Offering Free Shipping Without Losing Money

June 29, 2016

free_shipping_tips.jpgThe world of eCommerce is growing, and thus viciously competitive. In the vast sea of online shopping sites, it’s imperative to know what your consumers value, and what prompts them to leap from browser to buyer. One area to explore is that of free shipping. It may seem, initially, that free shipping is simply too expensive an option to offer. However, this is a key element for many online retailers to increase sales, promote business growth, and send conversion rates through the roof.

When faced with a multitude of options, customers want to feel as though they have ascertained the best price, best deal, or best savings related to any particular item. For many, free shipping is a large part of the equation. According to a Compete.com article asking customers their primary barriers about shopping from an online retailer, 93% of responders said free shipping would encourage them to purchase more products online. With the overwhelming percentage of shoppers placing this much importance on shipping, it pays to take a close look at your model. The ideal shopping experience for most online shoppers is to get free, quick shipping. There are several ways to offer free shipping without losing money. 

Minimum Purchase
Offer customers free shipping once they hit a minimum purchase threshold. Although this can be a good strategy to boost average order volumes, make sure to do your research before. Find the right minimum based on your margin and expenses, so you do not hurt profitability.

Promotions on Select Products
Even if you don't want to offer free shipping on everything, doing promotions on certain items and offering free shipping on those purchases is a great way to drive sales for those products and sell more items in general.

Free Shipping Windows
Retailers can provide free shipping as a limited-time offer, in the weeks leading up to specific holidays or over a weekend to boost sales.

Membership Programs
Membership programs are a good way for online retailers to remain competitive while offering free shipping because it gives customers incentive to shop with you for as many of their needs as you can fill. Customers pay a one-time fee to receive membership and from that moment on they receive free shipping on all of their orders.

Repeat Customers
Another popular free shipping incentive among eCommerce companies is offering free shipping to loyal customers. Basically, offer free shipping to the customers who frequently shop with you.

Additional free shipping tips:

Check out your competitors to see what shipping offers they make available to customers. If using a minimum purchase threshold, yours should be set at or lower than competition while still making sure it does not cut too deeply into your profits.

Free shipping does not always mean 1 or 2 day shipping - Free shipping can be offered at the 4-5 day level and upgraded for a small additional charge.

If offering free shipping, make sure to highlight the savings to your customers. Many online shopping carts will calculate shipping fees, so customers can see how much it would cost them. Another way to remind customers is to highlight shipping savings in email order confirmations.

While several years’ back free shipping might have been a nice add-on, in today’s market customers have come to expect it. Shoppers are more internet savvy than ever, and know how to easily compare one site to another when scoping out the best deal. That free shipping banner may be the difference between you and the competition. Partnering with the right order fulfillment partner can help eCommerce companies reduce shipping costs, providing more room in the budget for promotions such as free shipping. For more information on the freight benefits of partnering with a fulfillment company, tips for offering free shipping, or to learn how we can help improve your business, please feel free to connect with us at any time.

Topics: free shipping, online retailers, eCommerce, shipping strategy

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