The data says YES.
That’s right. Discounts and free shipping offers aren’t just casual perks—they can boost your sales and win over new customers. In this Amazon era where online shopping is ever cheaper and faster, people almost expect discounts and free shipping. But won’t I—as a small business-owner—lose money in offering these sorts of perks? NOT if you lean into Media Á La Carte’s favorite word: strategy. Let’s get into it.
First, let’s discuss discounts. A discount is a reduction in a product or service’s usual price. There are several “types of discounts:”
Loyalty discounts: discounts for loyal or frequent customers
New customer discounts: discounts for new clients (i.e. half off your first service)
Quantity discounts: discounts for purchasing more (i.e. buy 2 get 1 free)
Cash discounts: discounts for paying for a product or service in cash
Percentage discounts: discounts on specific products and services (i.e. 25% off)
Demographic discounts: discounts for seniors, students, or union members
Referral discounts: discounts for customers who refer their friends
There are pros and cons to discounts … On the plus size, discounts drive sales quickly, move inventory, create demand, attract new customers, and boost your brand’s reputation. But on the other hand, discounts can illustrate a lack of confidence in your business, set a bad precedent, reduce the value of your products and services, cut into your profits, and make your business come across as untrustworthy (Hubspot). So, it’s important to weigh your decision to offer a discount and not just throw them around willy-nilly.
Ultimately, discounts cultivate a sense of urgency (i.e. “I need to buy this now while it’s on sale!”). This can be great for businesses especially around (or after) busy holiday seasons. Conversely, some brands never offer discounts…Think Louis Vuitton, Canada Goose, Lush Cosmetics, and Tiffany & Co. In these four instances, the brands want to maintain a sense of luxury. But then you also have companies like Trader Joe’s that always offer affordable groceries and therefore don’t feel the need to compound prices with additional deals. It’s up to your brand to decide the discount policy that makes the most sense for you—long term. Check out this Shopify article for more about designing discounts.
Does Free Shipping Increase Sales?
Now, when it comes to free shipping, free shipping has power. A Forbes article noted that 36% of consumers would give up ride-sharing, 25% would abstain from coffee, and 22% would forgo Netflix for a year in exchange for free online shipping. Seriously! Additionally, 50% of those surveyed avoid shopping from companies that don’t offer free shipping, and a whopping 77% click out of their online shopping cart “due to unsatisfactory shipping options.”
Okay. We get it. Consumers want free shipping. But how can a business offer that without significantly
hacking their revenue? Well, first of all, with free shipping, customers think they’re getting a deal even if they aren’t. That gives you the opportunity to increase the price of your product to offset the cost of shipping (yes, really). Additionally, free shipping leads to MORE sales. According to Forbes, 84% of consumers have made a purchase simply because shipping was free! And 30% admitted they increase their orders to meet the qualifications for free shipping (i.e. “Free shipping over $50+). We’ve only got one thing to say to that: SLAY.
So, the moral of the story? Implement a plan that is best for your business. Don’t just offer perks because everyone else is doing it. Without strategy, discounts and free shipping deals will bring more stress than success. Need guidance laying out your strategy? That’s what we live for. Contact us and set up a discovery call. We can’t wait to strategize with you!