As the ecommerce market goes from strength to strength, free shipping has become more of an expectation than an added bonus.
Recent research highlights a growing reluctance among consumers to pay anything beyond the price of the product itself, with 73% of consumers more likely to purchase an item if it includes free shipping.
In the coffee industry, online orders and subscriptions have been adopted by an increasing number of cafés and roasters, particularly since the outbreak of Covid-19 early last year.
As such, brands have had to find new ways of gaining a competitive edge, with free shipping chief among them. For many, a failure to offer free shipping in some form, whether on across all orders or on a minimum basket size, could end up being costly should potential customers seek other companies.
However, the financial implications, coupled with the relatively small margins of specialty coffee, could in some cases outweigh the benefits of higher sales. So how do you know if it’s the right option for your business?
The rise of e-commerce and the psychology of free shipping
E-commerce has become an important part of our lives – and it’s not going away any time soon. According to Statista, global e-commerce sales totalled to $4.28 trillion last year and is expected to grow to more than $6 trillion over the next four years.
The internet has changed not only the way people shop, but it has also radically increased the number of choices available to consumers. As such, lack of free shipping could put retailers at a competitive disadvantage.
According to a survey by BigCommerce, more than three quarters of respondents have abandoned a purchase due to “unsatisfactory shipping options”, while 50% stated they will steer clear of retailers that do not offer free shipping.
But why is this? One commonly cited reason is the deterrence of unexpected costs. People don’t appreciate it when they find out that shipping costs have raised the final amount they expected to pay at the end of a shopping session, hence increasing the chances of cart abandonment.
Without free shipping, consumers also perceive themselves as paying extra for a product. For example, if an item costs $25 and shipping costs are $5, the price of the item has seemingly risen by 20%. In the minds of consumers, they would question why pay $5 for shipping when they can spend that $5 elsewhere on another product – and receive free delivery on both.
There is also a more simple reason that involves the use of words as triggers. In his book Predictably Irrational, behavioural economist Dan Ariely, explains that the word “free” offers an emotional trigger due to a phenomenon known as “zero price effect”.
He writes: “‘FREE!’ gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is. Why? I think it’s because humans are intrinsically afraid of loss. There’s no visible possibility of loss when we choose a ‘FREE!’ item.”
How can brands offer free shipping?
For the most part, free shipping is an effective strategy for boosting sales and reaching new corners of the market. However, the extra costs involved mean businesses need to find a way that works for them, which allows them to operate sustainably.
There are a number of options available to coffee shops and specialty roasters depending on their capacity and goals.
The simplest and perhaps most straightforward course of action is to offer free shipping across all products. Not only does this tend to generate more leads than any other approach, it can also help encourage return sales.
Pact Coffee is just one example of a roastery that does this well. Based in the UK and with an estimated annual turnover of $14.9 million, they offer customers free shipping across all their products, irrespective of order size.
That means customers who spend $8 on filter papers will pay the same amount for delivery as those who spend $40 on several bags of coffee. In addition to encouraging regular, small orders, it helps Pact compete with high street brands that may sell similar products.
A slightly more widespread approach is to offer free shipping on a minimum order quantity. While not as enticing for consumers as the first approach, it has the effect of strategically boosting order values.
This is because consumers are often encouraged to add more items to their cart to meet the threshold. (The same survey by BigCommerce reveals that 84% of consumers have done exactly that.)
Roasteries that offer free shipping on minimum order quantities include Rave Coffee and Ueshima Coffee Company, with minimum orders of £25 and £20 respectively.
The final option is to make free shipping available to consumers who sign up for a membership or loyalty programme.
Brands such as Death Wish Coffee do this to create a sense of exclusivity by offering free shipping on all domestic orders for those who register for an account on their website.
It doesn’t cost any extra for customers to sign up, but it means that companies can find out more information about who buys from them, as well as having access to an email address for promotional content.
Implementing free shipping at certain times of the year, such as during holiday seasons, festive occasions or even for a marketing campaign can be an effective approach. Since this shipping strategy is more time sensitive, it creates greater urgency among consumers to place an order before the promotion ends.
Customer experience: Why packaging matters
Once the offer of free shipping has convinced shoppers to place an order, a crucial next step for roasters is to provide the best consumer experience possible. If consumers have had an unsatisfactory experience, they are unlikely to make repeat purchases or recommend a brand, regardless of whether the delivery was free or not.
Packaging is one of the most useful tools available to coffee roasters who want to provide a positive customer experience, but do not have the means to do so in person. As well as informing customers about the coffee, such as its flavour notes and roast date, it can also be used to convey the coffee’s “story”, from who grew it to how it was processed.
Among today’s coffee consumers, this level of transparency and traceability is more important than ever. According to a recent survey, nearly 70% of consumers say that information on the origin of their food – from coffee to cheese – is either “very” or “quite” important in influencing purchasing decisions.
Furthermore, as at-home coffee consumption continues to grow, more and more consumers are taking an especial interest in different ways of brewing their coffee. The widespread closure of cafés and other hospitality venues during the pandemic meant that many were encouraged to “recreate the coffee shop experience” at home.
To cater to this change, a number of coffee roasters devised brewing guides, tasting cards, video tutorials, and even entire digital barista services that could be conveniently accessed with the simple scan of a QR code on the packaging. This quickly transformed at-home coffee brewing from a daunting task to one that was not only accessible, but fun and exciting.
Ultimately, packaging is a great tool for roasters to convey their stories and share information to create an overall enjoyable and unforgettable post-purchase experience.
At MTPak Coffee, we offer a range of sustainable coffee pouches that will preserve the freshness and all the distinctive qualities of your coffee. We also have a team of designers available to help you create packaging that tells the most compelling story, giving the best experience that keeps your customers coming back for more – with or without free shipping.