Wednesday, October 7, 2009


The concept of “free shipping” has proven to be a highly successful and compelling online offer for shoppers on the Internet. As a promotional tool, the cost to the seller is significantly better than what is required in the way of an equivalent discount to drive the same result.

One of the reasons consumers like free shipping offers, is that it makes an online transaction comparable with a local purchase at a neighborhood store. The buyer finds comfort in the offer, and this does not diminish the value of the product itself.
This is particularly valuable now for the smaller business, now that companies such as Amazon have made it a standard.

There is substantial evidence that packing and shipping fees are a primary cause of e-cart abandonment. Most of us have direct experience shopping online, where we are about to give our credit card, to complete their transaction, and then suddenly, the price of the total purchase skyrockets. Many shoppers exit quickly, leaving frustrated, and rarely, if ever return. Even in cases, where the fees are not excessive, we have been conditioned to expect higher online shipping fees, and this adds to the appeal of “free shipping”.

I encourage sellers to take advantage of this reality. Imagine an online shopping environment where the offer of “free shipping” is standardized. Now, analyze the cost structure of your products. When you arrive at your final retail selling price, add, what I call, a shipping fee offset. On a higher ticket item, add a smaller percentage, and on lower priced items, add a slightly higher percentage. The added percentage may not fully absorb shipping fees, but it will improve the margin of profit on your items, and give you “peace of mind”. Take these steps today. Once executed, your pricing structure will empower you to take advantage of “Free Shipping” without compromise to your brand, your items, and your costs.


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