Should you offer “Free” international shipping?
Marek Placheta is Customer Success Team Leader at Webinterpret. Marek focuses on optimisation of the accounts and increasing their cross border sales results. Today he shares Webinterprets findings on how “Free” international shipping impacts cross border sales.
Beat your competitors by free shipping
Everyone knows how competitive the international e-commerce market is with multiple sellers all vying for the same customers. So any competitive edge that you can gain is definitely worth pursuing, especially where that edge comes free of charge. A free shipping option is definitely one of the things that draws a customer’s attention.
However, there are several facts which are worth considering before offering free shipping, so that it will not result in a loss of profit margin. Before we get to them, let’s take a closer look at some statistics about free shipping that show the effectiveness of offering it.
- 61% of shoppers prefer to purchase items that offer free shipping.
- 44% abandon their shopping karts because of unexpectedly high shipping charges.
- 93% of shoppers purchase more items with free shipping.
- 64% signaled that free shipping greatly impacts their decision as to whether to order or not.
- 58% of shoppers want free or discounted shipping.
Free shipping best practices
Firstly, let’s start by explaining exactly what the ‘free shipping’ option really means. It does not mean that the seller pays the shipping fee for the customer. What it actually means is that the shipping fee is hidden in the item price, so that customers are presented with a single item price offering free shipping. This results in an offer which is psychologically more attractive to the buyer.
If you choose to apply ‘free shipping’ to your international listings, your products will be advertised as offering free postage. Even though the total cost to the customer is unchanged, this small rearrangement in the way the price structure is presented can lead to an increase of up to 30% in your international sales.
Also, as an added bonus, by offering free shipping, you automatically fulfill one of eBay’s Premium seller requirements.
But before you go about adding free shipping to all your items, there are a few things to consider. Using the free shipping option is not advisable for all items; therefore it is important to know when to use it.
As a general rule, we would only recommend using the free shipping option when the cost of the shipping is less than 10 Euros. Adding a high shipping cost of greater than 10 Euros to an item usually results in an uncompetitive total item price. This reduces the item’s visibility in search results and puts off potential buyers.
However, for some high cost items, you may find that you remain competitive even after adding shipping costs of over 10 Euros. For this reason, it is always worth checking competitors’ prices before deciding whether to employ the free shipping option or not.
Items that would not benefit from applying free shipping are those which require an expensive shipping or are less expensive that their shipping cost. When the shipping cost is twice the cost of the actual item, using the free shipping option would result in a 200% increase in the item price. This would render the total item cost to the buyer uncompetitive and will put off many potential buyers.
The free shipping option may also be unsuitable for items that are usually bought in multiple quantities. The reason for this is that, normally, when a buyer buys more than one of an item, a shipping discount is applied which reduces the overall shipping cost. However, when using the free shipping option, the shipping cost is hidden in the actual item price and therefore no subsequent shipping discounts can be applied. This again could result in your item becoming less competitive.
Since you know when to use the free shipping option and how does it impact online buyers, it is time for one last question. What does free shipping give to the online retailer apart from higher customer satisfaction? Is there benefit to the seller? As you probably guessed, free shipping obviously does result in a profit to an online seller. WebInterpret research, based on our sellers’ sales strategies, proved that all those who employed free shipping in accordance with our tips and advice, increased their revenue by up to 30%!