What Free Shipping is Really Worth

November 11, 2010

It's no surprise that free shipping is the most popular promotion an online retailer can offer, especially in a climate of cardboard boxescontinuing tight budgets, and retailers are taking note. It's all over the news that Wal-Mart launched free shipping today on almost 60,000 gift items. The third annual Free Shipping Day (Friday, Dec. 17th) has already signed up 550 merchants, and anticipates passing 1,000.

But now we have hard numbers to find out how much money offering free shipping makes for retailers. A recent Stamps.com survey found 64 percent of respondents report that free shipping, with or without minimum spend, is the most effective promotion they can offer during the holiday season, and 53 percent will be offering free shipping on more products this year than last. More than half (52 percent) of the survey respondents who use free shipping with minimum spend report their average order size increases by at least $4.

Only 29 percent of the Stamps.com respondents said they will offer free shipping on orders of any size, no minimum purchase required. But they may be missing the boat: According to the Experian Marketing Services annual 2010 Holiday Marketer: Benchmark Trend Report, last holiday season, free shipping offers with no minimum spend requirement had 70 percent higher transaction rates, triple the revenue per email, and more than double the average order value compared to free shipping offers with minimum requirements.

Double versus $4? No contest. When it comes to free shipping, however counterintuitive it may seem, less (restrictions) is definitely more (sales).