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Free shipping or Flat rate for my eCommerce Business?

By Anoop Nair on 17 Comments / 4125 views

Dear Rodinhood members

I am here with a very basic and simple question regarding eCommerce. I need suggestion from members of TRHS (both eCommerce experts and eCommerce users) about the best strategy to bill the customers for a product / item they buy online. I have two options:

  1. To bill an item as Rs.100 and a shipping charge of Rs.20.

  2. To bill an item as Rs.120 and free shipping.

The second option sounds good but I want to make sure if it is the best strategy. Looking forward to get some detailed insight on customer’s buying trends based upon the shipping charges they have to pay.

Thanks!

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17 Comments

  1. Thanks Anoop for asking this question …… Same thing was in my mind ….. which one we should adopt ??

  2. As an Indian, and as per my sales experience, I would say, charging 120 bucks and offering a free shipping  is the eye catch for people.. But, you’ll need to look at the product too. whether it is a competitive product (say, a tee shirt, a samsung Note2) or is it something exclusive you’re offering (say, MotoG).

  3. Something exclusive and something in demand. Basically it is a food and beverage eCom store for a specific niche of people. Looks like second option is best suited. Awaiting more response on this.

    Thanks!

  4. anoop – free shipping always looks attractive to the customer as she feels the site shouldn’t charge for shipping in the first place!

  5. Great to hear that from you.

    Thanks Asha!

  6. Hi Anoop,

    Showing basic price + shipping seems more transparent. Usually, customers will compare price points before buying – so, they will know if the shipping price is already built into the product price that you offer when you say free shipping. In summary, I think you must go with whatever option is operationally easier for you as customers will compare the final landed cost while buying anyway.

    Good luck!

    Ravi

  7. Dear Anoop,

    India is price sensitive market. Where as the fact is when you say FREE, it is actually not FREE and the price is already included in it. But it is only in India where people are looking for FREE stuff, hence to attract more customer, include the shipping cost in your final bill and mention FREE Shipping, what additional you can do is, for cart below 1000 or 2000 you can add a fix shipping & handling charges most ecommerce do like flipkart, myntra, jabong etc

    In case you are looking for eCommerce solution provide do speak to us. We can help you in strategy, technology, marketing etc.

    https://www.72interactive.in/packages/affordable-ecommerce-store.html

    https://www.72interactive.in/packages/ecommerce-website-packages.html

    Regards,

    Amit

    +919811122212

  9. Wow Abey.. Exactly what I was looking for.

    Thanks a lot!!

  10. Thanks for the reply Amit. I will definitely connect with you in case I need any support regarding eCommerce.

  11. I would NEVER make it inclusive.

    Why?

    – Prices of products and deliveries can change – so 1 price is not always helpful to show transparency

    – The product and its delivery (in this case) are separate and can be handled by 2 different parties at some point. Hence they should be separate

    – Only few products (Dominos pizza + delivery) is a ‘one stop shop’ served by the same business – in such cases, its good (masks prices) to have one price

    – The Oberoi always quotes prices on its menu that are INCLUSIVE of taxes while the Taj quotes Taxes extra. I guess the Oberoi wants its guests to understand upfront what they are buying (specially if you are a foreigner and dunno) whereas the Taj wants to be safer than sorry (you cant keep printing menus all the time when taxes change)

    Best idea – why not do an A/B test?!!

  12. Thanks Alok!

  13. I am into enabling ecommerce businesses…..

    If its Indian market….you got to put in inclusive…..

    Else Indian will take it as hidden cost…

    Its how people look into few things…..Taxes in food is different….as people are paying it extra in a lot of big restaurants…if billed extra they will not take it as a strange…..

  14. I was a Flipkart fan till they shipped FREE…switched my base to Amazo  once FK started charging….sums it all

  15. We had tested this extensively. For us inclusive prices resulted in 2X more conversion

  16. One of the few times I will disagree with Alok and my reasons why:
    I’ve listed items on eBay for over a year (at https://www.ebay.in/sch/copperspiral_rfid_nfc_biometric/m.html) and have seen first-hand the benefit of listing “free shipping”.

    Sales have gone up significantly on items where the “free shipping” option was highlighted (even when item price + shipping ends up as the same amount).

    Secondly, a little bit of psychology when making “what to price at” decisions:
    This is an awesome article (awesome because like many of Alok’s posts, it is short and to the point)
    https://www.gregoryciotti.com/pricing-methods/
    Refer to point #4 for sure!

    – Vinit

  17. Decided to make it inclusive.

    Will share the results!

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