Daily Insights

Keep Loyal Customers With Free Fulfillment Options

By: Sarah Shi | Jan 21, 2020

As retailers face the challenge of retail commodification from giants like Amazon, it is critical to find ways to offer unique value and ensure customer loyalty. However, as the number of loyalty programs rises and average engagement remains stagnant, catch-all rewards like discounts can fall by the wayside amidst the sea of similar programs. 

While programs are popular, they are not the only strategy for acquiring loyal shoppers. For example, fulfillment plays a key role in site conversion, with 65% of consumers looking for the free shipping minimum on site before they even add products to the cart. This incentivizes retailers to offer free shipping with either memberships or minimum orders. Retailers responded, with over half of the Index offering free standard shipping with a minimum to everyone, according to Gartner’s report, Driving Customer Loyalty Through Programs and Services at Big Box Stores. Eleven percent take matters a step further to provide free shipping on any order to loyalty program members, following Amazon Prime’s model. 

Overstock.com’s Club O paid membership program promotes free standard shipping on any order as its flagship reward, along with free returns and cashback rewards. In March, Overstock.com cited Club O as the biggest single driver of retention, and that the paid subscriber base rose 36% year over year. This increase allowed it to “harvest more revenue” from retained customers rather than being reliant on the continued expense of acquisitions. In the long run, programs like Club O can help facilitate data capture that drives personalization efforts to retain customers. 

Auto-shipment and subscriptions tied to free fulfillment are further steps to cement customer loyalty. Chewy ties fulfillment to loyalty and saw an increase in spending from its active customers by almost 10% from its 2018 Q4 to 2019 Q2. Such growth was supported by its Autoship users who signed up for repeat deliveries of pet goods. Almost 70% of Chewy’s 2019 Q1 revenue came from Autoship orders, a free program supplementing its free shipping minimum of $49. As loyalty strategies ramp up across retail verticals, big box retailers should use fulfillment capabilities to convert new shoppers into devoted shoppers.