Without doubt, we learned that many of us are going to be forced to move to a Free Shipping model, in the near future.
Oh, I can hear the moans and groans already.
- "We can't afford to do this."
- "We lose the ability to use free shipping as a promotion to goose sales."
We'll do this by executing two important tactics.
- Let's say that free shipping, no hurdle, gets you a 25% productivity bump.
- We'll cut marketing expense (catalog mailings), significantly, by 20%, by not mailing online-centric, social-centric, and mobile-centric customers as many catalogs.
- The circulation cuts will cost us a 5% top-line sales hit.
The combination of tactics yield a profit and loss statement that looks something like this:
For some of us, it will look like this. For some of us, we'll lose a ton of money, but the file will grow, eventually offsetting our losses. For some of us, we'll even make a little bit of money in the short term.
Eventually, most businesses will shift to free shipping, eliminating the 25% sales bump. That's when things get really interesting.
In the next three years, we will begin the transition.
- We will pay for free shipping by not mailing as many catalogs to online-centric, social-centric, and mobile-centric customers. Catalog marketing will ultimately pay for free shipping.