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Quick Hit: The Cost of Free & Fast Shipping On Retailers

Posted on 11.22.2016

Fast and free - it's what consumers want in their holiday shipping but retailers are paying the price - big time.

Analysis from Shippo shows "a dramatic jump in free and expedited shipping offers result in a 2x increase in shipping costs during Black Friday/Cyber Monday." Double the costs can certainly put a dent in retailers' profits this holiday season but what can they do when their competitors are offering better shipping promotions? It starts by looking at the numbers they already have. 

UPS research (open PDF) found 93 percent of shoppers will take action to qualify for free shipping, and the most frequently taken action is adding items to a cart to meet shipping requirements. So, Shippo recommends merchants should set the free shipping minimum slightly above current average order value to optimize margins. This is the advice many experts agree on.

Other highlights of Shippo's holiday research includes:

 Not surprisingly, Shippo’s data found that there is 78 percent week over week spike in orders for Black Friday/Cyber Monday week as compared to previous weeks. 

42 percent of holiday e-commerce shopping happens between Black Friday / Cyber Monday. There is another slight pickup in the days before holiday shipping deadlines, but otherwise after the initial spike it's a slow downtrend until cutoff dates. Merchants will need to fight for customer awareness early in the holiday season. 

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