Everyone loves hearing the word “FREE,” but can you blame them? This four-letter word added with shipping can excite anyone, so it has been one of the strategies online shopping stores use to attract more customers and retain old ones.
However, with every advantage, there is almost always a disadvantage. So, if you want to decide whether to incorporate free shipping practices in your business, read on.
What is Free Delivery?
Before getting to the pros and cons of free delivery, let us first understand what it is. Free delivery is a marketing strategy online businesses usually use to attract potential customers by eliminating or shouldering the customers’ shipping costs.
While offering free delivery is a great strategy, we must look at both sides of the coin – the pros and cons of free delivery.
Pros of Free Delivery
Free shipping is a marketing tactic that has worked for many online businesses, and there are good reasons why that happens. Here are some:
1. Customers want free stuff
Customers generally want free stuff, so if an online shopping app offers free shipping, it’s an automatic green flag for your potential buyers. In fact, a study by the National Retail Federation (NRF) says that 75% of customers want free shipping. Free delivery can also increase conversions, customer loyalty, and overall satisfaction for your business.
In the Philippines, 70% of Filipinos are more likely to buy if there’s free shipping included.
2. It puts you ahead of the competition
Suppose a potential buyer is looking at the same item at the same price from two competitors. In that case, the one that offers a free delivery can instantly tilt the needle in their favor.
In an article by Forbes, the research said that free shipping is not only a nice-to-have for online businesses today but is now a must. This is because customers often consider free delivery a saving by avoiding additional transportation costs.
3. Increases the likelihood of customers checking out
There is no bigger turn-off for online shoppers than seeing additional shipping fees at the end of the check-out page. In fact, the extra cost of shipping and related fees contribute to about 47% of cart abandonment or customers ditching their virtual shopping carts.
4. Encourages customers to increase their spending
Some businesses offer free deliveries but with some conditions and qualifications. For instance, some online shopping platforms may say you’ll only qualify for free shipping if you reach Php1,000 in a single purchase.
So, even if you only intend to buy Php500 worth of items, the mental image of not paying the Php100 for shipping is enough to increase your purchase to reach the minimum Php1,000 purchase.
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Cons of Free Delivery
While there are many advantages to offering free shipping for your business, there are also innate disadvantages to it.
1. Not because they say it’s free doesn’t mean it’s really free
There is an economic concept that says that there is no such thing as a free lunch. It implies that not because someone did not pay or got something for free, no one paid for it. For example, a customer getting free shipping does not mean no one paid.
In the case of offering free shipping, businesses usually pay the price for the free stuff the customer gets. So, this may mean a lower profit.
2. You may need to increase prices
The other disadvantage of free delivery is that businesses usually mask their shipping cost as free when, in reality, they pass it on to the customer by increasing the prices. This puts smaller businesses at a disadvantage against big companies that can easily offset their shipping costs.
3. Cheaper shipping may cause a worse customer experience
If you don’t want to increase prices but don’t want to avoid spending too much on shouldering shipping fees, you can use a cheaper option. However, since you are opting for a more reasonable delivery provider, delivery delays and other bad customer experiences are possible.
Online shopping and free delivery are now almost inseparable and almost expected by customers. So, if you’re a business trying to implement a free shipping benefit to get more customers, you must also look at the disadvantages. Your goal is to balance the pros and cons for your business and customers.