There are lots of theories and data on how free shipping effects e-commerce sales. The only constant is that the faster an item ships to a customer, the happier s/he is and that offering free shipping often affects sales in a positive manner.
My cheeky direct e-mail image illustrates the happy little beaver whom got free shipping on his/her $75 or more order. Wood has become a prosumer product ever since the realization of globalization and environmental impact hit the beavers. They want to order from Green Bee Wood’s web site with wood that’s been fairly traded and a company commitment to wood as a renewable resource instead of clear-cutting rain forests in Brazil. Because of this, the beaver has committed himself/herself to a higher price point and free shipping is helping to offset the sting on his/her wallet. Because even as a prosumer, the beaver still budgets.
On the business and marketing side, Green Bee Wood knows that their products are targeted at the prosumer and can accept that quality of product and other good business practices do drive up their prices compared to Wood-4-Cheap. Beavers make up 75% of Green Bee Wood’s demographic. In the realm of free shipping, Green Bee Wood has a lot of options. They can offer free shipping across the board, at a certain price point based on their average order, for a limited time only, to offset sale tax charges, at a flat rate instead of free, etc.
Green Bee Wood has decided to offer free shipping slightly higher than their average order to bring average order sales a little higher, and they think it’s a urgency incentive for their customers to buy. Since they want to create a demand, they’ve decided that free shipping is only going to be offered for a limited time, approximately two weeks, to drive up sales in a traditionally slow winter season when beavers stay lodged down with their families and conserve energy.
This free shipping campaign is very successful for Green Bee Wood as they understand their demographics’ buying patterns and how free shipping can affect them. Free shipping helped a few more beavers make the final click to buy.
To use free shipping or not really depends on the company and their target demographic. As a huge company and largely consumer-based, I think it’s brilliant that Amazon.com offers it on all orders over $25 year round. However, for smaller companies targeting prosumers, there are pitfalls in that constantly running free shipping can flatten out sales. People don’t think they need to order then because it will still be on months later. There’s no urgency. Free shipping can be a useful tool, but like all tools, there’s an appropriate time to use it. The prosumer appreciates free shipping, but will appreciate it more if it’s not there all the time.