When you own a business, there are a number of different things you need to plan. You need to determine what your products and services are going to be, your price points, promotional ideas and whether you’re going to offer free shipping to your customers. Some companies provide free shipping when an order is over a certain amount. There are times when this just isn’t cost-effective for a business. You can actually lose money and hurt your company. Keep reading to learn more about how offering free shipping can hurt your business and what you should do in this instance.
Customers Want Their Stuff Fast
Free shipping is something that is important to customers, but it’s usually more important that they get their items quickly. Nobody wants to sit around and wait for weeks to get something they purchased. If you’re currently offering free shipping, keep this fact in mind. Not only will you be taking on the shipping costs, but you’ll have to pay more in order to get packages to people in a timely manner.
Free Shipping Isn’t Sustainable for Most Small Businesses
Amazon is a company that currently provides free shipping to customers that have an Amazon Prime account. This is an incredibly convenient service. However, Amazon’s shipping model simply isn’t realistic for most small businesses. Due to the large inventory of items that Amazon sells, they can start up a membership program like Prime. People still pay for their free shipping through a Prime membership. Your average small business isn’t going to have enough interested customers to make this work. In order to pay the shipping for each order, this is going to be a big hit to profits. Your average business isn’t going to go this route. You can always offer free shipping periodically. You can schedule it around the holidays as a way to motivate shoppers to get started early. You can offer free shipping for birthday rewards, sales and so on.
Adjusting Your Prices
In order to accommodate customers and provide free shipping, you’ll likely have to increase the amount of money that you’re charging for each item you sell. This change in price point could really be a turnoff for customers. If they see the increase happen, they’re not going to be happy. They’ll start looking for somewhere else to shop that will provide free shipping, lower prices, and more discounts. If this was already built into your price model, you could be decreasing your ability to compete with other companies.
If you are offering free shipping as part of your small business profile, you might want to rethink this strategy. If you can manage to offer extremely affordable shipping costs to customers, this should keep everyone happy. You can offer free shipping on orders that are over $50 or $100. This makes it more affordable for you to provide this free shipping. It also shows your customers that you’re interested in providing them with deals and discounts if they’re loyal customers.
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