free is a four-letter word

A journalist recently posed some questions about free shippingWith the holiday shopping season upon us, there’s a debate between those who say free shipping is imperative,a cost-of-entry for any serious e-commerce player, and those who say it really isn’t a good idea because companies have to absorb the exorbitant costs and buyers will go for other types of promotions like free shipping on orders over $50 or whatever.

Here’s my take on the issue:

Free shipping is a marketing tactic along the lines of 99¢ value menus or coffee shop punch cards.

While it may stimulate trial for high-risk purchases and serve as a “tie-breaker” between 2 outlets that are perceived the same, it’s a dangerous tactic to begin using because it’s very difficult to stop (remember Amazon‘s rocky transition to super saving shipping a few years back?)

Consumers will take it for granted and feel a sense of “entitlement,” so you risk alienating them when you discontinue it.  Plus, if free shipping is the primary reason why people buy from you, you don’t have a sustainable competitive advantage and you’re not building brand equity.

If companies feel they must offer free shipping, they should do so on a limited-time-only basis and make it clear they are doing so.

But generally speaking, companies should seek out other ways to differentiate themselves and add value for customers.  For example, if the company operates in a high-risk category (whether the risk be due to the high price of the product or due to its nature e.g., shoes), the company should consider offering free return shipping and/or crediting the original shipping costs if a product is returned – or even better, it should provide personal advisors available 24/7 to help shoppers select the right products and feel confident in their decisions.

What do you think?

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  • hey folks — I found an Internet Retailer article on the topic of free shipping that I thought would provide an interesting context for this post —
    two highlights from the article:

    61 of the largest 100 online retailers offered free shipping as of the week of Monday, Nov. 10, though nearly all tied it to conditions such as minimum order value, type of product or a limited time period, according to a survey conducted this week by Internet Retailer.

    The following online retailers among the top 100 showed no free shipping offers:
    Wal-Mart (only offers free shipping to stores)
    J.C. Penney
    PC Connection
    J. Crew
    Foot Locker
    Coldwater Creek
    Abercrombrie & Fitch
    FTD Group
    Harry and David
    Hanover Direct
    American Girl

  • In a former job, we used free shipping sporadically, and it averaged about $25 per order. However, at other times, we offered % off or other valuable stuff worth $25 or more, but free shipping somehow always drove the most business. I don’t think people think of it in terms of “Wow, I’m saving $25,” but rather, “Great – that’s just one more thing I don’t have to pay for.”

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