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Can Free Shipping Help Drive Your Online Sales?

As online retail begins to become a homogenous sales culture, one of the greatest problems every retailer has to face is the question of free shipping.

Some experts will tell you that you can’t do business without it, others disagree. There’s a lot of speculation floating around about the power of free shipping, but hard evidence has been difficult to come by.

That’s why Innotrac combed and compiled 2 1/2 years of data in order to come up with some solid answers about customer behavior and retailer responses related to free shipping. With their data, plus insights from UPS’s 2015 report “Pulse of the Online Shopper,” the picture surrounding the much debated free shipping issue is becoming clearer.

What Free Shipping Means for Retailers

The answer seems to be clear: if you don’t have free shipping, you’re falling behind your competition. Innotrac discovered that as many as 67 percent of online retailers offer free shipping in some form and have since 2013. Whether this shipping is offered once the customer has spent a set amount of money, is given as a promotion or is a sitewide policy on all orders, customers say that it matters a lot to them to have it available.

In fact, UPS found that 77 percent of shoppers surveyed said that a free shipping option was the most important factor when checking out. It ranked higher than having a variety of payment options or even being offered a guaranteed delivery date. Based on these data sets, it would seem that order fulfillment without free shipping risks alienating your customers entirely, since so many other retailers are willing to offer the option.

What About Return Shipping?

Although free shipping to the customer has become the norm for online retailers, the issue of reverse logistics is a little less standard. According to Innotrac, only about 30 percent of retailers offered return shipping in 2014. However, UPS found that 67 percent of customers always reviewed online retailer return policies before buying and free return shipping was their number one want. In fact, 66 percent of these customers surveyed said it was the most important element involved in a positive return experience. Furthermore, paying for return shipping was a major issue for 57 percent of those online shoppers.

It would see that as free shipping is becoming an automatic expectation of your customers, free return shipping is an opportunity to further improve the customer experience and drive more sales. Customers hate having to pay for return shipping and they expect you to pay for initially shipping items to their door — it’s a situation that can leave a retailer scratching their head looking for ways to slim down their shipping budget without providing poor customer service.

Using free shipping thresholds is a good way to take the sting out of shipping costs, since as many as 52 percent of your customers (according to UPS) have added extra items to their shopping carts in order to qualify for free shipping. If you can encourage customers to purchase enough items to help cover both the cover of initial shipping and the cost of return shipping, everybody wins.

Improving the customer experience should be a cornerstone of your online retail strategy, no matter what you have for sale. If you give your customers what they want, like free shipping both ways, they’re more likely to tell their friends and help you grow your customer base.

December 17, 2015
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