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The Free Shipping Day Dilemma

By any measure, last year's Free Shipping Day (Friday, December 17, 2010) during the holiday shopping season was a huge success. With spending totaling $942 million for the day, it achieved a 61% increase versus the corresponding shopping day last year, comScore reported.

"Free shipping has certainly become one of the prevalent themes of the 2010 holiday season," said comScore chairman Gian Fulgoni. "Since the week before Thanksgiving, we've seen the majority of online retail transactions use free shipping, which confirms the appeal of the offer for consumers.

This year, Free Shipping Day is scheduled for Friday, December 16, and its organizers anticipate some 2,000 retailers will participate. With such numbers as comScore's highlighting its popularity, the decision whether or not to participate is almost is a no-brainer: never mind the costs, consumers want it!

The Question of Cost

But costs are still a huge concern for e-tailers and this decision cannot be made lightly, writes Jennifer Farwell in this Ystoreblog post.  She offers some tips for this issue, including taking care to calculate - if a retailer is going to put a floor on free shipping - what a minimum order value should be to warrant free shipping.

"Consider your packing and labor costs, and remember to calculate add-on costs such as residential delivery charges, delivery area surcharges, fuel surcharges, and cost of returns."

Another option is to offer free shipping on select items for the holidays, and on items that are overstocked, she wrote.

Also, after analyzing distribution patterns, negotiate concessions with shipping carriers in target spend areas, Farwell also suggested.

Tactical Use of Free Shipping

Another option for retailers that can’t afford to offer blanket free shipping is to use it as an inducement to increase order size, writes Auction Bytes. "Many sellers use shipping discounts as an incentive to buyers to increase order size. …But by offering free shipping across the board, this opportunity to encourage shoppers to buy more is lost."

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