Trends in S&H offers

Conditioning the customer

Indeed, there is a lot of concern in the industry that free shipping is conditioning the customer to expect never to have to pay shipping and processing. Yet we keep offering it because we're afraid otherwise we will not get the order. We wonder if the consumer will take another offer because of the cost difference.

In general, 50% to 70% of most businesses' customers are one-time buyers; they don't shop a second time. When you consider the initial acquisition cost for customers, and then add in free shipping if used in prospecting, this is bad news. Is there any end to this slippery slope into poor or no profitability?

The predominant sentiment I heard from the companies I spoke to was, “We wish we could all agree to not use it.” I don't hold out much hope of that ever happening — especially when merchants such as Coldwater Creek, Lands' End, Woolrich and L.L. Bean have upped the game by offering free shipping with no minimum order value.

Outerwear and gear merchant Backcountry.com picked up the pace further this past holiday season by offering not only free shipping, but also free tax and a price match on all orders.

The reality is that some multichannel merchants will always include a free shipping promotion. And many businesses continually start and stop free shipping offers in their catalogs, e-mail blasts and on their Websites.

Particularly in this business climate, and considering the number of companies using free shipping, you may find that you can't afford not to offer it.

There is always one way to avoid the free shipping trap: Offer unique merchandise. If customers want the product assortment you have, and if they can't find it elsewhere, they will live with reasonable shipping fees.

Curt Barry (cbarry@fcbco.com) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consultancy.

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Want more on shipping and handling?

For an expanded version of the chart above, plus comments from merchants on their free S&H strategies and Curt Barry's Q&A on the topic with database marketing consultant Kevin Hillstrom, visit: www.multichannelmerchant.com/february09