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    1. JamieBoswell9 is offline

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      #1

      Should I offer free shipping at my online store? Will it increase my bottom line?

      I have an online store that has been going on for about 5 months now. I am doing pretty good, but I have seen some things that say offering free shipping helps boost sales. Is that true? Should I offer free shipping for my store?
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    2. Sams_Johnson is offline

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      #2
      Free shipping is quite a trend these days, and a lot of people say that it helps them. Truth is, it depends on what your business is and how it works. It might work for you but not for someone else running a different kind of online store. Below, I’ll try to tackle the issues and help you figure out whether or not free shipping is for you and your online store.

      One thing you have to start out when you are considering this question is whether or not your product is appropriate for free shipping. Generally big products with smaller profit margins do not make it worthwhile to have free shipping offers. The reason is simple. Larger products cost more to ship, so that costs you more if you give it away for free. Also, many big products are quite cheap (though not always), so your profit margins are going to already be fairly small. That makes it fairly difficult to offer any special discount. For example, if you sell bookshelves, these are fairly heavy and the profit margin is fairly small. If you offered free shipping, most of your profits would be eaten up.

      Alternatively, if you are selling fairly small products, your shipping costs are going to be a smaller part of your costs to doing business. Often times, (again not always) these smaller products are the kind where you make a little bit more money and your profit margins are larger. So, you might be able to afford offering free shipping on these products. For example, if you sell electronics, you can probably afford to offer free shipping because your shipping costs are probably small and your margins are fairly large.

      Now does it make sense to do this. Even if it is something you can afford, will it make you more money by offering free shipping. Well, if it attracts people to your online store and gets them to buy more products, then yes, you can make a lot of money by offering free shipping.
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    3. JamieBoswell9 is offline

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      What are some strategies that I can use to make free shipping worthwhile if I am dealing something like Ipods?

    4. Sams_Johnson is offline

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      So, if it looks like you could be successful with the free shipping model, you could try a strategy known as the minimum order strategy. It is pretty self explanatory. All you do is you say that you will give free shipping as long as the customer buys a certain dollar amount. The point of this is that it forces a lot of the customers to buy a lot more than maybe they were originally going to be buying. If originally half of the people coming into your store are buying ten dollars worth of your products and half of the people are buying twenty dollars worth of your products, then what would happen if you offered free shipping? Maybe three quarters of your customers would buy things worth twenty dollars and one quarter would buy ten dollars worth of your products. Well, you’ve lost some money on shipping, but you’ve increased the amount you are selling significantly. So, it is probably worth it.

    5. JamieBoswell9 is offline

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      Do you know of any other strategies for making free shipping help me increase my profit margins?

    6. Sams_Johnson is offline

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      Well, a modification of that strategy is to use the minimum order strategy during the Christmas season only. People tend to do a lot of bulk shopping during the Christmas season. Perhaps, you normally wouldn’t make that much more profit by offering free shipping, but during the Christmas season it might make a profit.

      Taking the example I used before: What if, when you offer free shipping with a minimum order of twenty dollars, half of all purchases are worth thirty dollars and half of them are worth twenty dollars. Then the strategy is really working to your advantage. Studies show that you tend to gain more when you offer free shipping during the holiday season than at other times of the year. Something to think about.

    7. Janiebays is offline

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      #7
      One thing that I think needs to be mentioned in a forum like this: Make sure to calculate all the shipping cost, not just the cost of Fedex or UPS, but also the cost of the box and the things you use to protect your product when it is shipped.

    8. HollyKnows is offline

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      #8
      Absolutely, I had tried the free shipping model, and it looked like it was going to work before I started, but that was because I didn’t calculate the cost of boxes and bubble wrap. After I threw that into the mix, it wasn’t profitable to offer free shipping.

    9. Derek549 is offline

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      #9
      One thing I like to tell people about is that what if you use shipping as a way to make money. There is nothing wrong with trying to make shipping a profit generating part of your business. If it costs you five bucks to ship something and you charge six bucks for shipping, then you can make the product a dollar cheaper or make a little bit extra. I know some buyers complain that this is a back door way to make money, but whatever works for you is good. There is nothing wrong with it.

    10. CornyBob is offline

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      #10
      I have used the free shipping model fairly successfully. I think the real rule to follow is if you are dealing with electronics, it can work very well for you, but if you are dealing with things that are much heavier or cheaper, just don’t even worry about it.

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