More Retailers Offer Free Shipping

Industry Insight

While most people love the convenience of being able to shop online or through their mobile devices, having to wait and pay for shipping is one of the leading detractors of the digital shopping experience. However, many merchants are trying to make this less of a burden by offering free shipping – while people still need to wait for an item to be delivered, they at least do not need to pay out of pocket to do so.

Internet Retailer recently analyzed the shipping policies of more than 1000 online retailers in North America and found that approximately 64 percent of them had free-shipping offers listed on their websites as of the last week. While slight, that is a 3 percent increase compared to what was observed last year, suggesting that free shipping continues to become even more commonplace in the retail sector.

Free shipping is not just something the biggest of the big do

When people think of free shipping, huge companies such as Amazon may come to mind. These companies were often able to buy in bulk and take the hit to their margins in order to offer their customers free shipping. While big-name sellers may have been the first to jump on the free shipping train, that offering has quickly become more universal in recent years. As Internet Retailer noted, in the top 50 merchants analyzed, 33 offered free shipping, while among the bottom 50, 28 did so, illustrating the importance of free shipping across the board.

In the top 50 merchants analyzed, 33 offered free shipping, while among the bottom 50, 28 did so.

This may present a challenge for some sellers. Some have implemented checkout thresholds that must be crossed before free shipping offers can be redeemed, which is an effective way of ensuring retailers do not dig too deeply into their margins trying to eat the cost of shipping. Even some big brand name merchants, such as Amazon, have established thresholds.

Amazon is also unique in that it is one of the retailers that got behind subscription services to help offer customers free shipping. Amazon Prime members get free, two-day delivery on all of their purchases, which can quickly pay off for frequent shoppers. Additionally, this service bolsters shopper loyalty – if people are already paying a monthly subscription and get free shipping, why shop anywhere else?

The real danger arises from merchants that offer free shipping with no minimum thresholds.

Of course, the real danger arises from merchants that offer free shipping with no minimum thresholds. According to Internet Retailer, 267 online sellers offer free shipping on all orders, which is a substantial number of merchants. Given the timing of the study, it is likely at least some portion of those retailers are only offering unconditional free shipping for the holidays, but it does put competitors in a position in which they must respond.

Reducing order fulfillment and shipping costs

While retailers can utilize thresholds and subscription programs to help compensate for shipping expenses in order to offer this service to customers, they should also look for ways to improve the order fulfillment and shipping processes. The integration of solutions that could help automate or streamline these processes may also allow retailers to eat the free shipping costs more effectively.

Deploying the appropriate eCommerce solutions can alleviate much of the time-consuming nature of the process by automating some of the more tedious tasks such as deciding which location to process an order. This allows businesses to get orders out the door with as few errors as possible and while maximizing the use of inventory.

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