Free Shipping vs. Discounts

“For whatever reason, a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.” – David Bell, Wharton School of Business

It’s true. Customers value free shipping. It’s a simple fact that every marketer must understand when we think about pricing and promotions.

What does it cost to ship your product?

Maybe your shipping cost is standard, maybe it varies based on the quantity of the order or the destination of the shipment. Regardless, there are several strategies that companies employ with regards to shipping costs.

You can charge the consumer what you are paying, the break even philosophy. You can charge the consumer more than it costs you, the profit philosophy. Or you can offer free shipping, no matter what.

Why offer free shipping?

Free shipping sells. It’s a tried and true selling point for products of all kinds. Many companies make a living out of promoting the ‘free shipping all day, every day’ line. But if that’s not for you, using free shipping as an incentive can be a very worthwhile effort.

Use your email marketing to generate a special promotion, free shipping today only, to drive a high volume of sales needed to meet forecasts.

Or use free shipping as a way to increase the value of each sale. Many ecommerce sites will promote “free shipping on orders over $xxx”. If the cut off is $100, someone who is making a $20 purchase may not be intrigued enough to spend another $80. But someone who has $70 or $80 of stuff in their carts are sure going to take notice.

Why not discounts?

Discounts can still work, but depending on what your shipping costs are, free shipping has been proven to work better. There is no real reason that marketers and business analysts point to when they try to explain why this is the case. It just is.

What if you don’t charge for shipping?

If you don’t charge for shipping, you’re ahead of the game. But why not promote it? Consumers who have never purchased from you before will take notice if they see “Free Shipping on all Orders, No Exceptions”. If you don’t charge for shipping and you’re not promoting it in as many places as possible, you are missing a huge opportunity.

I want to hear from you…why do you think ‘Free Shipping’ works so well as an offer?