Rewards vs Free Delivery can be a big decision for any company. Free Delivery seems to be used everywhere. Because of this we thought our customers expected us to implement it. However, after careful consideration we realized that Rewards were a much better option for our customers. We wrote this short blog to go through our process in this determination, and why it works for our business.

A Brief Business Description

ACRA offers a wide range of products, but the focus of this was on our online sales. Our online shop sells cleaning products, tools and some basic equipment. While the sales of the tools and basic equipment makes up the bulk of our online sales in value, the bulk of our orders come from the much smaller sales of cleaning products.

Purchases for the cleaning stock is very low, with the cost of the item often being equal to the cost of delivery. Even without free delivery, these customers are still buying. We cannot offer free delivery for these orders, as there is not enough profit to cover the cost of delivery.

Analysing the Data

We thought of perhaps offering Free delivery on orders over a certain threshold. However, the fact that we were getting orders from customers who were willing to pay the delivery on a single really low value item made us realize that trying to push them to purchase a higher value for free delivery would not work. If they wanted to mitigate the cost of delivery they simply had to purchase more than one of the items, which they were not doing. So we discovered that implementing any kind of threshold to get Free Delivery was not going to work for these customers.

While it was easy to exclude these customers since they were low value, we wanted all our customers to benefit. While these low value orders did not make up a huge amount of our sales in value, they were keeping us busy with regards to the volume of orders. If we implemented free delivery with a threshold the reality was the vast majority of our customers would not benefit.

Free Delivery vs Rewards

Implementing a Rewards program was the answer for us. By adding a reward on each purchase we benefit all of our customers, not just the ones that pay more on our site. At ACRA each customer is important to us, regardless of how much they will spend. And of course, if we can keep our customers coming back we all win.