Free Shipping: Managing Downstream Consequences

Situation: You’re caught in a trap.

Dilemma: For many, business isn’t meeting expectations. You’re told that you have to offer free shipping. You’re told that you have to hold market share “during these challenging economic times.”

Temptation: Free shipping usually provides a positive bump in sales. Many catalogers see sales increases between 5 percent and 35 percent when offering free shipping to loyal customers or prospects. The impact on profitability varies, depending upon the gross margin of the product being sold by the merchant.