The Benefits And Drawbacks Of Free Shipping

By July 17, 2023 No Comments

Should I be giving away shipping for free?
We have all given it some thought. The benefits and drawbacks of free shipping are undoubtedly a tactic worth considering in a world where consumers are becoming more accustomed to receiving free shipping and returns.

Customers AGREE!
Free shipping’s main benefit is the subconscious effect it has on your customers.

Customers favor free delivery over all other forms of discount by 93%.

It is obvious that people prefer businesses that offer free shipping. Although it’s a recent phenomenon, it has quickly acquired popularity, and as a result, people have come to anticipate free shipping when they order online.

In fact, 75% of customers now want free shipping on all orders, regardless of their value. It increased from 68% in 2017.

Customers are far more inclined to shop with, and return to, businesses that offer free delivery as a result of this expectation.

Assists you in battling High Street stores
When creating a delivery strategy, you need to take into account more than simply your online rivals.

The High Street has its drawbacks, but one thing it can provide that no eCommerce can provide is an instantaneous “try before you buy” option, i.e., zero-commitment purchases and zero-consequence returns.

Because clients have actually seen and used the goods, enhancing their trust and desire to purchase them, friction is considerably reduced. Additionally, they are not burdened with any additional fees that could cause them to abandon their online shopping carts.

Offering free delivery is the only thing that will truly level the playing field. Of course, there are some factors that inherently favor online shopping over in-store shopping, such as more choice and availability.

Free Delivery might make the basket bigger.
One of the most frequently advised eCommerce marketing tactics is to offer free shipping, especially with certain purchase value requirements.

And that makes sense. Free shipping increases basket size, as evidenced by research. In order to receive free delivery, 58% of buyers increased the number of products in their cart, according to UPS, and BigCommerce reports that free shipping can boost average purchase values by 30%.

Why? The logic behind this is straightforward: Why spend £5 on shipping when you could spend it on something tangible? Free shipping with a threshold is a highly powerful marketing tactic, regardless of whether it’s a minor add-on item or something they had previously talked themselves out of purchasing.

Obtain a competitive edge
ASOS is a business that has a reputation for providing incredible bargains on free shipping.
In order to keep up and remain competitive, other online fashion stores had to imitate their free shipping and Premier Delivery policy, despite the fact that it was a risky and unprecedented move.
The significance of whether or not you offer free delivery is quite likely to depend on the industry in which you work.
The average buyer examines three websites before making a purchase, so if your competitors are providing free shipping and you aren’t, you’ll be left behind. Likewise, if they aren’t, you may shake up the industry, acquire a competitive edge, and develop a strong customer base by providing free delivery.

Due to their ability to stand out in the SERPs thanks to this competitive advantage, businesses are encouraged to add delivery information in their Meta Descriptions.

Six Cons of Free Shipping
Although we have thought about the advantages, nothing in life comes without cost. Now is the moment to consider how providing free shipping can harm your company.

1. Free delivery might have an impact on your revenue
Of course, the additional cost is the free shipping’s most evident disadvantage. You’ll incur significant shipping charges if you don’t carefully consider a shipping cost in each and every one of your product prices, which is difficult to do when you don’t know the size of each individual order.

Free delivery shouldn’t be a stand-alone business. If you want it to work, you’ll either need a lot of money to pay for the start-up expenses, more orders at higher prices, or both of the above.

Increases the cost of goods
You might experience some severe repercussions if you take the risk and choose to increase prices across the board in order to cover the costs of free shipping.

It will be difficult for a smaller company to compete with a bigger one that offers free shipping. Why? Economies of scale are a big advantage for larger businesses.

Because of this, businesses will likely see cheaper shipping costs overall and will be able to spread those expenses across a wider range of services and goods.

As a result, there is now a bigger difference between small and large businesses since the former must decide whether to take a chance on a loss and compete on price, or whether to demand a higher price and miss out on sales.

Changes how customers behave
You already know how enticing a free shipping offer is, so we won’t say it again. Additionally, if customers consider their purchases less, it will also result in more impulsive shopping, which may enhance your sales volume.

Customers won’t hesitate to order one thing this week and another when they get paid if delivery fees are eliminated. In contrast, this same customer is more likely to make large purchases in order to save money when faced with delivery.

How does this affect you?
Order volume increases with free shipping. While shipping costs decrease the number of orders, They’re likely to lead to fewer returns and a larger profit margin because customers are more likely to keep their purchases and pay for their own shipping.

Boosts returns
Offering free shipping has a number of drawbacks, including the potential to convert clients who are not yet ready to make a purchase. That is to say, unwilling clients are pressured into making purchases of goods they will likely not keep just because there is “no risk,” as delivery and returns are free.

As the company is liable for both the shipment and return charges of these undesired orders, this can, of course, be quite expensive for them.

This must be taken into account when determining whether free delivery is appropriate for your company.

Free delivery can diminish your High Street success.
If you own an online and offline business, you should think about how free delivery can impact the success of your store.

After all, consumers in the present era desire convenience. Customers may choose to shop online instead of visiting your physical store if you make your online offering too appealing with more options, larger sizes, less travel, and no additional charges.

Wonderful if this fits up with your objectives. However, if you want to maintain a successful store presence, you might need to give it a USP, such as letting clients try items for free before they decide to buy.

Detrimental to the environment
Are you concerned about the environment? Being environmentally conscious can be challenging for an internet business, especially if you have to ship out each and every order.

As we’ve shown, providing free delivery leads to a rise in both orders and likely order frequency. More orders require more resources because they all need to be packaged and sent safely to your consumers.

Whether this adheres to your personal principles or those of your clients is irrelevant. What matters is how it will likely affect your brand’s reputation. Frivolous shipping is probably not encouraged if your company promotes green products or something like that.

Do You Want to Provide Free Delivery?
After weighing the benefits and drawbacks of providing free delivery to clients, the crucial decision-making point is whether to do so.

The delivery plan that is best for you will be largely influenced by the size of your business, competition activity, and the kind of goods you offer and this is where DigAptics can help you!


Author Digpatics

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