how to survive and thrive in the era of free shipping

© 2013 GoECart Proprietary and Confidential. All Rights Reserved.

How to Survive and Thrive in the Era of

Free Shipping

Operations Summit 2013

Thurs, April 25, 2013


About Me and GoECart

Founded in Feb 2000

Hundreds of Clients ranging from small- and medium- sized

businesses to Fortune 500 companies

Committed to Product Innovation and Client Success

(3 patents awarded, 3 pending)

2013 SIIA CODiE Finalist for “Best Commerce Solution”

Featured as a Leading Vendor in Forrester Research 2012 Guide

(Selecting Your Commerce Solution Across North America And EMEA)

2012 CQIA Gold Innovation Prize Winner

2013 Stevie Awards Gold Winner for Best Customer Service

Thought Leadership Recognized By Industry Experts:


US Online Retail Forecast


Ecommerce Forecast Highlights

$202 Billion in 2011



10.1%+ CAGR from 2011 - 2016

167 million people (53% of US population) purchased

something online in 2011

192 million people (56% of US population) WILL purchase

something online in 2016

$1,207 average yearly online spending in 2011

$1,738 average yearly online spending in 2016.


Customers are connecting with brands

and retailers differently

More than 50% of mobile phones are now smartphones

Tablet ownership reached 19% of adult population

68% of online adults have a facebook account; including over

50% of adults over age 68

56% of social networkers have liked, followed or became fan

of a brand, product or company


Who are Shopping Cart Abandoners?


Why are they abandoning?


Top Reasons for Shopping Cart Abandonment


Delivery Time and Abandoned Carts


Options Online Shoppers Want to See


Free shipping program stats and trends

23% said high shipping costs discouraged them from making a purchase

43% abandon their shopping carts when they find high shipping charges

at checkout

60% said free shipping was a “very important” factor

75% prefer to shop with merchants offering free shipping

90% said free shipping offers entice them to spend more

50% indicated free shipping offers made it more likely they would shop

online

72% would switch merchants for free shipping


8 types of free shipping offers

1. Total Free Shipping

2. Free Shipping With Membership

3. Minimum Order Shipping

4. Select Item Shipping

5. Site to Store Shipping

6. Free Return Shipping

7. Flat Rate Shipping

8. Free Shipping by Delivery Location


Pros of Free Shipping

1. Increased sales

2. Increased traffic

3. Move more inventory quickly

4. A competitive edge over those not offering free shipping

5. Gained prominence in search engines for the term "free

shipping" plus whatever item you are selling

6. Higher seller feedback score and higher star ratings

7. Less abandoned shopping carts

8. Can help build referrals through word of mouth and social

media praise


Cons of Free Shipping

1. Product prices will be higher

2. Lower profit margin

3. Possible decrease in traffic from higher prices

4. Advertising costs and time to promote the free shipping sales

5. Customers come to expect free shipping

6. Added expense for the retailer and might cause a reduction of

other services

7. Discourages In-Store impulse buys

8. Shoppers might not enter the checkout stage to see what

shipping and final costs would be


Ways to combat the free shipping dilemma

1. Include Shipping Charges in the Price of the Product

2. Free Shipping Threshold

3. Free Shipping Membership (e.g. ShopRunner, Amazon Prime)

4. Ship a Subset of Items for Free

5. Flat Rate Shipping (e.g. $4.99 per order)

6. Other Options

a. Explore all potential carriers and services including hybrid shipping (e.g. FedEx

SmartPost, InXpress, UPS Mail Innovations)

b. Ad supported shipping (e.g. AdShip)

c. Vendor discounted shipping

d. Pick up from store

e. Drop ship

f. Free upgrades

g. Audit your carrier bills or outsource it

h. Eliminate double shipping


Ways to combat the free shipping dilemma

7. Rate Shop

8. Use Air Delivery Only if Necessary

9. Monitor DIM, Oversize Charges

10. Use Rewards Cards for Payments

11. Process Electronically

12. For Freight Shipments, Use a Broker

13. Seek Group Discounts

14. Request Discounts on Supplies

15. Watch for Billing Errors

16. Consider Outsourcing


Death of Free Shipping?


Welcome to GoECart360 The Ultimate All-in-One Multi-Channel Ecommerce Suite


Ray Miller

Founded My Wedding Reception Ideas.com in 2003

GoECart Merchant since 2003

E-commerce business built on supplier drop ship

business model

15 Suppliers across the U.S. and Canada


Competing In a Free Shipping Market

1. Increase product markup to offset shipping cost

2. Offer free shipping on order values over $100.00 (dollar

amount example) – No increase in product markup

3. Free shipping with no additional product markup


Free Shipping Promotion Challenges

1. Increasing shipping rates

2. Lower profit margin

3. No control over shipping costs with drop ship business

model a. Suppliers charging published ship rates

b. Supplier drop ship fees

4. Multiple item orders shipping from multiple warehouses


Our Solutions to the Free Shipping Dilemma

Focus on converting sales without free shipping promotions

• Competitive product prices every day – no promotions

• Publish and charge real-time shipping costs

• Use of Unique Value Propositions to sell our strengths

• Customer testimonials

• Easy web site navigation

• Easy ordering process

• Great Customer service before, during and after the sale


Thank You!

Manish Chowdhary

Founder & CEO, GoECart

Toll-Free: 877-243-3612

Email: [email protected]

Twitter: @goecart

www.GoECart.com

how to survive and thrive in the era of free shipping

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