Some eCommerce business owners may resent or balk at the idea of offering free shipping. The sentiment is understandable: it is only free for customers, and the business eats the cost. With that said, savvier minds may see many potential benefits in offering a perk beloved by customers of every demographic. For evidence of its potential effectiveness, look no further than the annual holiday-season event known as Free Shipping Day.
A business initiative that started as a surprise hit back in 2008 now regularly sees over a thousand participating retailers each December. The question is, should your own online business join the likes of Target, Nike, Banana Republic, and other huge brands? There is much to consider, and this blog post will provide information to help store owners decide whether they should celebrate Free Shipping Day.
Free Shipping Day is a shopping event that takes place in the middle of December. Participating online merchants offer free shipping with no minimum purchase and a guaranteed delivery date before Christmas Eve. The idea is that a customer’s order can qualify for this discount with fewer requirements than usual, thus incentivizing more people to make purchases.
An entrepreneur named Luke Knowles hatched the idea in 2008. According to the official website’s History page, he observed from his own data that online shopping as a whole tends to take a noticeable dive after December 10. Within two weeks, Knowles organized the very first Free Shipping Day, hypothesizing that offering a price cut would make up for the sales slump.
Word spread quickly, and over 250 businesses participated in the first promotion. Total sales for that 24-hour period reached $764 million, a smash success by any metric. The third Free Shipping Day raked in over a billion dollars in total sales. It may not be as famous as Black Friday or Cyber Monday, but it continues to grow in popularity as an unmissable seasonal event.
That history of increased profits is nothing to sneeze at. Still, the notion of nigh-unlimited free shipping, even for a single day, may concern some business owners. After all, it is easy enough for titanic companies like Walmart to run such a promotion and see financial gains anyway. Small businesses need to save every penny they can as they grow, and shipping can present a sizable cost.
These concerns are completely valid, and no commercial enterprise is required to join the Free Shipping Day festivities. With that said, businesses of any size can enjoy some significant benefits from participation. Here are a few of the more notable potential pluses.
The most obvious reason to run a free shipping promotion at any time of the year: customers love it. eCommerce statistics bear this out. Nearly a quarter of all online shoppers have added items to their cart so they could reach the minimum order required to waive the charge. On the negative side, a Statista study reports “unexpected shipping costs” as the reason 63% of shoppers have abandoned shopping carts in the past.
Shipping fees help businesses offset the cost of order fulfillment. Most people accept it, however begrudgingly, as a part of online shopping. With that said, consumers are so eager to obtain free shipping that many will buy more just to qualify for it. Store owners can use this practice to boost sales. If you have a good sense of economics and balance, the discount can pay for itself.
Free Shipping Day is an excellent occasion for pleasing your current customers and attracting new ones. The whole event may be designed to benefit businesses, but most of your visitors will only see the word “free.” How can they not miss the rare opportunity to place an order for less? Plus, the occasion only lasts 24 hours. If you do this right, your store may see one of its biggest sales days and your customers will be grateful.
Take a look at the analytics for your store’s sales over the course of a year. Depending on what you sell, you may expect December to be your most profitable period thanks to the month’s various gift-giving holidays. A closer look, however, may reveal a drop in sales halfway or a third of the way through. How could that be possible? Why did Luke Knowles’s sales data turn up that downturn after the 10th?
You may have already guessed the answer: shipping. Customers can place orders in a matter of minutes, but businesses may need days or weeks to fulfill them at the best of times. Factor in the distance between inventory warehouses and buyers’ addresses, then consider that December is the busiest time for delivery services. Alternatively, recall your own shopping experiences: when do you stop expecting online orders to arrive before the big day?
When people want to purchase presents from online stores, they do it early. Free Shipping Day delays the point at which your regulars start running to the mall. It is certainly a gimmick, but as history has shown, it is an effective one.
Even if you have not heard of it before now, make no mistake: Free Shipping Day is a big event. If the “total sales exceeding $1 billion” part does not convince you, then take a gander at the companies that participate:
These are only a few of the many major brands that take part in Free Shipping Day. You can be certain that they would not do something like this if there was nothing in it for them.
With that said, plenty of small businesses sign up as well. Free Shipping Day encourages participation by offering exposure on their official website. When a merchant is approved, their logo is placed alongside all the aforementioned titans, along with links to relevant pages on their online store. People searching through categories for sales on certain kinds of products may discover your store. Who knows? They might come back for more, even when shipping costs apply.
Anyone interested in official participation in Free Shipping Day can submit a form on the event’s website. While any merchant can sign up, the organizers will have the final say over their certified partners. To avoid immediate rejection, your business will need to at least meet a few criteria, outlined below.
One of the benefits of running an online store is the ability to receive new orders at any time, day or night. Most brick-and-mortar shops close in the evening because employees and managers need to go home at some point. Internet entrepreneurs can literally make money in their sleep. Customers appreciate this state of affairs: time zones are as much a non-issue as distance.
They also appreciate sales promotions that last the full 24 hours. That is why the Free Shipping Day event requires participating stores to “offer free shipping on all orders” for the entirety of the day. It must start at 12:01 AM, and it must end no earlier than 12:00 AM of the following day. As we said earlier, it is just for one day.
Many businesses offer free shipping with a catch. Only orders that exceed a certain price — or, sometimes, a certain number of items — are eligible. It is so common that for the first few years of Free Shipping Day, the event’s organizers permitted this practice. In 2013, though, they changed the practice. Now, all participating businesses must lift their minimum order limitations.
The official history cites “user feedback” as the reason for the change. Another possible factor: if this practice is already widespread, then the event is a little less special. Regardless of the cause, it is mandatory. Your customers will thank you — and hopefully reward you enough to make up for the costs.
This is the big one, and possibly the most difficult to promise. The whole reason for this occasion’s creation is because last-minute buyers tend to shop for presents offline, not online. By mid-December, even the most dedicated online shoppers may fear that non-Amazon Prime purchases will arrive too late.
Any business that takes part in the event must guarantee that presents will arrive on time for the holiday. If that strains your business’s capabilities, then do not sign up. If you sign up anyway, do your best to ensure that you meet the deadlines. Any customers who come to you that day are there because they took a chance on you. If you earn their trust, then you may just earn their loyalty.
Please note that if your store offers “oversized or personalized items,” they may be excluded from this requirement. These goods take a little more work, and customers should understand that. For the sake of good ethics and dissatisfaction prevention, you may want to include warnings on the product pages.
Once you receive approval from the Free Shipping Day organizers, it is time to prepare. The exposure and discounts may attract wave after wave of customers, possibly more than your store has ever seen before. Can you handle that? Here are some tips as you get ready:
At a glance, Free Shipping Day may seem difficult for small businesses. You would need to meet a potentially tricky holiday deadline and risk disappointing your customers. You may need to devote some of your budget to special delivery methods and replenished supplies with only the hope of a surge in visitors. On top of that, you will have to drop a fee that covers or helps to cover shipping costs.
We cannot deny that participation in the event may require a good deal of work on your part. However, if you take the opportunity, you may be rewarded handsomely. Free Shipping Day regularly raises hundreds of millions in total revenue. Plenty of small businesses have tried it out and witnessed their best sales days. These facts are significant, especially at a point in the year when sales often start to sag.
No one can tell you that your online store must or must not participate in Free Shipping Day. As the store owner, the choice is ultimately yours. All we can do is inform you that many people have no regrets about submitting the form and running the sale. If you drop your shop’s shipping fees for just one day, the sales and attention and customer satisfaction just might make it worthwhile.