Twitter icon
Facebook icon
LinkedIn icon
Pinterest icon

How Can Retailers Leverage Free Shipping As an Innovative Retail Solution?

Woman signing for a package - Free shipping can help boost retail sales and profits

Free shipping shouldn’t come at the expense of a retailer’s bottom line; leveraging this innovative retail solution is a matter of timing and promotion. Retailers can use free shipping as a competitive edge and a way to stand out, especially if they’re selling the same or similar products as other businesses, such as clothing and shoes.

The key to free shipping is that retailers must use it to entice customers to shop, according to an article on the Multichannel Merchant website. Consider how online retailer Vermont Teddy Bear uses free shipping. The retailer offers free shipping codes year-round, but when it comes to the “rush seasons” — like Valentine’s Day, Mother’s Day or Christmas — the retailer can charge a premium for shipping because it’s mutually beneficial.

“We’re saving them, and we’re saving their relationship,” Victor Castro, director of e-commerce at Vermont Teddy Bears, tells Multichannel Merchant. “Not only can we get away with charging a premium [for shipping], our customer is willing to pay for it.”

Using free shipping as a promotion is another way to leverage this innovative retail solution. Look at apparel retailer Spreadshirt, for example. Over a two-week period, the retailer offered free shipping without promoting it, and the result was that the “offer did not change conversion rates,” according to the Multichannel Merchant article. When the offer was promoted, Spreadshirt saw “a significant spike on order activity.”

How can a retail ERP system help when it comes to offering free shipping? If they’re tracking their customers, retailers should know their demographics, and therefore can set up promotions for specific segments. For example, certain customers might be more interested in a special product line, or retailers could run a promotion in which customers must spend a certain amount of money to qualify for free shipping.

Many retailers are concerned that free shipping will negatively impact their bottom line and lead to logistical nightmares. However, as this article shows, that doesn’t have to be the case. By properly promoting free shipping and increasing sales, retailers can cover the cost of free shipping. The key is to manage the program carefully and take advantage of instances when people are willing to pay for shipping. 

Source: Multichannel Merchant, August 2013

Blog Tags: