The first rule of economics is there’s no such thing as a free lunch. Everything has a cost and it must come from somewhere.
So, if you’re wondering should you offer free shipping, the real question to answer is how can you afford to give your customer the appearance of free shipping? When you’re considering how to start a furniture store, or any other business with high shipping costs, this can be a very critical question.
Here’s what you need to consider.
Why to Do It
With a behemoth like Amazon out there complicating things for everybody, you’re going to have to come up with some sort of a “free shipping” scheme just to look competitive.
There are several advantages to this for your customers (aside from the obvious one). If they don’t have be concerned about calculating shipping costs, they’ll know what they’re spending when they get to checkout and will be less likely to be put off by the bottom line price. This, in turn, will help minimize your shopping cart abandonment rate.
Offering free shipping can also make you come up more frequently in searches, as shoppers now have the option of filtering search results to include free shipping offers.
Why Not to Do It
This one is pretty simple—cost.
If you’re already dealing with a pretty thin margin and you’re trying recoup shipping costs from your regular pricing, things are going to be pretty lean.
Similarly, if you try to bury the cost in the price of the item, you could push yourself out of competition—unless you have a very strong unique selling position.
How to Do It
The strategy most people apply here is to make free shipping conditional upon meeting a certain item count—or total purchase amount. This can make it easier to bury the cost in the sale. It’s been proven to make customers buy more too.
Another approach is to be selective about which products to ship for free, limiting the offer to items with very low shipping costs—or those with enough margin in them to make covering shipping OK.
Free shipping can also be an effective way to attract new customers. If, for example, you’re considering how to start a furniture store using an ecommerce platform like those provided by Shopify, offering free shipping for a limited time can be a strong promotional incentive. It can incite a sense of urgency in shoppers who will fear missing out on the deal.
A lot of sellers offer free shipping on a glacial delivery method, while charging a premium for their expeditious means. This can make paying for shipping an attractive option for impatient customers. Meanwhile, those willing to wait will get a better deal and you’ll pay less to give it to them. Slower methods tend to be more affordable, so you can usually offer this with minimal risk. You might even manage to fold the lower cost into the price of the product.
Making Charging More Palatable
Rather than free shipping, consider offering flat rate shipping for combined orders. In addition to appreciating the transparency, customers like the fact they can combine orders to get one simple rate. Many customers see this as a good deal.
You can also charge the actual shipping cost, which gives customers a sense of transparency too. Include a shipping calculator if you choose this method so they can determine the amount before getting to checkout.
Ultimately, deciding should you offer free shipping is really more about determining how to do it, rather than whether you should.
These ideas will get you started in that direction.
Featured Image Source: Flickr