Free shipping strategies: Merchants weigh in
Multichannel marketers consider their free shipping offers to be highly strategic and competitive. So when operations consultancy F. Curtis Barry & Company interviewed dozens of direct merchants about their free shipping strategies used this past fall/holiday 2008, few wanted to be quoted directly.
But catalogers and Web retailers have plenty to say on the hot topic of free S&H. Here are some of the observations they shared with F. Curtis Barry & Company about what shipping offers they tried—and how they worked—this past year.
- Apparel cataloger (men’s): We use free shipping once or twice per season for our house file rather than for prospecting. It is still effective, but not as much as it once was.
- Apparel cataloger (women’s): Our early results in November with free shipping look okay, but not stunning.
- Book publisher and gift company: Our company, because of our exclusive merchandise, is looking to raise merchandise prices to be able to afford free shipping.
- Gift cataloger: We have traditionally seen a 12%-15% lift vs. a control on free S&H. The September and October drops had no lift. Average order value held. We traditionally ask for a higher AOV to qualify for free S&H. Obviously, this kills profitability. No explanation yet for the results; waiting on accounting to research.
- Home decor merchant: We do some free shipping on selected items only. All our tests show a discount of 20% off the merchandise gets us the lift better than free shipping.
- Multititle catalog company: We definitely use free shipping. It is a powerful tool, but we saw a dramatic falloff in September and October to our traditional lift in response with free shipping. This is a new phenomenon! We have not had a full accounting of the results yet.
- Nonprofit cataloger: We did offer free shipping in September. Results were good, considering the financial climate.
- Nonprofit cataloger: We offered a free shipping banner on the front over for all of our catalog drops this year, valid through Dec. 24 and redeemable only via our Website. We also offered free shipping via e-mail blasts, and it is our Web orders that are really below plan. So while I’m sure the free shipping offers secured some of our sales, I question how much it has motivated a new sale—it’s become a commonplace promotion. What I’m afraid of is if you condition the customer to free shipping can you ever stop it without hurting sales? We could not get a reasonable response to our e-mail promotions without a free shipping offer.
This was a snippet from the full article, “Solving the Free Shipping Puzzle”, that is on our website.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at www.fcbco.com
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