Why Your eCommerce Site Should Offer Free Delivery: London Encaustic
£114,541 Revenue Increase in 5 Months
Why Your eCommerce Site Should Offer Free Delivery: London Encaustic
When Amazon Prime launched in 2007, customer expectations were altered forever. Through the introduction of this service (even though it is subscription-based!), the company normalised free delivery throughout the entire eCommerce world. What was once considered an added benefit is now integral to most online businesses.
Despite free delivery being widespread, many small to medium-sized eCommerce businesses are understandably reluctant to adopt it. This is driven by the belief that free delivery is only profitable for large retailers. We are here to tell you that this is a misconception perpetuated by the industry and simply not the case.
When we started offering free delivery on London Encaustic’s site, revenue between November 2021 and March 2022 increased by £114,541.43 (23%↑) compared to the previous period.
London Encaustic: A Case Study
Founded by Steve Harvey in 2014, London Encaustic specialises in the supply of luxury tiles, baths and basins. Their products are entirely handmade, meaning that the company prides itself on authenticity and quality.
When we proposed the idea of offering free delivery, our client was initially resistant to the idea. They believed that it would not have a massive impact on sales and performance, especially considering the cost of delivering hefty items such as baths is quite high.
We suggested that London Encaustic offered free delivery on all orders over £500, which would encompass all bath orders.
We began offering free delivery on 4 November 2021. Below are the site performance statistics from this date onwards compared with the previous period:
4 Nov 2021 – 31 March 2022 vs. 9 Jun 2020 – 3 Nov 2021
Despite a slight decline in users, all e-commerce conversion data improved.
The conversion rate increased by 3.24% across the board (organic traffic conversion rate improved by 38%!)
Transactions went up by 2.77%.
And of course…
Revenue Increase +23% (£607,585 vs. £493,044)
Revenue increased by 23% – that’s £114,541.43 more revenue in under 5 months! This figure is disproportionately high versus the uplift in conversion rate and transactions, and so it was evidently not a boost in the numberof orders that drove this increased revenue. Rather, it was a boost in average order value (AOV) that did it.
The AOV grew by 20% (£683.45 vs. £569.99), owing to a dramatic increase in bath sales. Therefore, we can assume that customers looking to purchase higher value items expect to receive free delivery, and free delivery is just the incentive needed to get them to buy.
Tip: There is no point in offering free delivery if you are not going to advertise it on your site – make a point of it! The offer must be visible in the latter parts of the buying cycle, so it is important to think about how it will fit into your product page UX.
For London Encaustic, we advertise free delivery on a banner that appears across ALL pages.
The approximate delivery cost to the client from 4 Nov 2021 – 31st Mar 2022 was £10k. However, orders that totalled £500 or above increased by 22% compared to the previous period (from 230 to 280), which completely justified the switch to free delivery. Even when we deduct the approximate delivery cost from total revenue (£607,585 minus £10,000), revenue was still 20% higher than in the previous period!
The Benefits of Offering Free Delivery
We have seen the effects of offering free delivery, but we will now delve further into the why. Why does free delivery increase conversions and sales?
Provides a Competitive Advantage
In an increasingly saturated eCommerce market, offering free delivery will help give you a competitive advantage. Alternatively, if free delivery is common practice in your industry, you will need to offer it simply to not fall behind. Remember, the average customer looks at three sites before they make a purchase. Offering free delivery may actively give you an edge during this decision process or, at least, keep you in the running.
If you do offer free delivery, make sure that it is incorporated into your SEO strategy. Many people search for a product or service and then follow it with “free delivery”. To increase the likelihood of your site appearing in the SERPs for these queries, it is important to include the offer in your meta tags. This organic traffic will likely lead to more sales and conversions.
Reduces Cart Abandonment
Lowering the cart abandonment rate is a constant battle for anyone that runs an eCommerce site. Offering free delivery is one way that you can do so.
Spending money typically brings with it some form of guilt. So anything that you do that may add to this guilt (e.g. added delivery costs at checkout) will decrease the likelihood of a customer following through with their purchase. That is why it is very important to maintain a consistent cost throughout the buyer’s journey. From product page to checkout, you should give the customer no reason to change their mind.
In our case, this increase was mainly due to customers being more willing to buy expensive products (baths) when free shipping was attached. However, free delivery can also increase AOV by boosting the number of items added to a basket.
Whilst this blog highlights the various benefits of free delivery, there is no one-size-fits-all approach. There are various considerations that you should take into account before deciding whether it is right for you and your business. Risk-taking is important, but so are the necessary precautions.
How much capital do you have available? You should first determine how much you would need to sell in order to provide free shipping. Calculate the overall cost of your product including shipping. This calculation will help you discover, firstly, whether you can afford to offer free delivery and, secondly, whether making a profit is realistic.
Free shipping across the board on all products is often not the answer. Instead, you may want to think about offering free shipping…
With a minimum payment threshold (like we did with London Encaustic).
When a customer buys two or more items.
On certain items (as Amazon does).
For a pre-determined time period (e.g. during highly competitive holiday seasons).
Is Your eCommerce Site Losing Out on Sales and Conversions?
We are professional problem-solvers at Trafiki. We specialise in conversion-focused solutions that are tailored to the eCommerce world and, more importantly, your specific industry.
If you are interested in finding out just how much more revenue you could be generating, click here to contact Trafiki today. From PPC to SEO to UX, we have all facets of your digital marketing strategy covered.
By trafiki|2022-10-21T16:11:23+01:00April 8th, 2022|Marketing Case Studies|Comments Off on Why Your eCommerce Site Should Offer Free Delivery: London Encaustic