Have you asked yourself if my retail store should offer free delivery? Consider running a retail store that serves a local customer base. Your regulars are the bread and butter of your business. Keeping them happy is vital.
One great way to add value for your customers is by offering free delivery on orders. However, covering the delivery cost can quickly eat into your slim profit margins, so you need to do your figures. Some studies have been done, on the advantages of offering it, click here. Here is an interesting quote from the study.
"Speed of delivery is now the decisive factor behind over one-quarter of abandoned carts, second only to pricing among customers who intended to make a purchase. Lack of same-day delivery and in-store pickup options were also seen as key reasons for cart abandonment as customers sought faster and more convenient fulfillment options...“Customers want shipping to be free and fast — and they’re willing to abandon carts and walk away from brands that fail to deliver on both fronts,” says Kirthi Kalyanam, the L.J. Skaggs Distinguished Professor and Executive Director of the Retail Management Institute of Santa Clara University, which conducted the survey in partnership with X Delivery. "
Here are a few factors to consider:
Offering free delivery has some clear advantages
Offering free delivery has some clear advantages:
- Your POS System has a delivery system, so it's free - You can use your POS Software to handle deliveries.
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Increases customer convenience - Customers love the ease of delivery. This can encourage larger basket sizes.
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Encourages customer loyalty - Free delivery shows you value your customers and care about keeping their business.
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Businesses/government and customers often require it - Many demand delivery. For example, I often have the pharmacy deliver my orders as it is convenient and complimentary.
- Provides faster delivery - As a local store, you can often deliver orders faster than anyone. Getting purchases to customers quickly is often a significant plus. Leveraging your speed and proximity to customers is smart when promoting free delivery options.
The Downsides of Free Delivery
However, there are also some potential pitfalls with free delivery:
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Higher costs - Paying for delivery services will cut into your profit margins. This may not be sustainable in the long term.
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Staffing requirements - You will need dedicated delivery drivers or outsource this function. More staff means higher overheads.
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Geographic limits - Offering free delivery beyond a specific area may not be viable. This could disappoint some customers.
Smart Compromises on Delivery
Given the pros and cons, offering unlimited free delivery likely isn't realistic for most small retailers. But you can look for intelligent compromises:
- Offer free delivery on orders over a minimum size, e.g. $50. This has the added benefit of encouraging larger orders.
- Provide free delivery within a limited local area, e.g. 5km radius
- Offer customers free in-store pick-up as an alternative to home delivery
Conclusion
Finding a delivery model that adds value for customers without blowing your budget is vital. Getting this balance right takes some trial and error. Be prepared to tweak your delivery policy as you grow.
Keeping loyal customers happy is the lifeblood of any small retail store. Providing options like free local delivery helps show customers you value their business. A sustainable delivery strategy will keep your customers satisfied without hurting your bottom line.
