Building The Business Case For Free Shipping

Building The Business Case For Free Shipping

For online customers across the globe, shipping costs are one of the most important considerations when deciding where to shop. With retailers under pressure to offer complimentary delivery as a means of attracting and retaining customers, what are the effects of free shipping on an eCommerce company’s bottom line, and how can they best implement this into their operating model? Across the Asia Pacific region, eCommerce is full of opportunity and growth potential. However, as in other regions, many online retailers find it challenging to build a sustainable and profitable business model. At SingPost, we believe that in order to be successful, businesses must deliver best-in-class customer experiences, putting the needs and behaviors of consumers at the core of their systems and processes. Customers today have full visibility over product pricing and service levels. They also have the power to instantly research alternative offerings and switch to a competitor in a matter of seconds. Online retailers must therefore provide a superior shopping experience while sustaining a rational business model in order to survive today’s highly competitive eCommerce marketplace. While a positive shopping experience is driven by numerous factors, research shows that transparency with regards to shipping costs as well as the notion of free delivery are key customer experience influencers. Indeed, according to research conducted by Accent (now Startek) in 2014, 90% of consumers are drawn to online shopping by the notion of complimentary shipping[i]. What Customers Want According to a 2013 Forrester Research study, shipping costs were cited as the primary reason behind customers abandoning their eCommerce carts during the online shopping experience. Indeed, when determining whether to...