Does the word “free-shipping” often hurts you as a seller? Well, of course, it does, when you see your competitors offering free shipping for the same product that you’re selling too and thus you’ve got no option but to shrink your profit margins to offer free shipping.
However, in this article, you’ll find some practical tips and ways on how you can offer free shipping to buyers without compromising on your profit margins. If you follow the tips and do it right, I can guarantee you’ll see at least 10-20% improvement in net profit.
First things first – a Shipping Management Tool in action!
Free shipping will definitely multiply your order numbers – big time. But what if you are not able to fulfill those orders efficiently, and on time. The cost that you incur in free shipping might just go in vain. Thus, how you manage your shipping process is the key. And multi-carrier shipping management tool is said to be very useful in the case.
This is how a shipping management tool can treat your shipping woes:
- Fastens the shipping and order fulfillment process
- Assists you in determining the best shipping options so you always get the lowest rates in the market.
- It automates time-consuming and error-prone shipping tasks by applying business rules specific to your orders, organized packing, automated picklists and packing slips creation and real-time shipment processing.
Shoppers prefer free shipping over fast-delivery
With the advancement in technology, the retail industry has taken new shape – and so do consumers buying preferences. According to Deloitte’s 33rd annual “Holiday Survey” of consumer’s spending intentions and trends, 88% of respondents prefer free shipping over receiving their order faster.
The majority (61%) of holiday shoppers report they will purchase products that have free shipping option. For free shipping, 66% of consumers in the survey willing to wait 3 to 7 days for their merchandise.
Offering free shipping to all your online products is a surefire way to improve your conversion rate. During the survey in the United States as of April 2017, 57 percent of online shoppers said that they canceled their order if the shipping costs were too high. Therefore free shipping is something that nowadays every online seller have an eye – for achieving success in the e-commerce business.
Why should you offer free shipping?
“Because nearly every consumer on this planet enjoys getting something for nothing!”
Unfortunately, not charging for shipping simply isn’t something every retailer can do. But if you don’t offer free shipping under any conditions, you’re potentially leaving a ‘big-bag’ of revenue and buyers on the table – which far or later would be taken away by your competitors.
Amazon was the first company that introduced free shipping several years back. However, at that time ecommerce merchants particularly the small ones, were least concerned about those free shipping thing. But with scale and evolving customer expectations, free shipping has become both common and profitable to some sellers.
Here are some data and stats which would make the picture clear about how important offering free shipping is for any ecommerce:
- According to a case study, Red Door Interactive said that by offering free shipping ecommerce orders increased as much as 90 percent.
- In a survey from 2010, 93 percent of respondents said that free shipping encouraged them to buy more products online.
Remember, it’s not worth offering free shipping unless you can make the offer profitable. Hence let’s see some of the ways through which you can make your free shipping more profitable than ever.
1) Find “One” most suitable shipping provider
Yes, try to keep the count of shipping provider you chose for an ecommerce business to one. Many shipping companies have now started offering free shipping to capture the seller’s market. However, as a seller, you must know that if you partner with multiple shipping companies, it would eventually cost you more.
Also, the fact is, not all shipping-provider caters their service across the globe. So, to ship the products where your shipping provider is unable to provide service, you need to have multiple shipping partners.
But having one shipping provider that let you ship products across all your selling region is just the cherry on top. Why? Because with one shipping carrier you even get the chance to negotiate shipping fees, as all your shipping will be done by one firm only.
Another advantage of having only one shipping provider is that you don’t need to go through the terms and policies of different companies every time you ship the product. Although if for some reasons (as mentioned above) you’ve to go with multiple shipping providers, then you can leverage shipping management software that can handle each and every shipping process even with multiple shipping carriers.
2) Set minimum order value
Yes, by setting minimum order value assures that your cost of goods sold is not too costly for each order or transaction. Eventually, you are ensuring a minimum profit amount per order.
To determine the minimum order value, you must look at the cost of selling products. Let’s assume that you want to earn a profit of at least $15 per order and you sell items that cost you $1 each for a price of $2 each, therefore you need to sell or set a threshold of at least 10 items in order to reach ‘minimum order value’. Which concludes that your minimum order value for this example is $20.
3) Include shipping costs in product prices
Tell me, which given the option would you choose or prefer while buying a product online:
Option 1: $20 (product-price) + $3 (shipping charge) + $2 (taxes)
Option 2: $25 (free shipping and inclusive of all taxes)
How do you include shipping costs in item prices? There are shipping management tools available which have the feature of including the shipping amount and other extra costs in the product price itself.
if you want to show less or no shipping rates for your targeted areas, this shipping management software will allow you to set/include the shipping rates or extra charges in the actual price of the product itself. So your consumers would feel that your store is localized one thus the shipping charges are zero.
By offering your customers free shipping, they might keep coming back to you and this would indirectly increase your overall revenue.
4) Restricted Shipping
You have to work smartly! Well, of course, you must be doing it currently. However, restricted shipping is an easy yet smart way of – how to offer free shipping. In restricted shipping, sellers offer free shipping only on products where they know the shipping cost is low.
Restricted shipping works best when your one product is dominating the entire sale of the store. For example, more people are coming to your store to buy shoes then, definitely, offering free shipping on shoes is going to appeal to a large number of your shoppers.
This type of offer is “harmless for your pocket” because you know you can afford to make this type of offer long-term. Also, it’s easy to implement.
5) Leverage shipping software to save management costs
You may come across instances where a large amount of time and money is consumed or invested for managing all your the shipment process.
Managing shipping costs is important, yet often overlooked by small companies. Many small companies are too busy with the core elements of their business to give shipping much attention.
However, using good shipping software that takes care of everything from the shipping rate comparison to shipping workflow automation, save your valuable time and money. Which eventually can be used to offer free shipping.
6) Use Amazon FBA
FBA product listing features the ‘Amazon Prime logo’, signaling the Amazon Prime members that your product can be bought with free 2-day Prime shipping or other Prime shipping offers.
Amazon Prime holds nearly 85 million subscribers who look for the Prime logo while shopping. Therefore, FBA products can draw more buyers than non-Prime products. As a seller, the whole purpose of sending stuff to FBA is having items available to Amazon’s Prime members for free 2-day shipping.
You have no control over this whatsoever in Amazon’s FBA service and there is nothing for you to set (which has its own benefits, as Amazon will take care of order fulfillment process). If someone orders your items and they have a Prime membership, shipping is free. Non-Prime members get it free (standard) over a certain threshold or Amazon will charge them shipping and Amazon will pocket said shipping charged.
7) Offer Bundle Suggestions
Bundling means selling different type of products together as a whole package – to encourage customers to buy more goods. Product bundling is a well-known way for online sellers to sell more products and increase profit.
Giving product bundle suggestion to your buyers at the end of the checkout process and emphasize that adding this ‘xyz’ products in your cart would make your order eligible for free shipping. While you sell via bundling technique, emphasize on figures or percentage how much they (customers) can save on that order and even get free shipping.
For example, if you are selling shoes, you can add a product like socks, shoelace or shoe polish as a bundling package option. There are high chances that it would urge buyers to buy bundled products as well and eventually increasing your revenue or profit.
Free shipping not only increases order volume and average order value but may also decrease online cart abandonment. So start thinking about free shipping offers like overhead or advertising expense, rather just than an extra cost.