Is Free Shipping Profitable?

Yesterday on NPR I heard a news story about L.L. Bean's new free shipping on everything policy. Everything. Apparently, recent market research showed the #1 reason a customer decides to buy something from you instead of your competitor is free shipping.

If it's a matter of sales versus no sales, it's probably better to sell (assuming your prices aren't already so low you lose money on your items). But if it's just more frequent sales versus less frequent sales, it gets a lot harder to know the "right" answer.

Questions to ask yourself:

• How high are your shipping costs to begin with?
• Will increased sales more than make up for the shipping costs?
• Can you increase your current prices to cover the shipping costs and still gain enough customers to cover shipping costs?

That last question is the one I'm going to play with. Market research shows that customers irrationally would rather have free shipping and pay the exact same amount more for the item. Now, on Etsy that means paying 3.5% fees on your shipping costs, too, but if you make more sales, it's worth it.

My shipping costs are high. I ship heavy and/or breakable things all the time and I abuse bubble wrap until I can safely drop the package down the stairs without damaging the contents. Plus I like to make my packages look like presents (wrapped in recycled wallpaper samples for attractive durability), though I do that on my own time and don't figure that into my costs. Can I really get away with selling, say, my ebony Pyrex mugs for $60 if I offer free domestic shipping?
I'm going to try. If everything flies off the shelves, I'll let you know.
And send NPR a thank you card.


Another fabulous article showing how to think about free shipping and set up a formula for figuring out a good number for "free shipping over $__" can be found here:
http://www.marketingexperiments.com/improving-website-conversion/shipping-charges.html

personal pricing logic of the undead

Doing a bit better as of fairly late last night. I got all of my packages ready for shipping and was perhaps a bit overzealous with the goodies and general package decorating (I'll post a photo if my friend lets me steal his camera before we head to the post office this morning), but I feel a lot better just knowing I could do what had to get done. Being useless is frustrating.

As a result of Mr. Migraine I'd left up my Black Friday-Cyber Monday sale an extra four days with the quick note at the top of my Etsy shop that I was in Migraineland and shipping might be delayed but that meant the sale got extended because I was too dead to take it down. Today, I was going through to bump all of my prices back up and remove the "25 PERCENT OFF" from my titles when I decided perhaps I'm better off leaving most of my cards at $3. I know I personally am more likely to buy from a shop with $3 cards, since I don't like to buy just one at a time and almost $10 when you figure in postage is much more daunting than $8. In fact, I might even buy three cards at $3 each when I would be loathe to buy any from the shop that's selling for $4. Hopefully I'm not the only one thinking like this right now. Also hopefully I have cards that people want and find. That's the huge first part of it. The price just seals the deal. So pretty pretty please if you have a friend you think would like my shop, send them the link, and hopefully this afternoon I'll still feel better enough to work on general whoring (AKA marketing).