Free shipping is probably one of the most recommended digital marketing strategies out there. You’ve heard it before, and you’ll hear it again. It’s something about the word “free” that has an amazing effect on buying behavior. As a consumer yourself, you’re probably aware of how a free offer can influence you.
If you’re wondering how to offer free shipping without losing money, this guide is designed to help you. Doesn’t matter if you’re a startup, or a relatively large business either. We’ll cover if offering free shipping is right for you, strategies, and more!
By the end of this article, you should definitely have a better game plan.
The Psychology Of Free Shipping
No doubt about it, customers appreciate free things! With that being said, the influence of free shipping on sales isn’t one to overlook.
The main reason behind this is simple. Time and time again, free shipping is proven to be the primary incentive for customers to shop more in your store. Studies show that 9 out of 10 customers are more likely to shop at a site online if they’re promised free shipping.
Additionally, a Statista survey on digital shopping trends in the US shows that 48% of respondents said they’ve added items to their shopping cart to qualify for free shipping. Furthermore, 44% stated they’ve chosen the slowest delivery option because it was free! This would go to show that customers seriously care about free shipping.
Free shipping is a mainstay of major online stores. Shoppers today expect all eCommerce sellers to offer some form of free shipping. Unless you sell very exclusive, rare items or have a well-renowned brand, you likely have to get a competitive edge.
So how exactly do you do this without taking a big blow to costs? Well, there are a few ways.
Is Offering Free Shipping Right For you?
Not every eCommerce store can offer free shipping. In some cases, flat-rate shipping or real-time carrier shipping makes more sense.
However, you can always start small and test it out as a promotion, or try different strategies (we’ll go more in-depth about that soon). The key is to pay attention to how many customers meet the free shipping threshold compared to historical data; including the number of shoppers who had previously spent that much money.
You’ll also want to also measure any product returns that come out of new purchases. This way you’ll get a better understanding of the overall effect on your profit margin.
How to Offer Free Shipping
Offering free shipping is a great way to help prevent any unwanted surprises at checkout. As previously mentioned, many believe that free shipping is the expectation or even the standard and that anything less is an inconvenience to your customers.
However, with the high costs of shipping, many businesses may struggle with the cost of offering free shipping. It may even seem counterintuitive or impossible. While there is no one-size-fits-all approach that works in all scenarios, businesses can strategically find the right balance.
Covering the Cost
Unless you sell very expensive products, sitewide free shipping on all orders may not be an ideal option for you. Depending on your shipping carrier or methods, this can end up being more costly than profitable. Nonetheless, there are many ways to go about implementing this tactic.
Strategies for Offering Free Shipping
When it comes to offering free shipping, the marketing strategy is another big step. The overall strategies to do so can be grouped into two categories:
Conditional: sets conditions to your free shipping offers, such as minimum order value, select items, or economy delivery.
Unconditional: applies free shipping to every item and every order across the board
Furthermore, there are many ways to implement one of these two strategies. Here, we’ll go over the three, most common routes.
Increase Product Prices
One way to cover the cost of free shipping is to increase product prices. This can be on select eligible products or sitewide. This strategy gives the illusion of free shipping.
While you likely won’t cover the entire cost, the additional orders you get from using this stratefy can quickly offset the difference. To include the shipping cost in the listed product price, you’ll need to do the math and calculate the necessary markup. To do this, you can use the average shipping cost per order.
In addition, you also shouldn’t try or expect to make a profit on shipping. If individual products can’t sell with markups, try to get customers to buy more in a single order.
Increase AOV With Bundle Offers Or A Minimum Spend Limit
Increasing your average order value (AOV) can cover your margin. There are a few great ways to go about this; such as offering upsells, memberships, and or bundles.
Bundles are an easy strategy of offering either a pre-selected grouping of products you sell as one unit. One example of a bundle is like a gift set. With gift sets, customers can get a discount, offered by you, by mixing-and-matching options.
On the flip side, if you sell low-cost items and raise the product price tag, this can result in losing customers instead of gaining. Also, if you don’t have a product that allows for a subscription model, bundles might not be an option for you. In any of these cases, you could opt into a minimum dollar amount that’s required to receive their deal.
Common offer thresholds include $25, $35, $50, and $100; before choosing any of those, however, you should do some calculations. Furthermore, think about the possible product combos customers might put together to hit that offer mark. This way, you can make sure there’s few low-risk products that would allow customers to pass your threshold.
Offer Economy Shipping
Another way to cover costs is to offer free economy shipping!
To lessen the blow of costs, this can be a better option. Most carriers have a slow, low-cost shipping option, such as USPS Parcel Post. Most of the time, this can be cheaper than Priority Mail.
Despite offering slower shipping at no charge, in some cases, customers may happily decide to pay for faster shipping instead. Either way, this option provides you a lower-cost option when considering this strategy.
How A 3PL Can Help
Even after implementing all the advice above, you may still run into a few obstacles. If you’re still not sure, or you’re having trouble keeping up with the costs, a 3PL partner can definitely help!
The process of third-party logistics (3PL) is simple. Many offer different services; such as warehousing and fast shipping. However, the best ones can do it all! In the event that you want to lower the risk ofcosts, outsourcing order fulfillment is a great solution!
Outsourcing order fulfillment allows you to focus on your business instead of dealing with shipping orders to your customers; in a timely manner at that. Offering free shipping has the potential to increase your sales volumes. So, finding a 3PL that can help you maintain your growth would be highly beneficial.
Working With Print Bind Ship
As we discussed, offering free shipping tends to be very appealing to not just your customers, but to everyone shopping online. Moreover, the option can lead to increased sales and a possible increase in profits. The biggest hurdle you would have to get over is keeping your costs reasonable. Whether it’s raising prices or offering conditional free shipping, the ultimate option is partnering with a 3PL.
3PLs, like Print Bind Ship, often get discounted shipping rates with carriers because they ship such high volumes. In addition, Print Bind Ship not only handles shipping, but printing, packaging, warehousing and more! By choosing a 3PL that can handle many areas in order fulfillment, you will be able to see the return on your investment.
Get in touch with us today and take advantage of our free consultations! You can speak with an expert and see how we can help you scale your business.