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Why Free Shipping Works

Summary

There’s been alot written on Practical eCommerce and elsewhere concerning free delivery and whether it makes sense for merchants to offer you. I’d love to discuss my experience with it and let you know why it is logical for eHobbies. […]

There’s been alot written on Practical eCommerce and elsewhere concerning free delivery and whether it makes sense for merchants to offer you. I’d love to discuss my experience with it and let you know why it is logical for eHobbies.

For years, we seldom offered free shipping promotions whatsoever for any size of order. When we did, it was done in conjunction with a limited time offer place at a threshold of $75 or greater. While we had some success with this version, we didn’t promote it out of our newsletters.

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However, when a lot of our competitors began offering ongoing free or flat rate shipping promotions we knew we needed to provide something similar to our clients. Our shipping rates were structured in a weight based version that was the exact same price whatever the destination. So if we were sending something down the road in zone 1 or across the nation in zone 8, our clients paid the exact same price. This enabled us to have a greater margin for transport to nearer zones however we wanted to accomplish a situation that would enable our clients in zones 1-7 to cover lower shipping costs. The obvious negative outcome of this was high cart abandonment from the closer zones since the transport costs were too high.

Early last year, we developed and implemented new transport rules that was a game changer for us. We could plug into UPS & FedEx APIs (application programming interface) which enabled us to receive our real time prices and delivery quotes with the carriers. Additionally and this was big for us too, we decided to provide first class mail, priority mail and parcel post shipping options from the postal service. We take many small and lightweight items like RC car parts and pinewood derby kits. These low priced products are ideal candidates for first class mail. Additionally other products such as rocket starter sets and rocket motors can only be sent via parcel post. While we passed along significant savings to our clients with these new shipping choices, we’re also able to boost our profits from transport and finance promotions to drive more business.

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After collecting data that supported our initial findings on shipping profits, we chose to run a continuous promotion offering free shipping with most purchases over $99. While we launched this deal on a limited basis we’ve continued to conduct it since late last year and we’ll continue to monitor it and examine different thresholds. The effect of free transport (financed by offering other lucrative shipping options to cancel ) has driven our January expansion to double digit gains over this past year in both sales and average order size. If we did not have a car to help us finance free delivery, it would be tricky to support a case to offer this promotion in a huge way. The reason why it works for us is because we could discover a technique to support its presence.

The Technical Side of PCI DSS

What merchants do not know concerning the technical aspect of protecting client information can be costly.

The Payment Card Industry Data Security Standard (PCI DSS) describes 12 system and procedural requirements for securing customer credit card information which is transmitted, processed, or stored by an internet merchant.

To be able to accept credit cards as a kind of online payment, merchants are expected to comply with the PCI DSS standard. In an effort to satisfy this condition, online shops dutifully encrypt data transmissions using a secure socket layer (SSL) or even extended validation SSL, which is perfect, and implement a policy of not storing credit card information, which can be significant. What’s often overlooked, however, is an internet store is responsible for each and every credit card number that passes through (touches, if you will) its servers.

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So, some shops are failing to comply only by not recognizing that some credit card info could be in log files or might have been hacked during the transaction, even if the merchant did not understand that their website was managing that number.

While you don’t have to be a web developer to comprehend PCI DSS, it helps to be knowledgeable about the technical aspect of PCI DSS to make certain that your company is doing all that it can and should do to protect customer credit card info.

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