Online shopping used to be a matter of convenience. However, as the world has evolved, more people than ever have abandoned in-person shopping in favor of shopping from home. The cost of goods in many sectors has gone down thanks to the lower overhead that comes with online merchandising. On the other hand, a new hurdle has been created; shipping cost. There is no way to get around the need to ship things from your warehouse to your customers. So, let’s delve into shipping, the cost, and why free shipping is essential for company growth.
Why is Free Shipping So Important?
How Shipping Cost Affects Customer Purchase Decisions
Customers love to get a great deal by shopping online but one of the biggest factors in a purchase decision is shipping. Between the shipping times and the cost of shipping, customers will choose whether or not to follow through with their purchase. Most customers won’t mind skipping next-day shipping and choosing a slower shipping time if the shipping costs are low or free. However, very few people will pay higher shipping costs even if next-day delivery is an option. There is no way to avoid shipping, and in the end, the shipping cost will have to be paid. Still, customers automatically think they are getting a better deal by retailers offering free shipping, even if an item costs a little bit more as a result.
Is Free Shipping A Perk or A Necessity?
When online shopping was in its infancy, free shipping was used as a way to draw customers in. Free shipping was also a reason for people to shop online instead of in stores. Now, with the rapid increase of online shopping and the explosion of online-only brands, free shipping is more common than ever. Also, with most brands being available across several sites, there is even less reason to stick with one company over the other when the final purchase decision comes down to the cost of shipping. Keeping all of these factors in mind, we can see why businesses must offer free or almost free shipping in order to boost customer retention. In fact, free shipping also helps drive conversions and boost customer spending as a whole.
Customer Shipping Expectations
Today, more websites than ever offer this popular free perk. As a result, most consumers have come to expect it as part of their online shopping experience. For some brands, free shipping is available regardless of how many items are purchased. However, for others, free shipping is tied to minimum spend amounts. In fact, most customers will look at the shipping charges or offers before they start browsing for products. Of course, there are still plenty of people who will shop on their favorite sites regardless. For the vast majority, the savings in shipping cost alone is often enough to seal the deal.
The Mechanics of Shipping Cost + Product Cost
Everyone likes to get a great deal. Better yet, who doesn’t like to get something for free? Most consumers have a budget in mind when they order online. As a result, the final price they pay will also take shipping fees into account. For example, if someone is interested in buying a vase and they have set aside $20 for the purchase, adding $12 in the shipping cost to an $18 vase will push them over their allotted budget by a lot. However, if they can get the same item for $22 with free shipping, they are more likely to go a little over their budget to get the item they want. As you can see from just this example, the importance of free shipping for business growth goes beyond bringing customers to your site. Free shipping also helps determine purchase decisions.
Additional Reading: NRF study says more online shoppers want free shipping (National Retail Federation)
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