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Will Offering Free Shipping Increase Revenue?

Yitz Lieblich
November 13, 2019

With the Holiday season fast approaching, the shopping frenzy is starting. Consumers are already scouring the internet for the best gifts at the best prices.   But not only are they shopping for a good deal on a gift, they are also shopping for a good deal with free shipping!

Is Free Shipping the New Norm?

Amazon Prime’s offer of free two-day shipping has raised the bar for all other retailers. Consumers now expect all items to be shipped to them as quickly and cheaply as Amazon. What is a retailer to do? Shipping costs can account for 5% or more of the total cost per item. Offering free shipping will mean that shipping costs will eat into their hard earned revenue.

High Shipping Costs = Abandoned Carts

When you take into consideration the fact that 55% of consumers will abandon their shopping cart when presented with added shipping costs, it seems that retailers are not really left with much choice. Especially when a recent survey shows that 58% of customers want free or discounted shipping. 

Why Offer Free Shipping?

Surprisingly, even with the high cost of free shipping, more than 46% of small to mid sized retailers say that offering free shipping has actually increased their revenue. How can this be? Since one main reason for cart abandonment is shipping costs, simply offering free shipping will potentially gain back the 55% who would not otherwise complete the purchase.

The goal for retailers is to find that sweet spot, where the increase in retail sales will outweigh the cost of free shipping. But how can a retailer accurately determine the cost of shipping? The key is having the proper shipping management software in place.

Automated Shipping Management

SkuNexus is a fully customizable commerce operations platform. We are an inventory, order, warehouse, and shipping management system all rolled into one! SkuNexus integrates with over 130 shipping carriers worldwide. 

The SkuNexus platform will automatically compare shipping speed and price among various carriers to determine the most cost effective and efficient way to ship each and every item. Choosing the correct carrier has never been easier. Now you can start converting all those full shopping carts into sales by offering free shipping!

Click here to learn more!

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