Many online shoppers hate paying for shipping even if they buy products once a while. More than 86% of customers would rather abandon their shopping carts than have to pay a few bucks for shipping fees. Nothing is free of charge whether it includes the price of the boxes or the shipping costs. However, customers expect many things from online retailers which include free shipping as well.
With the rise of Amazon that is empowering every other online retailer, there has been a paradigm shift. Free shipping has become the norm among many online retailers. The customers prefer ordering from stores that offer free shipping even if they are purchasing a single product.
- Reasons to Offer Free Shipping
- Evaluating Your Shipping Policy
- Cutting Down the Shipping Costs
- Setting a Minimum Order Amount
- Offering Free Shipping as a Promotion
1. Reasons to Offer Free Shipping
Offering free shipping is one of the most powerful and enticing marketing words in any online business. Providing your customers anything for free influences their buying behavior on a psychological level. In the past few years, when Amazon started their free shipping plan, the daily number of orders skyrocketed. Rather than free shipping, Amazon mistakenly set the shipping fee to ten cents just enough to completely stall the predicted jump in daily sales. Imagine losing countless $20-$200 orders over a ten cent shipping fee that sounds very absurd. But, it really shouldn’t come as a surprise because some individuals seem very irrational about how they spend their money. It seems clear that free shipping is more valuable than shipping only 10 cents. Read the stats below to evaluate the benefit of free shipping.
- Over 85% of online shoppers consider free shipping as the top incentive that drives more purchases,
- Up to 90% of online buyers described the cost of shipping a major reason for cart abandonment
- More than 50% of shoppers said they would like to add more items to their cart to qualify for free shipping
2. Evaluating Your Shipping Policy
Most of the free shipping policies are not created equal. Each online retail business is quite different. The reason before advertising your “free shipping policy” to your online customers, you have to determine the right shipping strategy best suited for your business model. When it comes down to advertising, there are two basic types of free shipping you can offer, unconditional and conditional.
- Unconditional: The free shipping policy applies to each and every item in the online store regardless of its value
- Conditional: The customers need to meet specific conditions like minimum order value, give their contact info, or live in a particular city to qualify for the free shipping policy
3. Cutting Down the Shipping Costs
The following are a few tips to take to maximize efficiency and cut down the shipping costs to a bare minimum. Apart from the delivery distance, the overall weight and the dimensions of your packaging are the crucial factors in the cost of shipping. Rather than worrying about currier’s shipping rates over which you barely have any influence, you should focus on the weight and dimensions of your packaging. Consider the marketing tactics at USPS, they split the parcel sizes into two wide categories
- General commercial parcels which are at least three to four inches high, six inches long, and 1/4 inch thick
- Machinable parcels which are less than 27 inches long, 17 inches width, and 17 inches high and weigh less than 50 kg
4. Setting a Minimum Order Amount
This insane shipping strategy has an amazing power to enhance the average order value. If you merge this with an optimized packaging (maximizing the potential around your average box size) your profits will boost. If you realize that the “minimum order amount” free shipping strategy fits best for your online business, then it is better to use it. However, if you have no clue how to calculate the minimum order threshold, it is better to start with average order value. If the customer spends $50 on every order, then maybe you should try putting the minimum free shipping threshold to $65 that can ideally fit in the same shipping box. According to many different surveys, more than 45% of customers report that they’re willing to add another item and spend more money to qualify for free shipping. The reason it’s important to remain realistic when setting the minimum order threshold. The whole idea of this approach is not just to sell more, but to boost the profit margin on your average order.
5. Offering Free Shipping as a Promotion
There are mainly two ways to offer free shipping. You can offer free shipping to some of the customers that are willing to give you their email address for marketing purposes. Or, you can create a business model that offers free shipping to members or returning loyal customers. By offering free shipping, you are essentially leveraging free shipping to get something from your customers in return. Absorbing the shipping costs to gain the ability to send marketing promotions, email upsells, and sales funnels to encourage customers to come back and become regular shoppers oftentimes proves the be a winning strategy for small online retailers.