In the age of Amazon, consumers are spoiled by fast, free delivery of items ranging from paperclips to furniture. The “Amazon Prime Effect” has led many consumers to expect to receive their items in two days or less, and when companies fall short of this expectation, it can have a negative impact on brand perception.
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According to one study, one-third of consumers feel that fast shipping increases brand trust while 90 percent say free shipping is important to them. Another study indicates that 74 percent of consumers prefer cheap or free shipping over fast shipping. There is a lot of conflicting information out there about which is best, and while offering both is great, doing so isn’t always realistic.
For most businesses, offering fast and free shipping just isn’t feasible. Unless you are sending out huge volumes of packages on a daily basis, you probably cannot offer the same type of speed and affordability that is available from mega-retailers like Amazon. Instead, you likely will need to choose between offering fast shipping or free shipping.
So, which is best? Fast or free? The answer isn’t always a straightforward one.
Fast Shipping
There are plenty of instances in which consumers need merchandise quickly. Whether it is a business owner who has run out of packaging materials or corrugated cardboard boxes for shipping their own merchandise, a spouse who waited until the last minute to order an anniversary gift, a student who needs a book for a class or anyone else who needs something in a hurry, just about everyone needs fast shipping from time to time.
We also live in a world where we seek instant gratification. For most of us, the idea of placing an order from a catalog by mail and waiting four to six weeks to receive our purchase is inconceivable — even though that’s exactly how the older generation purchased things that could not be bought locally just a few short decades ago. Customers expect to receive orders quickly, and if they are left waiting more than a few days, they are unlikely to be satisfied with the experience.
Offering fast shipping attracts customers who need to receive their orders quickly. Doing so also makes your company more appealing to customers who demand nearly instant gratification and do not have the patience to wait an extended period of time to receive their orders.
As a business owner, though, offering fast shipping can be challenging. You need to have enough staff to quickly prepare orders for shipment, and you need to determine how much to charge for expedited shipping. Getting a package from point A to point B in less than two days comes at a steep price, and you will need to decide whether you will eat the cost or pass the expense along to your customers.
For most small to medium-sized businesses, it just isn’t possible to absorb the additional cost of expedited shipping. Instead, they need to pass it along to the customer as an additional shipping charge. If you choose to go this route, you will need to make the extra charge clear to your customers and show them that the amount you are charginFast vs. Free: What Type of Shipping Do People Want? g is reasonable for the service you are providing.
Free Shipping
Free shipping is also appealing to consumers, for obvious reasons. During the hectic holiday season, one study reports that a whopping 88 percent of online shoppers preferred free shipping over fast shipping, and it makes sense. Free shipping reduces the overall amount customers need to spend when shopping online. Instead of needing to allocate part of their budget to covering the cost of shipping, they have more money to spend on the products they are interested in buying. From a consumer perspective, free shipping is an attractive perk that sets many businesses apart from their competition.
For business owners, however, the cost of offering free shipping to customers can be staggering. Online retailers that offer free shipping are forced to cover all shipping expenses themselves, which can significantly cut into profits.
When offering free shipping, most retailers either make it a limited-time promotion or have restrictions in place to help reduce the financial impact. For example, many sellers require customers to meet minimum purchase requirements to qualify for free shipping. This helps offset the cost of shipping by ensuring that each order brings in a certain amount of revenue.
Which Is Right for Your Business?
Offering either fast shipping or free shipping is beneficial for online retailers. While many customers demand instant gratification, others are willing to wait a bit longer to lower their out-of-pocket costs. No matter which options your business offers, you need to determine how you will cover the cost on your end.
While it is impossible to please everyone, offering multiple shipping options is usually the best way to go. Offering shipping that is both fast and free may not be feasible from a financial standpoint, but you may be able to allow your customers to choose between fast or free shipping. For customers who want to receive their orders without paying for shipping, you can use a slower method to save yourself some money — just be sure to disclose the slower shipping to customers before they order! For those who want to receive their items quickly, offer expedited shipping options at a commensurate fee.
Offering multiple shipping options may be a bit tricky at first, but once you have established all the potential choices, you will likely be able to set yourself apart from your competition and attract customers with vastly different needs.
In the end, the shipping strategies that work well for one company may be poorly suited to another. If you sell something small and lightweight like jewelry, it may be easier for you to offer free shipping than it would be for someone who sells something larger and heavier like athletic equipment. It is important to consider your business, your budget and your own goals and needs when determining what shipping options to offer. Meeting your customer’s expectations is vital, but it shouldn’t be done at the cost of destroying your own business.
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