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Gaining the Edge in eCommerce with Free Shipping

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Gaining the Edge in eCommerce with Free Shipping Powered By Docstoc
					Gaining the Edge in Ecommerce
with Free Shipping
“42 percent of all          Ecommerce is a thriving industry with      How many other ecommerce retailers
                            fierce competition. One of the best        have taken to the trend? A lot. There’s
 ecommerce transactions     ways to achieve success in this dynamic,   overwhelming evidence that free
 completed in the U.S.      competitive environment is to have a       shipping promotions are continuing
                            strong marketing mix with a most recent    to flourish and are becoming a
 included free shipping.”   phenomenon — free shipping. How has        permanent marketing resource. In 2009,

2009 comScore Survey        free shipping become a new marketing       comScore® reported that 42 percent of
                            staple and what is the best way to         all ecommerce transactions completed
                            implement it? To find the answers, let’s   in the U.S. included free shipping, up
                            explore free shipping trends, benefits     from 31 percent in 2008. Additionally, a
                            and variations.                            Practical Ecommerce® survey revealed
                                                                       that 52.2 percent of respondents offer
                            Free Shipping: A Trend                     free shipping on some orders. With
                            on the Rise                                the numbers on a rise, ecommerce
                            Free shipping is a growing trend in        retailers looking to compete in the ever-
                            the ecommerce industry. Each year it       changing marketplace should explore
                            becomes more and more prevalent,           free shipping promotions, starting with
                            especially during the holiday season.      the benefits.
                            Leading online retailer Amazon® is
                            believed to owe much of its success to     Benefits of Free Shipping
                            Amazon Prime™, a customer program          Free shipping, like any marketing
                            that offered a low-cost year of free       promotion, can enhance your
                            two-day shipping. In 2010, Walmart®        relationship with your customers, help
                            expanded its marketing mix with the        grow your business and give you a
                            introduction of free shipping and the      competitive edge. These benefits have
                            promotion was met with great response      been researched in recent years and
                            and success.                               have impacted today’s ecommerce.
By how much does your average order   What is your most effective holiday sales promotion?
   increase with “Free Shipping”?
                                                   Some type of free shipping promo                                                    64%

                                                                 Discounted shipping                      26%


          It does not increase                                                                           24%
                                                                       Online only sale
                  12%
                                        Promo codes / Save $ or % o on any purchase                     22%


                                                               Free gift with purchase            14%


                                                              Save $X if you spend $Y            13%
        Less than $1 per order
                 1%                                Buy X get Y free (e.g., 2 for 1 deals)        13%

                                                                          Refer a friend    5%




                                      Customer satisfaction directly affects                responses from such promotions.
          $2 to $3 per order          your bottom line profits. As such, finding            The profits can be quite impressive,
                 6%
                                      ways to appeal to your customers is                   as studies show. In the 2010 Stamps.
                                      crucial. Free shipping is a great way to              com survey, 37 percent of respondents
                                      make a positive impact on consumers.                  reported an increase of $7 and more
                                      Recent studies have shown that                        with orders including free shipping.
                                      customers value free shipping and                     Additionally, comScore reported that

          $4 to $6 per order
                                      use it to determine their purchases. A                free shipping orders produce an average
                 15%                  2010 comScore® survey revealed that                   of 15–20 percent higher order values
                                      55 percent of respondents would be at                 than orders without the promo.
                                      least somewhat likely to abandon their
                                      shopping cart without a free shipping                 When in direct competition for sales,
                                      promotion. In a Stamps.com® survey, 64                free shipping can be used as a catalyst to
                                      percent of respondents indicated that a               gain the edge. Free shipping promotions
       Greater than $7 per order      free shipping promotion was the most                  often appear with special graphics or
                  37%
                                      effective holiday promotion. Therefore,               highlighted text on price comparison

                  ?                   offering free shipping can help greatly               sites, which drive a lot of traffic from
             I’m not sure             improve your consumers’ shopping                      consumers actively looking for the best
                 30%
                                      experience and, in turn, their buying                 deal. The widespread popularity of free
                                      behavior and loyalty to your brand.                   shipping is likely to persuade buyers
“Free shipping orders                                                                       to select free shipping offers, resulting
                                      Free Shipping Can Grow Sales                          in higher website traffic and sales for
 produce an average of                Free shipping also can effectively                    businesses offering such promotions.
 15-20 percent higher                 grow your business by driving activity.               With such tremendous benefits, it’s in
                                      With savvy consumers looking for and                  the best interest of every ecommerce
 order values than orders             making purchases with free shipping,                  retailer to learn about the different types
 without the promo.”                  ecommerce retailers can expect higher                 of free shipping.

2009 comScore Survey
                                        The Different Varieties of Free                 Specified products
                                        Shipping Promotions                        Free shipping on specified products
                                        When considering offering free shipping,   allows consumers to receive free
                                        you have three basic options to choose     shipping on a limited amount of
                                        from:                                      products. For example, offer free
                                                                                   shipping on your best-selling items
                                             Limited-time                          or high-margin products. This type
                                        Limited-time free shipping allows          of promotion promotes higher sales
                                        consumers to receive free shipping on      activity, generates orders with larger
                                        orders for a designated period of time.    grand totals and depletes excess
                                        For example, offering free shipping        inventory.
                                        during the holidays has become a
                                        popular and profitable promotion. This     Your Future in Free Shipping
                                        type of promotion generates higher         Incorporating free shipping into your
                                        sales activity.                            ecommerce marketing mix gives
                                                                                   your business unlimited potential
                                             minimum order                         for establishing a competitive edge,
                                        Free shipping with a minimum order         engaging your consumer base and
                                        allows consumers to receive free           increasing profits. Trend or not, free
                                        shipping on orders of specified amounts.   shipping promotions have earned a spot
                                        For example, offer free shipping on        amongst the most effective marketing
                                        orders of $50 and more. This type of       tools. Your decision to offer free shipping
                                        promotion typically generates higher       should always include an analysis of the
                                        sales activity and orders with larger      return on investment. You may find that
                                        grand totals.                              you too can offer free shipping and reap
                                                                                   all the benefits.




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posted:6/14/2011
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