The Advantages and Disadvantages of Free Delivery Services for a Business

Whether to offer free delivery or not is a question that every merchant must ask before setting up shop. The practice of shipping and delivering purchases to buyers is not novel. Ever since online retailing gained popularity, shipping became a huge concern. Delivery costs are some of the biggest hindrances for online shoppers. A study about why customers opt not to order goods from mail-order services and online retailers showed that 36% fear the high costs of delivery. By eliminating these expenses, merchants can enjoy certain benefits that boost their businesses. However, free delivery has a negative impact as well, and this piece looks at both sides.

What’s In It for the Business
Sales Boost

Increased sales are the obvious advantages that a business person can expect by offering free shipping. One study discovered that 9 out of 10 consumers will buy an item from an online store if it offers free shipping. The same report stated that orders that include free shipping have a 30% higher value than those that don’t. As a consequence, many merchant see the wisdom of providing free delivery services. A boost in sales might result in high revenue values.

Outshine Rivals

Competitive advantage is another reason to offer free shipping. Online retailers have a lot of competition to deal with, and staying ahead of it requires smart strategies. Free delivery services can convince buyers to pick your store instead of your main competition. With the help of a parcel delivery broker service, you can find the best shipping solutions for your business at reasonable rates to help you maintain that edge.

Free Advertising

Free delivery buys a lot of goodwill with customers, and you can leverage that. Through referrals, buyers are likely to spread word that your store provides free delivery services. This free advertising means that you can save money on your marketing campaigns. Additionally, it can help build the reputation of your brand, especially if your customers always leave happy.

The Downside
Increased Costs

If you offer free delivery, your business has to shoulder the costs that come with the service. Shipping costs are not what they were ten or even five years ago. Transportation rates keep increasing, meaning that businesses that offer free delivery services incur high expenses. Merchants must also factor in the back end maintenance costs. Your company needs a proper set up to provide the option of free delivery when necessary.

Poor Revenue

Voluminous sales do not always translate to high revenue values. Customers might be purchasing items from your shop, but they might not be spending very much. It is why merchants have conditions for free shipping. For example, you can set a price range for the goods that qualify for free delivery.

Over Dependence

You run the risk of spoiling your customers when you offer free shipping. Buyers who have come to expect free shipping for certain items might stop getting them from you if one day you stop the complimentary delivery service.

Free shipping and delivery changed how retailers operate and the way consumers make their buying decisions. Merchants have to weigh the effects that free delivery services have on their business before deciding to offer them.

Image credit: Free Delivery Services via Arcansel/Shutterstock

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