Editor's Note: How to Make Free Shipping Profitable
With the COVID-19 pandemic forcing the temporary closure of nonessential retail stores, as well as the permanent shuttering of a number of other stores in the wake of a record number of retail bankruptcies, the gradual trend of consumers opting to shop online has been accelerated. Consider that total U.S. online sales reached $73.2 billion in June, up 76.2 percent year-over-year. With that increase in online buying also comes an expectation from customers that they will receive free (and oftentimes fast) shipping for their orders.
Amazon.com’s paid loyalty program, Prime, has conditioned consumers to expect free shipping for their online purchases — at the very least when a certain monetary order threshold has been reached. That expectation of free shipping now extends to all retailers and brands selling products online. And for those retailers that aren’t offering free shipping, the likelihood of converting a site visitor into a paying customer drops significantly. Hidden, extra shipping costs are the No. 1 reason why online shoppers choose not to complete their transaction. According to a study by Statista, 56 percent of consumers abandon online shopping carts due to hidden or unexpected costs, such as shipping fees. This was the top reason for consumers abandoning their carts prior to purchase.
However, with retailers trying to deal with reduced revenues as a result of store closures as well as economic uncertainty limiting consumer spending, offering free shipping for online purchases must be carefully considered before being rolled out. With that in mind, Total Retail recently published a 10-part article series on the topic. The series was intended to educate retailers on how they could offer free shipping, helping them to remain a viable option for consumers in a saturated and ultracompetitive e-commerce market, without it becoming a money-losing proposition.
The article series, which was published between January 2020 and May 2020, was written by Manish Chowdhary, founder and CEO of Cahoot, a peer-to-peer order fulfillment network that enables merchants to collaborate to increase their sales and margins by offering profitable one-day and two-day free shipping to customers nationwide without spending a penny more than the economical ground shipping. This guide is the curation of those 10 individual articles into a single piece of content, representing a valuable resource for retailers as they look to capitalize on increased e-commerce demand.
The COVID-19 pandemic has fundamentally altered the retail and e-commerce landscape going forward. Being able to compete for shoppers’ limited dollars increasingly means offering free shipping for all online purchases. Being able to do so profitably will be what separates the retailers that are able thrive going forward vs. the retailers that are just merely looking to survive.
You can download this free guide, How to Make Free Shipping Profitable: Tactics to Help Retailers Meet Growing Consumer Demand for Free Shipping ... Without Going Broke, here.
Related story: How to Make Free Shipping Profitable, Part 10