Thursday, 7 January 2010

Free Shipping - 5 good reasons to offer free delivery is a successful, award winning online retailer. I've recently been trialing 'free delivery on everything' and monitoring the sales results closely. This blog post outlines the good reasons to offer free delivery based on my real experience as a major retailer. I intend to do a post on what I see as the reasons not to offer free delivery next.

You'll find lots of free shipping articles online from research companies and marketing 'experts', but I hope this will give you an insight into a genuine use of free delivery. From this and my next post I hope you will be able to decide if free delivery is the right thing for your business. At the end of the day it will hurt your profit if it's not.

Here's a bit of information on our trial to put things into context. We sell thousands of different products and make thousands of sales. We added the words 'Free delivery on everything' next to the prices on our site. Then 'free delivery within 5 days' was added as an option in the basket along side 'next day at £9.95+vat' and '2 days at £4.95+vat'. We told our existing customers about the new delivery option by email. We added free delivery to our price comparison data.

So I think it's fair to say we haven't really used free delivery to drive new customers to our site as yet, we wanted to see the effect it had on conversion based on our existing traffic levels.

So here's my 5 good reasons to offer free delivery

1. It removes a sales barrier.
I'm convinced of this. Before starting our trial I'd read 43% of online shoppers said they abandon a purchase because the delivery charges were too high. So far in our trial I'd say we've seen a marked increase in sales from the same amount of visitors.

2. Customers want it.
There certainly seems to be a whole set of customers who think free delivery is the most important deal clincher. It's always a talking point. I spoke to an affluent businessman recently who spent £1500 on a new laptop - he couldn't tell me anything about it other than he got free delivery. I've also worked in a company that had a 'we don't pay for delivery' policy. It was supposed to make you haggle over the delivery cost, but it made people pick a supplier with free delivery.

3. You win more new customers.
When we removed our delivery charge we immediately notice more lower value items being bought. Whilst we obviously don't make much profit on sales like these, I see it as a cost effective way to win new customers. They experience buying from More and with their permission I can send details of new offers and remind them of our existence. Over time we may build a relationship and they may purchase again and even go on to recommend us. Looking at our data I can see we're getting more consumers shopping with us, probably because they're not as dependent on receiving their orders next day like some business customers.

4. You will retain your customers.
Customers remember free delivery and I'd like to think it helps us to stay on their shopping list. I often hear 'I shop there because it's free delivery'. In my research I read in a ComScore study 72% of those surveyed said if an online retailer stopped offering free shipping, they would leave them and do business with one of their competitors. It seems like a loaded question to me but I believe free delivery combined with a previous good shopping experience will cut down the amount of shopping around our customers do.

5. Not all customers will select free delivery
This is something we are monitoring very closely. So far it looks like the percentage of free delivery compared to paid is sustainable. Probably down to the nature of what we sell, but our next day and 2 day delivery options are still being used significantly. It looks like our business and IT professional customers require next day deliveries and are happy to pay for that service.

Follow me on Twitter to make sure you get my reasons not to offer free delivery.

Please leave a comment about your free delivery experiences.

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