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Can free delivery be used for customer acquisition?

Can free delivery be used for customer acquisition?

Free delivery is increasing in popularity, as many customers have come to expect it. However, can free delivery be used as a tool to acquire more customers to begin with, at a time when acquisition and retention is more crucial than ever?

IMRG conducted a survey of 300 retailers, to find out about their delivery choices, and how this ties into acquisition. Firstly, they asked, ‘What is your opinion on free delivery being used as a tool for acquisition and retention?’. The majority of retail respondents said that it works well and they highly value it (38%) but this was also followed closely by retailers offering it because it’s industry standard. 16% said they don’t view it as an acquisition tool, and only 4% of respondents said they don’t offer free delivery at all, showing it really is standard practice nowadays.

customer acquisition 1

What is your opinion on free delivery being used as a tool for acquisition and retention?

(Source: IMRG’s survey of 300 retailers, April 2022) 

Looking at the data in more depth, we can see how this split across the categories. Free delivery as a tool for acquisition is actually used most in Electronics (80%) and alcohol (50%). It works as a acquisition tool in most categories, except for gifts, multi-department, and other. Clothing and health and beauty are split between using it for acquisition, and using it just because it’s industry standard. Free delivery was most likely to be seen as ‘not a tool for acquisition’ in alcohol, or multi-department sectors.

customer acquisition 2

What is your opinion on free delivery being used as a tool for acquisition and retention?

(Source: IMRG’s survey of 300 retailers, April 2022)

Finally, although it seems that free delivery is widely used as an acquisition tool, how do retailers decide—other than this—on how much to charge for delivery. 75% of retailers said it simply came down to their courier costs, whilst another 70% (they could select more than one answer) said it was to do with competitor pricing. A further 42% claimed it was to do with the margin on AOV.

customer acquisition 3

How do you decide on the amount charged to the customer for delivery?

(Source: IMRG’s survey of 300 retailers, April 2022)

So, if courier costs can be made back elsewhere (e.g. a free delivery threshold), it seems as though free delivery is a widely adopted, and successful, tool for acquisition and retention.

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