order more.
  • By offering this service, will keep your customers to always visit your store to make a purchase and they can help you to spread the good offer of yours and build referrals. 
  • By having these factors, conversion rates will increase.
  • Increase in customer retention because of the customer’s satisfaction and referrals.

Cons in free shipping:

  • By offering free shipping, you are forced to increase the product price to cover the shipping charge. However, high priced products can affect the customer’s purchase decisions.
  • Customers assume that the shipping costs have been built into the cost of the product so not all of them will see it as a saving.
  • Offering free shipping will increase the maintenance cost. Be sure to start and stop your promotion correctly to avoid the negative effect to your business.
  • Significant decrease in operating margins that will reduce marketing budgets & overall profits.
  • Difficult to reverse free shipping once implemented. Because customers always expect your business to have this offer and will disappoint if you then stop it.
  • There’s always someone that has to pay the charges, and of course, it is the retailer’s expense.
  • If you did not make your free shipping offer to your dear customers, and found out later that they missed it, you will see the changes in their shopping behavior through your site.
  • The worst thing to probably happen once you offer free shipping is your customer will shop from your site only when you offer this promotion, or else they don’t.

These are the pros and cons in free shipping and might help you to think of including free shipping as one of your marketing tool. Keep in mind that “Free shipping influences consumer behavior in buying goods through online shops.”