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With Amazon Prime on the rise, it's getting increasingly difficult for other online business to get their products out there. With technology advancing at such a rapid pace, instant gratification is beginning to become an expectation, and Amazon's two-day shipping enables it to dominate the online retail industry. Studies have proven that Amazon Prime members are actually spending more money than people who don't have a Prime account. The key to this is that because they can provide instant gratification at "no cost" to the customer, people are buying things simply just to buy them.

One of the solutions some businesses have found to benefit them is by having the customers pay shipping costs. However, is this really a good solution? People like to know that they are saving money, and Amazon Prime provides this illusion for them. One of the biggest deterrents that affect people when they buy things online is seeing how much shipping costs. Just a few dollars is a lot to some people, like college students, for example. So, how do you make free shipping profitable for your online business? 

Well, to put it simply: it will work all on its own.

Here's why:

According to Business Insider:

  • 60% of teens' spending goes to clothes, food, personal care, and shoes. 
  • Generation Z, those aged 18 to 24, spend the greatest percentage of their income online, about 9%. But Generation Z has far less money to spend compared to older generations, and spends less money overall online than any other generation except those older than 65.
  • Millennials, those consumers aged 18 to 34, remain the key age demographic for online commerce, spending more money online in a given year than any other age group. These consumers spend around $2,000 annually on eCommerce, despite having lower incomes than older adults.

Younger generations are more susceptible to the desire for instant gratification simply because they grew up in the technology era that made it possible. However, the loophole for companies is this: teenagers want to save money. Now, most teenagers do not know how to properly save money, but what they do know is that free stuff is good. Free means less money they have to spend. 

By providing free shipping in your online business, you draw a larger demographic. Instant gratification is great, but if there's no time crunch for people, a great deal is better than quick shipping. By offering this service to your customer base it makes your product even more appealing. Chances are customers are coming to your business because it offers something unique, and that the quality is better, or maybe it was recommended to them by someone else. 

Consumers will often think twice before making an online purchase when they see a price increase after shipping charges have been applied. A mere three dollars can bring a $27 item into the $30 range and have a customer feel as if they're being charged an extra ten. 

Here are some ways in which your profits can only benefit from free shipping:

This will provide a bit of compensation for the shipping costs.

Most shoppers will do the most to ensure that they meet the minimum price so that they can get free shipping.

Offer free shipping on products that are a bit pricier, or products you want to sell more of. This kills two birds with one stone because more of that product is being sold, and because you sell more, the cost of the product will compensate for shipping costs.

Do you ship internationally? If the bulk of your customers come from within your country then shipping products for free will be more beneficial for you. By capturing more customers with free shipping, you will be getting more product out there. By increasing sales, the cost of shipping will gradually decrease in comparison to the sharp increase in sales.

These are words most consumers enjoy hearing. Offer free shipping on your products at certain times of the year. This will draw more customers to you if you have free shipping sale days or specials on holidays. It will remind customers to return to your website during this time in order to get free shipping, and it will set this notion in their mind that they should buy more product now because free shipping won't be there tomorrow. 

Consider free shipping for your business, test it out and see how it works for you. The numbers will speak for themselves.

If you need some help setting up your free shipping model, contact us and we'll have one of our business development team members get in touch.

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