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Free Shipping vs Discounted Price : Which Fulfillment Strategy Is good?

Introduction for fulfillment Strategy:

It’s a common confusion among sellers – whether to offer discounts or free shipping?  You can work in two ways for fulfillment strategy prices. Either you provide discounts on product pricing and charge for shipping. Or you can offer free shipping and increase the product price to cover the Fulfillment Strategy costs.

Whether to give discounts or free shipping depends on seasons, selling scenarios, and various other factors. There is no sure shot tactic that is common for every occasion or product selling. You need to look at some of the considerations to make your decision. In this article, we would be discussing common strategies that can be applied for every product and occasion.

Know the Psychology of Online Pricing in Ecommerce Platform

Cart Abandonment is the major concern in the eCommerce market among all the online sellers. Buyers leave the page without completing the purchase either due to hidden charges revealed during checkout or no free shipping. We cannot always conclude that the customers complete the purchase due to free shipping.

Customers also look at factors such as fast shipping. According to a survey, about 60% of the consumers look at the various delivery options that include both fast and free shipping while choosing between the competitors. While 45% of the consumers will abandon the cart if the options are unsatisfactory.

When I shop, I would lose interest in a product if I found that the shipping costs extra. So, definitely, free shipping has a higher weightage than the discounts offered. But at the same time if the product is of greater value, better quality, not available with other competitors, then I would buy the product even if it comes with shipping charges.

Online shoppers always compare several eCommerce platforms and stores just to get the best deals. If they found that your initial prices are lower and at the time of checkout turns out to be higher than your competitor, then they would not buy from you.

Conduct a cost-benefit analysis for Fulfillment Strategy :

Don’t just move on to multiple strategies as you have read on a blog. The first step is to do an analysis, that will take some time but is worth the profit you will gain. This analysis will help you to come to a conclusion about which options can help you gain more sales. For example, if one of your products has recently experienced a drop in sales, so this is not the right time to increase product pricing. And on the other hand, if the product sales velocity is strong, it is not profitable to lower the prices. So, change the strategy depending on the market conditions.

During the holidays or seasons when the sales are higher and customers spend more you can offer free shipping. Free shipping can help to increase the average order value and make the audience or your customers feel that they are receiving a good deal.

Different strategies on Ecommerce Marketplace

It’s a good idea if you use a different selling strategy in every eCommerce platform. For example, if you are selling a product for $10 on one platform and offering free shipping while on another platform you are offering the product at $9 and giving no free shipping. This would allow you to experiment on which strategy works best on which platforms. You can offer either higher discounts or great shipping options on varied eCommerce platforms. Diversifying the strategies across various eCommerce platforms can also help you reach and serve different audiences with different needs.

When it comes to selling on Amazon, there are various options you can find like Fulfillment Strategy by Amazon or Seller fulfilled Prime that offers a two-day delivery option. But if you are selling on a local or eCommerce marketplace then it has a different selling approach.

Conclusion :

With so many factors to look into, there is no such thing as that one-size-fits-all approach. You need to look at different aspects such as the eCommerce marketplace you are selling on, your product, and the season. By analyzing and evaluating all the elements, you can get a clear idea of the shipping offers and pricing strategies to implement.