Are Free Shipping & Fast Delivery The Key To Staying Competitive?
Stephen McCance January 9, 2019
It was recently announced that Jeff Bezos, founder of online shopping giant Amazon, overtook Bill Gates as the richest person in the world – according to the Forbes 400 rich list. For many retailers, it can seem impossible to stay competitive against Amazon given their dominance of the market. However, there are some tips and tricks you can try that will give you an edge – such as free shipping and fast deliveries.
The Importance Of Free Shipping
Offering fast shipping has almost become a standard, particularly in the fast-fashion industry. In fact, if free shipping is not offered – it can cause customers to turn away. As many as 57% of shoppers say they’ll cancel their orders if shipping costs are too high, with most abandoning their cart altogether once they learnt that free shipping isn’t an option!
People’s high expectations have made free shipping widely normalised among many online retailers. Consumers have even admitted to adding additional items to their cart just to qualify for free shipping.
Fast Delivery Takes The Lead
Not only do customers anticipate free shipping, but they want it faster than ever. An order with two-day delivery is ideal, but an order with same day delivery? Incredible. Amazon are one of the few retailers who have the capabilities to offer such a service. Obviously, offering fast delivery to a location across the world is never a viable option. But even two-day delivery within the UK is an achievable benchmark for many e-commerce brands.
Optimising Your Packaging
Because nothing ever comes for free – someone along the chain must be taking the brunt of the cost for free shipping. Companies in the fast fashion industry have even looked into the way they package their products to establish the most efficient shipping methods that will also keep costs down. For example, customers don’t expect to see their order of £100 worth of clothing increase in shipping costs compared to an order worth £10. So, companies look to charge a flat-rate fee.
The Price Of Staying Competitive
In order to stay competitive against the likes of Amazon, retailers only option may be to offer free & fast delivery service – but at what cost? Calculating your free shipping thresholds is a must to ensure you don’t make a loss as a result of offering this service. To do this, you need to find out your median order value, or MOV. This is the midpoint of your sales, meaning that half of all your orders will be above this value, and half of your orders will be below.
In an ideal world, free shipping is set just high enough above your MOV that it encourages customers to add that extra item to their basket. Many fast fashion brands now have a feature at the top of the website page or at the checkout stage that alerts customers to how much they’d have to spend to qualify for free shipping. You need to experiment with your MOV to find out the threshold that gives the most returns. You’ll then have a scenario that works for you and your customer.
Free & fast delivery is certainly a feature that’s helped many fast fashion brands stand a chance against their competitors. Even if it’s only something offered as a promotion every so often, it’s one of the main ways that companies stay ahead of their rivals.
