I was happy to see Tableware Today magazine share our experiences and lessons regarding the power of free shipping.
You're invited to read the article below:
THE LAST WORD
FREE SHIPPING PAYS OFF
by JASON SOLAREK
Most indie stores don’t have the technical ability or people power to track pricing and offer discounts like free shipping. Indie stores need this information or they’ll be left behind. This information can make a difference: in e-commerce free shipping can produce a 600% sales boost.
My company, Bridge Shop Local, studied 1,100 stores and 40 top selling brands and discovered that to get free shipping retailers require a $190 purchase while brands just want a $118 order (View the study's results here). If you could spend $72 less to get free shipping, where would you shop? (Some brands even have no minimum spend to receive free shipping.) Brands are four times more likely to offer free shipping; 65% of brands offer it vs. just 14% of indie retailers. These 65% of brands know what just 14% of retailers do: free shipping is a requisite to online success.
Most brands are using free shipping to dramatically outpace their retailers. My company analyzed the shopping carts of our stores and found that customers were six times more likely to complete a purchase if the store offered free shipping. Let’s say your retail business sells $100,000 a month online; you could be doing $600,000 with free shipping. Only 14% of indie stores are getting this sixfold sales boost due to free shipping. You may counter that brands have double the margin and do more bulk shipping so they get lower shipping rates. Okay, so what? That doesn’t change the fact that they’re cleaning up on free shipping.
So why can’t a retailer just offer a lower price? Because many premium brands require stores to sell the item at MAP and prohibit discounting. Yet visit a brand’s site and it may be offering $20 off for signing up for an email or running a sale. What’s a law abiding MAP retailer to do? It’s stuck between Amazon’s low prices and the brand running deals on its D2C site. My company is against breaking required MAPs, as are our retailer members. Therefore, free shipping is an important discount tool because it allows a store to offer a lower price but not be in violation of a brand’s MAP pricing. There are other ways to lower prices, including private sales and loyalty and rewards programs. For example, RH gives members 25% off after joining for $175 a year. We encourage you to consider offering these although they can be complicated. Free shipping is the easiest solution to boost online sales and be competitive.
We need indie retailers to offer the lowest price via free shipping discounts because otherwise many in the retail food chain, including you and me, lose; Amazon will get the sale. We’d rather have a small percent of a sale than zero percent of an order lost to Amazon or other sites. Free shipping will shrink your margins, but there’s no other choice. Online margins are smaller and that must be accepted. Could that mean a negative margin, losing money? I want you to stay in the black. Yet there’s a cost to acquiring a customer. It may be worth it to get the customer and starve competitors of the sale. Amazon does this to you on a daily basis. You may not want to compete against Amazon, but you’re forced to compete on shipping vs. your brands. You’re likely a small retailer and smaller margins may not be for you right now. If you run the numbers and it won’t work, that’s okay. Set it as a goal. But please be sure to stay in the know about what your brands are offering.
Each month in 2023, my company is going to visit the top-selling brands’ sites and record promotions, including free shipping offers. To help our indie store members we’ll share the report with our members and offer tips. For example, a retailer could see that brand X is offering free shipping over $Y, so the retailer may decide to offer free shipping over $.9Y. We’ll ask the brands if they’d like to help provide this free shipping information. Brands can assist and help their stores have this information so their stores can sell more. Sale reps, I haven’t forgotten about you. We’ll share this promotion tracking information with you as well. Everyone wins by helping everyone in offering competitive prices, including reps. We want your stores to sell more.
We need to bring light to pricing. Currently most merchants don’t know about brand promotions, such as free shipping offers and what the lowest online prices are. E-commerce is fueled by offering low prices and competitive offers. Price is a lever that you have to pull and free shipping is a handle that only 14% of stores are pulling. The time is right to make the shipping price right.
You’re invited to join us at ShopLocal.org at no charge to see the results of our free shipping studies.
Jason Solarek created Bridge Shop Local, a collaborative e-commerce platform, to give independent retailers a fighting chance. Hundreds of retailers have chosen the platform to offer fully loaded, product-rich websites to push back against Amazon. In particular, retailers and their customers are using the software to sell millions of dollars in gift registry orders. On Bridge, retailers, brands, and sales reps collaborate on 170,000 home goods products from 3,100 brands. Retailers sell these products, share these products on social media, and use the products to power their gift registries. Brands such as Baccarat, Versace, Le Creuset, Juliska, and Michael Aram use Bridge to promote their products.