To Ship for Free or Not: Free Shipping Day for the Small Business?

Posted by Amy Chan on August 13, 2014 0 Comments

Small businesses always must compete with The Man, the big businesses who can more easily absorb costs like shipping and tax to drum up business on a larger scale.  But small businesses, with their lower overall overhead and profits, have to decide whether competing with – or joining with – the big boys on nationwide events like Free Shipping Day, around the holiday season, will be good or bad for the bottom line. 

First of all, what is Free Shipping Day?  It’s a day where online retailers can all, on the same day, offer patrons free delivery with the promise that the orders will arrive by Christmas Eve.  There’s obvious incentive, as it’s almost last minute, and shoppers do not have to leave the comfort of their own homes.  For small businesses, the event is free to sign up for, and it offers promotion for the Free Shipping Day website, driving traffic to your store.

But should you do it? We asked some small businesses their experience with Free Shipping Day, to offer a little first hand advice on whether you, too, should try it out.

THE PROS

The universally agreed upon advantage for joining FSD is that, because of the affiliation with the umbrella website, you will definitely get new customers, attracting a pool of potential repeat buyers who had never heard of your company before.  Any way to expand your customer base is of course beneficial long term, and great for the short term’s bottom line.  On top of that, you will have an opportunity to move a lot of product to make room for a new line.   Also, it helps the image of your small company – while you may be a one-person operation, you are listed on the FSD website right next to some of those bigger companies.  You can’t lose by being perceived to be bigger than you actually are.

THE CONS

The obvious downside is that your profit on each individual sale will of course be diminished.  You will have to convince yourself that a small profit on many more units will be worth having a small degree of profit on each sale by itself.  This can be a tough pill to swallow for the young retailer, particularly if you don’t have a large enough inventory to support a large number of sales.  Also, similarly, if you have a small business operation, you may get inundated with orders and find it difficult to get all the orders out.  You must take that into consideration, since one of the advantages is the customers are assuming that the delivery will occur before Christmas.  Another thing to consider is purely specific to your company: if your shipping costs are high, then offering free shipping may be impractical.  FSD works best for retailers who ship small things: jewelry, media, that type of stuff.  If shipping is usually $15-20 for you, FSD may be impractical.

ADVICE

There’s no catch-all advice for all small businesses.  You need to look at your bottom line and determine if you can afford to absorb a day’s worth of shipping costs.  If you need to make money back on shipping, maybe this isn’t for you.  However, if you are on the fence, go for it: you may just be surprised how many customers come back for more!

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