According to the researches, one of the most important reason that make the customers leave the shopping is shipping costs. Paying an amount as much as product cost causes the customer to leave the shopping, especially for the low cost products. On the other hand, extra shipping costs for large or heavy products are the factors that cause the customers to leave.
So free shipping is a good method to make the customers content and increase the sales. Every day, more companies provide free shipping. We believe that there is an important issue which new enterprises should be careful about because it may not be very easy to anticipate and calculate the net shipping costs.
To simplify it for you we brought together the advantages and disadvantages of free shipping.
We can refer that there are 4 main advantages for your ecommerce site:
1 – High-order quantity
The option of free shipping will make your site more attractive for customers and your order quantity will increase.
2 – The revenue rate per order
Because the customers will purchase without caring about the shipping cost, probably the average order value would increase. By this means, the income would increase that you earn for each order.
3 – Cost per order
If you provide the option of free shipping for the orders above a certain price, you can decrease the cost per order by completing all of the operation at a time when the quantity of the order increase.
4 – Repeating order rate
The customers may not remember where they bought which product but they would probably remember that you provide free shipping. And this also increases the possibility of the customers to return to your site when they wish to give an order.
But you shouldn’t forget that there are also disadvantages of free shipping. Here are the most significant ones:
1 – Free shipping cost per product
Providing free shipping option means you would pay the shipping cost, but the effect of this would be different for every product. Especially for the products whose profit margin is low, shipping cost may cause you to have a low profit moreover in some cases it may cause you to lose.
2 – Unpredicted number of free shipping
The problem in the previous article may not be a problem if it is for a few number of products. Total revenue that would be increases thanks to free shipping may cause you to take into account the loss of sales. But not knowing the number of the sales that would cause you to lose at the beginning may become a difficulty that you may not overcome.
3 – Costs per product
The method that you can apply to overcome the sales at a loss which we mentioned above, may be increasing the pricecs of the products which doesn’t reimburse the shipping cost. But if these or similar products are sold by your competitors, the customers would probably prefer your competitors instead of you.