Roughly 88% of consumers say they would be more likely to shop at a site online if they were promised free shipping. No wonder so many merchants are considering discounted or free shipping.
The question is: Should wineries be doing the same for their DTC sales? Or for their wine clubs and subscriptions services?
More importantly, are such incentives a solid part of a long-term business strategy, or are they more a short-term band-aid that only serves to squeeze margins thinner?
The shorter answer is that there is no easy answer. There is no single strategy that will work for every winery or wine business. Still, we’ve found that some solid “best practices,” along with some creative ideas, can be an awesome combination:
- Know the laws regarding shipping. For example, the California ABC states that No free goods or premiums may be provided in connection with the marketing and sale of alcoholic beverages. This includes free shipping. Shipping may be included in the price but it cannot be offered as “free shipping.”
- Measure the effects. If you sell online, look at your numbers for cart abandonment. Try to figure out if consumers really are abandoning the sale at the point where shipping rates are revealed. If so, discounted shipping may be the cure. If not, look elsewhere, or you might be cutting into profits with little to show for it in terms of increased order completions.
- Be cautious about devaluing your product. Discounted shipping can keep you relevant in the marketplace, but be wary of the impression you are creating. Also, pay attention to the pace of discounts: Are frequent discounts making you look like a value brand when you are not a value brand?
- Pay attention to context. Where is the offer being made? Digitally, through emails exclusively, or in the tasting room? Consumers may be used to receiving shipping offers via email, for example, but find the discussion awkward in person.
- Make them “work for it.” Many retailers offer free shipping when customers spend a certain amount ($50, for example). Then, instead of balking at shipping rates, the customer receives an incentive to spend more. The free shipping is partly paid for by the increase in average order size.
- Include shipping as part of a “membership.” Amazon figured this out with their Prime membership. If you have a wine club, charge an up-front members’ fee to help offset shipping costs, then make each order free or “shipping included.”
- Try “promotional period” shipping deals. These are shipping offers that are good for only a limited time, perhaps even a single purchase. For example, you could offer a seasonal deal, a “first-time buyer” deal, or a loyalty or wine club bonus.
- Look for efficiencies. Would it be easier to ship kits or bundled items instead of solo products? What is the ideal purchase size where a shipping discount makes sense? Can you encourage larger purchases with flat-rate shipping? Sometimes the question to answer is not if to use a strategy, but when.
In short, the question should not be whether free shipping or shipping discounts are “worth it.” The real questions are what matters to consumers, how do you want your brand to appear, and how can your establishment offer creative shipping deals that do justice to both?
Many of these ideas above came from our panel discussion at the 2016 Direct to Consumer Wine Symposium held in January 2016. We have a brief transcript of the panel, along with other useful tips, in our white paper “Discounted, Flat Rate, or Free Shipping: What’s the Right Strategy?” available for download now!
You can also discuss your particular pricing and fulfillment challenges with one of our experts by contacting us. We’re at your service!