How Can Businesses Offer Free Shipping?

Free shipping has become increasingly popular and widespread. It simplifies pricing and eliminates complaints about excessive delivery costs, but many business owners and shoppers wonder how it’s possible to offer this service for free.

Thresholds

Most retailers require customers to spend a minimum amount before they qualify for complimentary shipping. Numerous companies set their thresholds at $25, $35 or $50. This policy often succeeds in boosting the size of each order.

Pricing

Some merchants simply build shipping and handling expenses into their prices. For instance, a music CD might normally sell for $6.50. A company that offers free delivery could cover its costs by charging $9.99 for the same product.

Volume

Nevertheless, major online retailers’ prices frequently seem too low to include postage. Such pricing is possible because the carriers give them sizable volume discounts. Unfortunately, these reductions put smaller businesses at a disadvantage.

Speed

When retailers provide free delivery, they often use one of the slowest and least expensive options. For example, they might ship products via UPS Ground or USPS Media Mail. Shoppers usually have the option to pay extra for faster deliveries.

Efficiency

Businesses can offer complimentary shipping with greater success if they find ways to cut packaging costs. They accomplish this by ordering boxes in bulk and using the optimal amounts of lightweight packing materials to protect each shipment.

The bottom line is that companies can easily provide free deliveries when they benefit from volume discounts on shipping services and materials. If a firm doesn’t qualify for these cost reductions, it may still opt to build postage expenses into its prices.