Wednesday, June 4, 2014

The Importance of Offering Free Shipping

Just How Important Is Retail is undergoing a rapid metamorphosis from online shopping as a nice complement to bricks and mortar shopping to online retailing as the main, or even sole, method of shopping for many consumers. The 2014 Walker Sands Communications “Reinventing Retail” study uncovered some surprising facts about consumer attitudes towards ecommerce.
Many small business owners continue to wage pricing wars to drive online sales when in fact the key to increasing the average order size may in fact be shipping. Retail shipping, it seems, may be the key that unlocks profits for retailers. (learn who offers the lowest shipping rates here)

The chart below, taken from the previously cited Walker Sands study, lists the responses when consumers were asked, “Would you be more likely to purchase online if you were offered….”
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Note what customers cite as an incentive to buy online – free shipping. In fact, both free shipping and 1-day shiping ranked high on the list of reasons customers would buy online.


Take-Aways for Small Businesses

Small business owners engaged in ecommerce should take note of the forecasted trends in shipping services. Consumers have spoken, and the result is a manageable list of changes small business owners can make to be more competitive in the ecommerce sector.
  • Compete on shipping services, not on price. Many small businesses make the mistake of trying to compete with the ‘big boys’ like Amazon on price. You can’t win a pricing war with a huge, global retailer that wields enormous negotiating power with wholesalers. Instead, organize your competitive strategy around shipping.
  • Free shipping is such an appealing offer for the majority of consumers in the survey that it makes sense to offer it as much as possible. Just remember to wrap shipping costs into the cost of goods to offset any potential losses.
  • Experiment and test offers such as free shipping versus one or two-day delivery to see which service your customers prefer. The U.S. Postal Service offers the least expensive one and two-day shipping options compared to other major carriers, and you can print postage online and schedule pickup from your store or office location.
  • Make online returns simple for your customers. Test free shipping on returned items, no-hassle returns, or other offers and wording to see which performs best for your business.
  • Since shipping is an important part of ecommerce, don’t forget to include box stuffers, or marketing materials, in your outbound cartons. It’s a truism in direct marketing that customers are more likely to purchase again soon after a first sale if they’re satisfied with their items. Enclose a ‘thank you offer’ or discount coupon, a new catalog, or another incentive in your outbound packages to encourage the next sale.
Shipping continues to evolve as an area of competitive difference for ecommerce businesses. Small business owners can capitalize on these changes in shipping trends to compete with the biggest businesses on a more even footing.

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