Offering free shipping to customers is a consideration retailers often re-visit. Free shipping is becoming an increasingly common offering, but how have others been able to turn a profit? Statistics show that shoppers spend 30% more on average when they are offered free shipping for online purchases. The potential to drastically increase your average sale skyrockets when you ship for free, so here are some strategies to help you get the most out of this promotion:
1. Promote, promote, promote!
Whether it’s offered all the time or for a limited time only, get your customers excited about free shipping. There are a few ways you can generate buzz:
- Send emails to your subscriber list.
- Spread the word on your social media channels so that your followers can tell others.
- Include a highly visible mention on your webpage and on every product page.
2. Offer free shipping on select items
Free shipping can really work to your advantage when you offer it only on certain merchandise. For instance, if you have overstocked items, free shipping can be a great way to clear them out. Perhaps you can offer free shipping exclusively for higher-margin items or items that cost very little to ship. You could consider promoting a deal of the day or week and offering free shipping for that item only to get customers into the habit of returning to the site to check out what the next deal is.
3. Leverage fulfillment centres
When you offer free shipping, your volume of orders increases. That’s great news! But wait – how can you keep up with these orders without breaking the bank on delivery costs? Carriers factor the distance your package travels when they calculate your shipping rates. One way you can lower this fee is by adding fulfillment centres to your supply chain. Store your popular products in warehouses located closer to your customers so that when it’s time to deliver, you reduce the distance charges and consequently, the cost of free shipping altogether.
4. Specify a minimum purchase requirement
It’s rare for an e-commerce retailer not to require a minimum order amount for free shipping. Why? Because it helps increase order size and profit margins so you can afford to offer free shipping in the first place! In fact, 75% of consumers will happily spend more money to take advantage of free shipping deals. Why not get a tangible product instead of spending the same amount on something you can get for free by hitting the minimum purchase requirement? You can help your customers meet the minimum by providing up-sell and cross-sell options (e.g. suggest products that are often purchased with the item in their cart).
So, how much should your minimum order requirement be? Well, it depends on your business.
- Not so low that you can’t cover your costs if customers place low-value orders.
- Not so high that average customers can’t reasonably meet the threshold.
When customers order multiple items, try to consolidate your shipments to save on shipping costs. We share order consolidation tips in our 6 Easy Ways to Save Big on Shipping Costs article.
5. Minimize your packaging
To optimize your return on free shipping, you have to look for opportunities to minimize expenditures at every step of the order fulfillment process, while maintaining a quality experience for the customer. A saving opportunity lies in the way you package the orders. Minimal packaging isn’t just a sustainability practice – it benefits your bottom line as well. Charging by dimensional weight is the status quo across carriers. There are two ways to optimize your return on free shipping in adherence to your carrier’s dimensional weight rules:
- Ensure your packaging is compact by using parcels that are just the right size.
- Place items from the same order in a single parcel where possible.
By keeping this fee structure in mind when packaging your products, free shipping becomes that much more affordable.
To learn more about proper packaging, see our infographic on the dos and don’ts of packaging.
6. Make it for members only
Providing a membership service (or tiered membership subscriptions) is beneficial for your customers and your business. Offering perks such as free shipping for an annual premium will likely have your customers happy to pay a one-off fee for a year-round benefit. In fact, it will make them more inclined to “capitalize” on free shipping with repeat purchasing.
There are a few ways that you can provide this service. These are some examples of membership systems offered by other companies:
- Customers are offered free shipping on specific items for a monthly premium.
- Customers pay an annual membership fee for access to exclusive offers including free shipping.
- A tiered membership system where customers gain the exclusive perk of free shipping after spending a certain amount (e.g. $500 or more) per year or on a single purchase.
7. Consider strategic timing
You don’t need to offer free shipping year-round if it’s not a cost-effective strategy for your business. The holidays are a fantastic time to draw in price-conscious shoppers with this popular perk – 77% of shoppers say free delivery would encourage them to buy more online during peak season sales periods. And, by limiting the time frame, at least to start, you can get a sense of how much an offer of free shipping boosts your overall sales when you compare them year over year.
8. Extend the delivery timeframe
The good news is, customers don’t expect free deliveries to arrive within the same timeframe as paid shipping.
- The majority of shoppers are happy to wait up to a week for free shipping.
- Shoppers will expect a paid delivery to only take 2 to 3 days.
Take advantage of ground transportation delivery services – a cost-effective option. It can be faster than you think too – if you choose a delivery provider with a large courier network, ground deliveries can actually be as quick as a few days.
The benefits of offering free shipping are likely to increase over time. Shoppers might visit your site and buy from you more often because of free shipping. And once your sales go up, you may be able to negotiate better shipping rates based on higher volumes. Increased sales and lower costs? That’s a win-win!
Shoppers love free shipping – and businesses of all sizes and types have had success offering it. But you know your business best. Consider the benefits and see if it’s right for you and your customers.