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The state of free shipping this holiday season

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When you think holiday, do you also think free shipping? Consumers value – often demand – free shipping this time of year, putting pressure on retailers to balance making the offer against maintaining profits. Free shipping offers are likely to ramp up quickly heading into the thick of the holiday shopping season: one-third of retailers surveyed expect to launch their first free holiday shipping offer sometime in November.

We dug into the eHoliday 2013 Pre-Holiday Study conducted by Prosper Insights & Analytics to glean some insights into the state of free shipping for this holiday season.

Consumers value more than just free shipping.  More than four out of five (85 percent) of online consumers say free shipping is very important or important, just ahead of factors such as flexible return policies and an easy-to-use website But when asked to choose the most important factor in deciding to shop with a particular retailer, 35 percent said sales or discounts, and almost as many focused on aspects of the merchandise, including selection (18 percent) and quality (14 percent). Free shipping and shipping promotions were the most important consideration for only 5 percent.

Retailers have invested in their free shipping programs this year… Retailers should think about how free shipping augments merchandise selection and quality to tip the scales so the customer completes the purchase. We were encouraged to see that approximately one-third of retailers we surveyed this summer were investing significantly in free shipping programs for holiday, both with and without conditions.

…And are testing several free shipping approaches. Nearly half (47 percent) of retailers surveyed expect to increase free shipping offers this holiday season, compared with just one-third last year. One in 10 plan to increase use of free returns shipping, while 13 percent expect to lower the minimum required to qualify for free shipping.

Retailers know they have to offer a mix of promotions across coupons and free shipping. Ultimately, retailers understand that many consumers remain concerned about the economy and will be looking for both coupons and free shipping to stretch their holiday budgets. Among the three promotions retailers plan to most heavily emphasize this holiday season: percentage-off coupons (45 percent), dollar-off coupons (29 percent) and free standard shipping with conditions (29 percent).

Find the right free-shipping threshold.Monetate advised retailers last year to not only test the right shipping thresholds, but also test where to place the threshold message on their sites, including the checkout process. Retailers should take the same mindset as we get deeper into the holiday season.

There’s plenty more data where this came from. members can see the full eHoliday 2013 Pre-Holiday Study results on the site.