Interesting article about the value of offering free shipping:
How the Offer of 'Free Shipping' Affects On-line Shopping
Highlights:
For whatever reason, a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.
Consumers like free shipping offers, perhaps because it makes the online retail transaction more comparable with that at the neighborhood store. Whatever the reason, it's clear that consumer behavior changes when shipping fees are imposed. With fees, shoppers will make fewer shopping trips and purchase more goods at a time.
Amazon.com, for example, now offers what Bell calls an "all you can eat" express shipping option, called Amazon Prime, for an annual fee of $79.
The researchers do note, however, that it is unlikely the "all you can eat" policy will be valued by Amazon users who purchase sufficient volumes of products. These customers can "strategically" time the placement and volume of orders in order to always hit the free-shipping threshold and avoid such fees altogether. From a purely rational perspective, Bell says, these strategic and/or heavy use customers, therefore, have little to gain from paying $79 to avoid shipping fees when they can already avoid them through judicious purchasing strategies.
My experience with Amazon Prime is that there are other benefits to it than just free shipping. You also get stuff faster than if you use the free shipping on orders over $25, which makes it worth it if you buy enough (which we do).
I've done free shipping offers in the past and the response was indeed better than the response to discounts with coupons.
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