Comments 7

  1. The only problem with this is you incentivize customers to game the system. Retailers want to know who the multiple purchasers are so they can focus their efforts on those customers, rather than have an endless stream of one-off buyers.

  2. Post

    @Ted: If we break shopper universe into “online shoppers” and “non-online shoppers” you will see the ratio is 1:5 (if not higher). An overwhelming number of people have never purchased online. Converting this group is key. Once the retailer converts them we have many opportunities to recoup free shipping costs.

    If a retailer has irrefutable data that proves the cost associated with this strategy outweighs life time revenue then they should definitely abandon it, but if Zappos can make profit through two way shipping for all customers we should be able to implement “First-Time Buyer Free Shipping” without incurring loss.

  3. Post

    Hi Joe,

    You might be right but a retailer could conduct an A/B test to see which version yields higher ‘sustained’ lift. In my opinion generating the first sale is the most important step in building lifetime value. This idea is one way of doing it but I’m sure it could (and should) be tweaked depending on the type of retailer, their product mix and competitiveness of their market.

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