It is the holiday season again and businesses must take advantage of this time by making it easy for consumers and retailers to buy their products. One of the strategies companies can employ to ensure people buy their products is offering free holiday shipping — it makes customers happy because they feel like they are getting a deal.
When a business offers free shipping during the holidays, it gets an advantage over others that are not. Yes, free holiday shipping sounds exciting to retailers and consumers, but it is a nightmare for organizations because they have to cover the cost of the free service. Companies know they suffer a loss when offering free shipping services during the holidays, but why do they still do so?
Why Businesses Offer Free Holiday Shipping
Aside from exciting customers, there are many other reasons why organizations offer free holiday shipping. During the holidays, businesses strive to keep up with increased customer demands, which may result in delayed service delivery. As a result, they try every means to make their consumers happy and one of those is offering free shipping.
Statistics show 73% of shoppers say free shipping influences their decision to buy from a company. Therefore, offering free holiday shipping could entice more people to convert and make a purchase, helping a company avoid missing out on sales.
Low demand could also force a business to offer free shipping to customers. According to Yahoo, there will be low demand from shoppers during the 2022 holiday season due to inflation and the looming recession.
Since most consumers would rather buy from an organization offering free shipping, they could avoid the projected low demand this season by providing free shipping to potential customers. Business activities must go on after the holidays — the ones that kept customers happy by providing free shipping during those times could get returning loyal customers.
Companies can experience various benefits of offering free holiday shipping, including:
- High service demand: Free shipping is music to shoppers’ ears and they would choose a business that offers it over every other one.
- Increased loyalty: Suppose an organization is able to offer free shipping during the holiday season when most others are less likely to. In that case, customers will return to employ their services even after the holidays.
- New customers: Consumers who shop with a business and are satisfied with its service will likely refer their friends and families to utilize the same company. Since offering free holiday shipping makes customers happy, a brand may get new visitors from referrals.
- Complete buying process: Organizations that offer an exact shipping cost to customers during the buying process can build trust and encourage them to complete the purchase.
However, there are also a few aspects they should remember to watch for during the season:
- Price hike: A business may find it necessary to increase the prices of its products in order to balance the cost of free holiday delivery. Though item costs may still be affordable during the holidays, they may be different afterward.
- Addicted customers: Free shipping increases a shopper’s buying activities. The more free shipping a company offers, the more customers will place an order for their products. This number of increased purchases could make the warehouse and shipping chaotic.
- Product return. Since free shipping increases a buyer’s shopping activity, they may end up buying things they do not need. This will lead to many product returns, jeopardizing free delivery’s purpose.
- Bankruptcy. Excessive orders due to free shipping services could harm the revenue of a business, which may lead to its shutdown.
How Businesses Can Offer Free Holiday Shipping Without Impacting the Bottom Line
Reducing shipping costs can significantly benefit an organization, but only if it does so efficiently. How can a company dodge the potential downsides? Below are several ways businesses can offer free shipping during the holidays without impacting their bottom line.
1. Use Logistics Companies
When organizations partner with reputable logistics companies to ship their products rather than operate on their own, it can help ensure the timely delivery of their services to customers. In turn, doing so can increase customer satisfaction and encourage them to return after the holiday season.
2. Set Order Limits for Free Shipping
A business may offer free holiday shipping without impacting its bottom line by making consumers qualify for it. This could encourage them to bulk-buy, making sure the organization is still gaining profits during this time.
3. Offer Free Shipping as a Loyalty Reward
Another way a company can prevent loss from offering free shipping is by making customers come back for more of its products. As a reward, the business can offer to deliver its products to them free of charge.
4. Set a Time Limit
Organizations should ensure their free holiday shipping only lasts during the season. A good idea to do this is by limiting the free deal to two days. For example, a business can offer free shipping between November 27–December 18. This will ensure consumers buy products they are less likely to return and guarantee they cover the cost of their returns.
5. Keep an Eye Out for Competitors
A brand may offer free shipping during the holidays in order to increase visibility, especially if competitors are not offering the same service. Since shoppers would rather have their purchase delivered for free, they are likely to buy from a company that provides such a service than pay for their own shipping. Keeping an eye out for the latest technology solutions may help the business stand out.
Should Businesses Offer Free Holiday Shipping?
Free shipping makes customers happy and could increase visibility and engagement on a brand’s website. Should a business offer free shipping during this holiday, it will likely encourage customers to buy from them. However, organizations must be aware of the cost of providing free holiday shipping and prevent potential loss by partnering with a logistics company, setting order limits for free shipping or introducing a return policy.
Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry.