TulipTools Internet Business Owners and Online Sellers Community

Quote:In October 2005, L.L. Bean announced it would offer free shipping throughout the holiday season. That year the company posted record sales. In 2006, L.L. Bean reversed course, not offering free shipping. The result? The company did not meet its sales goals. So this September, in honor of its 95th anniversary and as a reward to customers for stronger than expected spring sales, L.L. Bean announced it would again offer free shipping throughout the holiday season.

While offering free shipping may make cents (lots of them) for a big, well-established retailer like L.L. Bean, even with a potential bump in sales, it may not be a good business move for smaller e-commerce businesses...

Quote:UncommonGoods has never offered free shipping and I have a pretty strong view on the subject that I’d like to share.

Shipping a product to a customer’s home (or to the home a gift recipient) is a huge convenience that can save the customer nearly an hour (especially if the store is out-of-stock at the time of the visit). This should have a value of $25 or more to our average customer (the average hourly wage is $18 nationally) for the time savings, plus the gas/wear and tear on the car, etc. Therefore a $5-$10 shipping cost is a modest price to pay. Furthermore, customers tend to be very focused on product pricing - it is largely a zero sum game - if the customer does not pay for shipping, the retailer could try to make it up with a higher product price, which is not going to help an online retailer compete against a store. While it is tempting to offer free shipping, I think it is generally bad for the direct-to-consumer industry to give away something of such value - as consumers, we tend not to fully appreciate things that are free. I am also skeptical of research that indicates that free shipping is highly valued by shoppers - if a choice were included for free merchandise, I suspect that would score even higher...