To protect profitability, reduce virtual retailers offer free shipping

Sao Paulo-the maturation of e-commerce in Brazil, the percentage of sales with free shipping has decreased gradually in the industry. In 2011 the slice was 66%, last year she has already fallen to 39% of the total. From now on, the movement should continue, with the transformation of practice into something increasingly scarce.
The culture of free shipping, explains the President of the Brazilian Association of e-commerce (Abcomm), Mauricio Salvador, gained momentum in the early years of e-commerce as a way to attract consumers to the channel and gain market.
Currently, however, the practice has become impractical for the virtual retailers. "What explains this change is the increase in the cost of shipping, which impeded the continuity of strategy", says Salvador. According to him, the cost-which two years ago represented 6% to 12% of the value of the product, represents 6% today to 15% of the total.
The Director of Shipping Market area of the free market, Leandro Bassoi, corroborates the vision Executive and States that the decrease has been given just to balance the finances of the companies of the sector. "The weight of freight has gained more and more importance in the composition of financial companies. As the free shipping '' ate '' profitability, they are trying to balance better this issue. "
Salvador points also that there was an increase in other operating expenses, such as storage, labor and marketing, what ended up pressing even more retailers to diminish the offer of free delivery.
The Director General of the Search Platform Discounts, Richard Bove, the search of the virtual retailers for greater profitability deepened the crisis, accelerating the change. "As the whole market is today searching for ways to increase profitability, this reduction of the offer [free delivery] is natural," he says.
In your view, the trend is that the percentage of sales with free shipping, which according to E-bit closed at 39% in 2016, to fall to around 20% in two years. The co-founder of virtual stores platform Cloud Shop, Alejandro Vázquez, also signals a left of that reality. "One of the reasons why the free shipping was strong years ago is that the consumer was getting used to buy over the internet. No one was willing to pay to receive the product at home. Nowadays, with the consolidation of e-commerce, the customer is already more accustomed, "he says.
This does not prevent, however, the change starkly impact industry sales. In view of the CEO of the E-bit, Pedro Guasti, the Brazilian consumer is still very susceptible to free shipping, especially when the ratio of the value of the shipping is too high relative to the price of the product. Therefore, the decrease of the offer of free delivery ends up impacting sales of e-commerce. "But as companies are committed to the financial health of the business, they give up sales for profitability", he explains.
Will always exist
Despite the trend seen over the past four years, Salvador, the Abcomm, States that the offer of free shipping always exist in the industry, since it is an important marketing strategy. What happens, however, is that it will be something much more selective. "Most stores today establishes a minimum purchase value and specific regions to provide the free delivery. In addition, some retailers before they paid the total freight, are paying a portion and the other party including the price of the product, "said Salvador.
Bove, the Search Discounts, agrees and says that the free shipping will always be a sales strategy important for retailers. "The question, however, is that it''s no longer something automatic, to become a differentiator," says.
Against the grain
In the free market, says that occurring Bassoi an opposite movement seen in the sector, and the percentage of sales with free shipping increased last year. The Executive does not open the numbers, for strategic issues, but says the high was relevant and that the company''s goal is to continue encouraging retailers to offer free delivery.
"The free shipping is an important vector for us, because the conversion of sales is better than ads with the freight paid," says Bassoi. He explains that a few years ago the participation of this format of sale was below market average, but currently (after the implementation of changes to the system of free market submissions), the slice is above the seen in the industry.
According to him, the marketplace today offers tools that facilitate for the shopkeeper to the forecast value that is charged on shipping and to ensure the same value regardless of the region, which encourages the provision of the benefit. "When he [retailer] already knows in advance the price we will pay for the delivery, he can adjust the value of the ad, and so maintain their margins. For us, on the other hand, the retailer offer free shipping does not affect negatively in any way, and only gives a better experience for our consumers, "he points out.