I am lucky enough to talk almost every day with some of the best eCommerce managers around Europe. Most of them are medium-sized or large, and the issue of delivery costs usually arises, as many of them are considering it. There are all kinds of views, from “we will never offer free delivery because that’s a war we can’t win” to “free delivery is a part of our infrastructure, just as having our premises in downtown Madrid or having an adaptive website”, through “we have a margin for free delivery, but we only use it for promotions so we can make the most of it”.
Nine months ago, the CEO of Celeritas, the great Juan Sandes, said in an eComm&Beers event that delivery would be free in Spain in two years, and that it would take place within the day in the main Spanish cities. A few months later he changed his view and said that this wouldn’t take place within two years but rather within one year, and the fact is that time is proving him right.
I believe that there are strong reasons to offer free delivery. Obviously you must have the margin to offer it because someone has to pay for it, but I will give you seven reasons:
- You can compare prices with physical stores, avoiding the question of how much delivery costs are. In this way you can compete against physical retail on an equal footing, and we know that eCommerce is stronger in terms of time, price, and variety.
- You avoid price comparison with eCommerce stores which don’t offer free delivery; they may be cheaper than you but few people have the time and willingness to calculate and compare prices. .
- You provide transparent prices. People don’t expect hidden costs and you generate more trust, something crucial in such a dramatic growth stage as the one which we are currently experiencing in the eCommerce sector.
- If you increase the size of the average shopping basket you will also increase your margins. Obviously, not everyone can offer free delivery for one-euros products like DealExtreme, but you might offer it for a €30 purchase, where the logistical cost would amount to approximately 10%. Then you can promote cross-selling, either using our tool or some other one.
- You facilitate the purchase decision process and shorten times. It’s clear that if there are no hidden costs such as delivery costs, the user will find the decision easier to take.
- If you also shorten delivery times, for example by delivering within the same day to the main cities, you will reach a much wider audience. Once again, free delivery within the day, as put forward by the CEO of Celeritas, is a strong blow against physical retail. Customers won’t ever be late for any birthday or anniversary.
- You will place yourself at the forefront of eCommerce and communicate one more argument. Free, quick delivery will probably become standard in a few months, but right now it provides an opportunity for you to communicate your eCommerce store to potential customers.