The offering of free shipping is a topic of much debate throughout any business with an eCommerce channel and one which is almost impossible to come up with an exact answer for. It is however a topic that must be debated and thought about when developing your online strategy.

As with any argument, there is always at least 2 sides to come at it with, so lets have a quick look at what might come up within your business:

1. Australian retailers must offer free shipping to compete with our overseas competitors

This is a pretty standard argument really. It also has quite a bit of credibility. With the likes of ASOS offering everyday free shipping to across the world, and delivery time frames from the UK to Australia of a week, its no wonder they announced at this years eRetailer Expo in Sydney that they are currently making $1 million of sales into Australia each week.

How are we to compete with this offer as a local retailer? Surely we have to come to the party, offer our loyal customers the same deal and start to bring those sales dollars back into our country. The argument is almost one of a business necessity, with customers now expecting such service, rather than being part of customer service / a product offering that goes above and beyond.

2. Use free shipping as a sales tool to engineer a lift

It amazes me time and time again, how offering free shipping for a limited time can engineer a sales lift from your week in week out sales.

How important is it as a business to have this ability to turn on this promotion to your database when you really need to kick sales along a bit? Sure you are going to take a slight hit to your margins, but for that limited time, the increased sales from the offer are surely worth it.

This argument also seems to hold some credibility from a promotional strategy point of view, and its certainly one that I have heard regularly, but the bit that I always seem to come back and question is what damage is this strategy doing to your checkout conversion funnel? How many people are wanting to buy, going to all the effort to put an item in their cart and then running for the hills once they see your shipping prices. What is that potential lost business worth to you each year?

3. Never offer free shipping

Occasionally you might also get someone just say that you should never offer free shipping. Sure you have an expense that is incurred to your business, so shouldn’t you just pass that directly onto the customer?

While these arguments sometimes seem to incur, next time someone suggests this strategy, why don’t you ask them to add in electricity, the flooring and fit out costs of your retail store and the rent paid to the landlord as separate charges on top of the item costs onto the customers receipt and see how many sales you complete in store then.

You may also want to walk away to avoid having to ask them how they still have a job in this digital era and being forced to slap them around a few times to knock some sense into them.

(note: I don’t actually condone violence, but it is amazing how you sometimes want to slap someone round a little until they wake up)

So what is the right answer to the whole debate? It is really dependent on your business. Can you afford to absorb the added cost of the free shipping? What is it going to do to your margins one you take out all the costs? Are you shipping bulky goods to the middle to the country with freight bills of $70 on a $20 purchase? All of these are obviously going to come into the argument, but as a business, my experience is that offering free shipping is a BIG WIN! Even if you have to put a threshold sale value where it becomes valid over that price range. It always seems to become clear that you will loose less people through your checkout sales funnel.

As far as the promotional plan goes, find another way to engineer that sales lift. Category or specific product discounts are always great. You may even like to look at engineering product specifically with more margin in it to drive more traffic and sales through your site. You may also be amazed at the multi purchases that happen with customers picking up other full price items.