There’s no doubt that offers of “free delivery” are luring more customers to the world of online shopping. When compared to brick-and-mortar stores, the benefits of online shopping are clear: no driving, no parking, no hauling your purchases around in the rain. Add free delivery to the mix and for most, any lingering doubts are erased.

Many retailers such as Play.com and Dixons offer free delivery as standard. But is this really a good thing?

"Free Delivery" is really a misnomer because ultimately someone has to pay for it. It’s just a question of who. Do you, the online retailer, choose to absorb the cost of delivery or pass it on to your customers? It’s true that online retailers with large volumes or high margins can usually afford to absorb delivery costs, giving themselves a competitive edge. But for the rest, maintaining competitive prices while absorbing delivery charges is a real concern. And a bigger question looms: are online retailers hurting themselves in the long-term by conditioning customers to expect free delivery?

It appears this is already happening: A survey conducted by PayPal and comScore back in 2008 indicated that 43 percent of shoppers abandon their shopping carts because of unexpectedly high delivery charges. And 61 percent of online shoppers, according to Forrester Research, prefer to shop with those retailers offering free delivery.

As consumers become savvier with their online shopping and as delivery costs factor more heavily into price comparisons, retailers need to follow suit. There are many ways in which to achieve the benefits of offering free delivery without the drawbacks. For example: Offer free delivery for purchases over a certain amount. If your average order is £15, try offering free delivery on orders over £25. If you’re selling more expensive items, or if your items are costly to ship, then you’d want your cut-off to be more like £50 or even £100. Either way, the offer should boost your order size, with the extra revenue covering your delivery costs.

Choose a flat-rate delivery charge but keep it very low. Customers are looking for a fair deal, and this doesn’t necessarily always mean “free.” Research shows that ultra low-cost delivery tends not to cause a decline in purchasing, and as long as your product prices remain competitive it will reduce the pressure on your margins.

Use a sliding scale to calculate delivery. This could incorporate a combination of the first two options, using a nominal delivery charge for small items, increasing it by a pound or two for larger orders, but offering it free above a certain amount.

Offer free delivery for loyal customers. Keep your most valuable customers happy and make them feel special by including promotions or coupons in your email correspondence. Or, give them a discount if they forward the offer to a friend, fill out a survey, or take other action that helps you improve your business.

Ultimately, your delivery pricing strategy depends on the type of products you sell, where your customers are located, and your overall pricing model. But delivery doesn’t always have to be ‘free’ for your customers to feel they’ve been treated fairly and have gotten a great deal.

Readers who submit articles must agree to our terms of use. The content is the sole responsibility of the contributor and is unmoderated. But we will react if anything that breaks the rules comes to our attention. If you wish to complain about this article, contact us here

Readers who submit articles must agree to our terms of use. The content is the sole responsibility of the contributor and is unmoderated. But we will react if anything that breaks the rules comes to our attention. If you wish to complain about this article, contact us here