The surge in online stores and an increasingly more budget minded consumer have resulted in a much more competitive market. Consumers are no longer willing to pay top dollar for a product. They are now shopping around to find the best deals. Businesses have had to make a number of marketing changes in order to attract customers. One such change is implementing a free shipping policy.
A recent survey by PayPal and comScore revealed that "43% of people surveyed didn't pay for items in their shopping carts because shipping charges were too high." As well, according to a Harris Interactive (2008) survey, "60% of those surveyed claim free shipping is a reason they are more likely to shop online." Offering shipping for free can drastically increase store sales. In attempt to lower their shipping costs, many retailers will store their products in a number of warehouses in various locations across the country and ship their orders directly to the customers. Other companies are negotiating shipping prices with companies in an effort to obtain better rates.
There are a number of ways that businesses use free delivery as an effective sales and marketing tool. A company may offer shipping free of charge for orders where the total purchase price is above a specified amount. Another fee shipping option companies will employ is offering the customer a shipping rebate in the form of money, a discount on their next order, or a coupon or gift certificate. They can also offer free shipping on specified items. Some retailers will even offer shipping for free on all items. The goal is to increase sales which will offset delivery cost losses. Other companies will provide free delivery to their members or as part of a rewards program. Sending electronic coupons to a customer's email providing shipping deals on a customer's next order is another effective method of increasing sales. As well, businesses may offer free delivery throughout the country including directly to one's door step
Providing free delivery is an effective way to obtain repeat customers. Most online retailers and a growing number of traditional retailers that offer free shipping are offering it as free ground shipping. However, there now appears to be a new trend of offering better free delivery service. Some companies are offering free 2 day shipping and free overnight shipping.
The benefits of providing shipping free of charge include a reduction in the number of abandoned shopping carts, assists in the marketing a new product, improves customer loyalty, encourages shoppers to make a purchase, and helps sell excess products.
Internet shopping is one of the fastest growing retail sectors. Online shopping is one retail area that has not been affected by a slow economy and increase in gas prices. Consumers are drawn to shipping offers because they feel they are getting a good deal compared to driving to a local store. Studies have shown that customers are more likely make a purchase if free shipping is offered. More consumers are not only demanding free shipping with their orders, they are expecting it. Offering free shipping in a variety of forms is an effective marketing and sales technique that most businesses are now using. In order to compete for your business, retailers that have never offered free shipping will have to start offering it. It appears that the free shipping trend is here to stay.