5 Ways to Offer Free Shipping Without Breaking the Bank
If you’re not offering free shipping, you’re missing out on the chief deciding factor for 90 percent of online shoppers.
Last year’s Walker Sands’ Future of Retail study found that for 90 percent of respondents, free shipping is the top incentive that will make them shop online more. In fact, it’s been that way for decades. Companies like L.L.Bean were using free shipping offers in the late 2000s to gain customers, even if the practice cut deeply into margins.
Customers now expect free and fast shipping. Forty-two percent of people say “fast” shipping takes three days or four days — and they’re willing to pay less for it than in previous years. Therefore, you’ll need to embrace free and fast shipping in order to keep customers coming back. Here are a few different ways you can offer free shipping and still make a profit:
1. Set a price.
Create a minimum order amount to get free shipping, but provide deals to get your customers to that price threshold. This allows you to boost sales but also makes it simpler for your shoppers — they won’t feel pressured to spend a lot if you highlight products that make it easy to reach your threshold.
2. Choose your items.
Limit the items that can be shipped for free. It seems like this may upset customers in today’s “free shipping” age, but even giants like Amazon.com have restrictions on items available for free shipping. This tactic ensures you’re making money on goods that have high margins.
3. Provide rewards.
Create a plan for free shipping. You don’t need to charge for this one, but just make sure that you’re creating repeat customers. For example, if you sell a product that has something that needs to be changed, such as batteries or filters, create a rewards program that verifies someone has purchased your main product. Once people join, they can get free shipping on those refills, ensuring a consistent flow of sales.
4. Offer free economy with an upsell.
If you want to make your shipping more profitable, give away the slow option and charge a little for the faster one. Economy shipping is available from your carrier partners, and free is great for your customers. However, if they want your product tomorrow, they have to pay for it.
The big caveat here is that you need compelling products. Online retailers with a drop-shipping model where many others can offer the same products are going to struggle with this option because they're competing largely on price.
5. Hide the shipping cost in product costs.
Here’s another tactic that many retailers are using right now: put the cost to ship goods in the sale price and then offer the shipping for free. Sellers in a wide number of verticals already use this tactic.
Search for a specific product on Amazon and look at the variety of prices. If you then filter by what's eligible for Prime shipping, you’ll often see a jump in the lowest price. It works — people are often willing to pay a little more in exchange for free shipping.
These are just a few ways you can manage free shipping in a way that keeps your margins viable and empowers your business for growth.
Remember Perceived Value
At the core of your efforts, always come back to the value that free shipping provides. Sometimes this means that you need to change the way your discount is framed, even if it stays the same.
Test your shipping options as well as the messaging. In your cart, try listing free shipping as a percentage off the total price and then list the shipping price as the same, thus negating it but making the customer feel like they're getting a better deal. Sometimes, 20 percent off will be more desirable than free shipping, but you’ll have to test it.
Keeping free shipping affordable requires you to be smart and try things out, so there’s no need to limit your creativity in the deals you choose and how you present them.
Jake Rheude is the director of business development for Red Stag Fulfillment, an e-commerce fulfillment warehouse.
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Jake Rheude is the Director of Business Development for Red Stag Fulfillment, an e-commerce fulfillment warehouse that was born out of e-commerce. He has years of experience in e-commerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.