How does Free Shipping plans work?

by BluersLoves. Posted on Sep 09, 2020    1    1

In cases where users can pay a monthly payment and get free shipping to any product they buy. What if the user buy too many times, wouldn't it generate loss for the company? How do they compensate the free shipping?


ltdan993 1

Let's say you can get a widget wholesale for $60 and sell it on your website for $100. You know that on average a widget costs about $10 to ship to most places in the U.S. You tell someone that you will give them free shipping on all orders if you pay them $15 a month. Let's say a customer ordered 10 widgets and let's say they were orders that were shipped separately. So they spent $1000 and paid no shipping on those 10 orders so they save $10 per order or $100. On the business side they got $1000 from the sales, paid $100 for shipping, collected the $15 monthly fee,and collected $400 in profit so they net $315 vs. $400. Plus the consumer is more likely to shop somewhere that they get free shipping and have a membership. The business side usually has the numbers figured out if they are going to offer free shipping.