Free shipping.
These two words work like a magic spell. They are the #1 way to enthuse customers to buy from you.
However, offering free shipping on your ecommerce store may be quite a venture. How can you foresee whether free shipping will be profitable? How do you pick a good shipping strategy that doesn’t break the bank? Is it even a reliable thought for small organizations?
We suggest that you don’t act with a blindfold on, so we have gathered some free shipping strategies for you.
Should I Offer Free Shipping?
Researchers say 46% of customers are likely to pay a bit more for their overall order if it comes with free shipping. It might not come as a surprise, but 84% of online customers are more likely to shop with brands that offer free shipping.
87% of consumers will refer to Amazon for their gift purchases — and Amazon is one of the most famous providers of free shipping.
What you really should do is make a cold-hearted calculation based on the following factors:
- Your profit margins. Remember that your margins vary per product. Don’t be too hasty to put a free shipping label on every piece in your store.
- Your products. The size and weight of a product impact the shipping cost. The heavier and larger a product is, the more restrictions you should consider for shipping.
- Your customer’s location. If you ship abroad or to faraway destinations, don’t forget to exclude them from your free shipping list or to at least set a threshold.
4 Free Shipping Tactics for Your Online Store
A Shipping Threshold
Setting a threshold is a strong showcase punch to increase your AOV. This way you encourage customers to order more products: 9 out of 10 people say that having an order ship for free is the biggest incentive to add more to their cart.
So setting a threshold helps to increase the average order value, but how do you calculate the minimum order amount? Let’s consider the following example.
- Number of orders — 10
- Average order value — $40
- Profit margin — 25%
- Average shipping cost per order — $10
Calculation:
- Profit 10 х 40 = 400
- Gross profit of 400 х 25 / 100 = 100
- Shipping expenses 10 х 10 = 100
- Net profit 100 – 100 = 0
You will break even if you offer free shipping for a $40 order. For a net profit to be $100, gross profit should be $200. So the profit should be 200/25×100=$800, and an average order amount — 800/10=$80.
Member Program
Member programs are increasingly popular. It means you charge customers an annual fee in exchange for free shipping on some or all items.
Tip: Run a holiday contest and offer a free membership to attract more attention to the program.
Free Shipping to Certain Locations
If your sales increase, try this technique to expand your client base. Partner up with a new shipping service and offer deliveries to a new region.
If you have customers in Hawaii or Alaska, you can restrict your shipping destinations to the U.S. continent only, just to be safe on far-away and expensive delivery.
Free Shipping on Everything
Offer this if you sell lightweight and small products with a high-profit margin.
Tip: If you can offer free shipping on everything, don’t stay under the radar. Mention your free shipping policy on social media pages and in your newsletter, add a bar saying “Free Shipping” on the store landing page.
Free Shipping Alternatives
When free shipping is not an option, you can try other ways to improve your customers’ attitude towards your shipping terms. Here are a couple of suggestions.
Same-day delivery
Sometimes free shipping is not what people are looking for in the first place. With big retailers like Amazon people are getting used to receiving orders within a short time, so it becomes more and more important to provide fast delivery.
Free Return/Exchange
More than 92% of customers will buy again if the product return process is easy, and 79% of shoppers need free return shipping. Also, 67% of shoppers check the return page before buying. As you can see from the stats, free returns are just as important as free shipping.
When customers see a free shipping label, they consequently think you offer free returns as well. But that is not essentially the case.
Use Eco-friendly Packaging
Styrofoam, which is used to keep products safe from damage and extreme temperatures, is heavily polluting the environment. Not only is it unsustainable, but its manufacturing process generates a lot of waste.
If you have a mature attitude towards helping our planet, use fibrous blocking materials such as corrugated inserts instead of styrofoam. And don’t forget to tell your customers about it. Ecological problems touch many people’s hearts. Show them you care too.
Free shipping can make the shopping experience more pleasant, which in turn may increase the number of loyal customers you have. Ensure you gauge all pros and cons, and calculate a free shipping threshold appropriately. And if you already offer free shipping to your customers, We’d love to learn how it works for you.
