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63% of Top 100 Retailers offer Holiday Free Shipping

Posted on November 16th, 2009 by Matt Sampson - Colorado Web Solutions

According to Internet Retailer, 63 of the top 100 online retailers are offering Free Shipping to customers in one form or another this holiday season. That’s a huge percentage of sites and it’s up from last year. I’ll provide a link to the full story below, so I won’t bore you with the details, but my point in writing about this is to provide you with a few thinking points.

I know that everyone is very price conscious right now from a consumer as well as a retailer point of view. Free Shipping may not be a viable offer for your Yahoo! Store this season, and if that’s the case, no problem, but for those retailers who can potentially offer free shipping from their Yahoo! Stores this holiday, I’ve got some thoughts for you.

Determine your Free Shipping Threshold

If you’re not offering free shipping on EVERY order (which we don’t recommend), here is a great way to determine the level you should set for free shipping to take effect.

  • Log into your store and click on “Graphs” under the “Statistics” Column.
  • Under the SHOW field, select “Revenue / Order”
  • Pick your date range (365 is a great place to start)
  • And then click GRAPH

The number you see there is your Average Order value. So this is the value of your average order, minus shipping charges and taxes. To make it easy, let’s say your average order was $50. Assuming that your goal is to increase your revenue, I assume you would like to see that average order value go up. So what if you offer free shipping to customers who order $75 or more? Chances are that as long as you are selling a product that allows for adding more items or value to your order (some stores really only sell a limited selection and this doesn’t really work), you will start to see your average order size getting closer to $75 before you know it. Depending on your margins, etc, this 33% jump in average order value could actually offset your extra shipping fees and be a win – win for everyone. Now imagine if you could DOUBLE your average order size. Would that help offset the costs of offering free shipping? It just might!

My advice would be to take your average order value and add between a 25% and 100% increase to it and that then becomes your shipping threshold. Like I mentioned above, 63% of retailers on the top 100 list are offering free shipping. I would highly suggest considering joining them if it is possible for your business model this holiday season.

Ways to limit the offers and keep costs lower

There are a number of ways to limit the use of free shipping if you are worried about wide-spread use. For example, you could send a coupon to your past customers offering them free shipping on orders during November and December. This is an easy way to offer deals and limit the usage.

Another option would be to post coupons in strategic locations. For example, if you have an affiliate program, you could provide your affiliates with a coupon to post on their site to get free shipping from your store. You could post a coupon code to twitter each month, week or day and only offer free shipping to the folks that find the coupon. You could post the codes on your stores facebook page. You could post the coupon codes in your stores blog. Etc, etc, etc. Point being is that if you don’t want to offer your deals to everyone, this is a great way to narrow that down and still have the offer available to the savvy customers.

If you do offer multiple coupons, be sure to make a different one for each location that you post it so that in January you can review each coupons usage rate and value in sales!

Promote the heck out of it

If you are offering Free Shipping to your customers, PROMOTE IT as much as you can. In a recent survey, almost 80% of consumers said that Free Shipping was in their top three list of priorities for shopping online this season. Get a banner on the front page of your site. Add the info to your header and or footer. Add information to your product pages and make sure it’s very clear about what qualifies and what doesn’t. We have a feature that can automatically add a graphic, or icon or text blurb on every product that qualifies for free shipping (based on dollar value) that is a fantastic conversion booster. Here are the details.

The Article

Here’s a link to the article that sparked this post. Have a great day everyone.

Read the Full Post

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