If you are thinking about how to supply free delivery in your products without losing money, this guide examines ways to manage it wisely. From promotional bargains into site-wide free shipping offers, we cover each choice and explain the way to approach every strategically. Done right, free shipping is a great tool, and we’ll show you how to use it.
The achievement of any free delivery program is based on the shipping rates you pay and price of work. If you manage your order fulfillment and shipping, you may be losing money through inefficiency and lack of scale. FedEx Supply Chain is an all-in-one fulfillment solution for eCommerce businesses that features packaging, warehousing, and transportation. They can let you offer free shipping without murdering your own margins. Receive a free consultation today.
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How to Offer Free Shipping: Options and Tactics
There are two primary ways you can offer free transport: Conditional or Unconditional, and both are pretty self-explanatory:
- Conditional Free Shipping sets conditions to your free shipping offer, for example minimum order value, pick items, or market shipping.
- Unconditional Free Shipping applies free shipping to each item and every order across the board.
Which strategy is best for you depends on factors including your profit margins, shipping costs, and competition. We’ll fit these into many scenarios below to show you the best way you can offer free shipping for your unique business.
How to Offer Conditional Free Shipping
Regardless of the marketing advantages, it is rarely a fantastic idea for small sellers to offer free shipping on all products. For one, not every vendor has high profit margins on all goods. You might sell bulky or heavy items that are expensive to ship or concentrate in low-margin goods. By way of instance, even a high-end eyewear shop sells cart stuffers like lens cleaner and microfiber cloths. Shipping these low-margin things alone at no cost can put you in the red.
On the contrary, it’s usually good to put some limits. Here are 5 common ways retailers stagger free shipping offers:
1. Set a minimum order level
Offering free shipping with an order worth limit of, say, $50, is a simple means to avoid losing money on smaller trades. Additionally, it may encourage customers to purchase more. One survey revealed 48% of shoppers have added items to their shopping carts just to be eligible for free shipping.
“To set a minimum purchase amount for your free shipping offer, choose your average purchase quantity and put your minimum about 10% to 15% higher. This motivates shoppers to spend a little more to save on shipping. You’ll want to experiment to obtain the amount that drives longer, and greater, sales. The amount ought to be low enough to be perceived as a marketing that attracts new customers, but high enough so you aren’t losing money.”
— John Lawson, eBay Platinum Powerseller.
2. Provide free shipping on select items just
Another approach is to supply free delivery on some items, but not others. Employ free shipping only to things which have a very low shipping cost and sufficient markup to be rewarding after shipping charges are factored in. By way of instance, jewelry and small fashion accessories are inexpensive to ship, so free transport may operate on these goods. Handmade soaps and kitchen fittings are not, so free shipping might not work for all these products.
3. Use free transport as a promotional event
Offer a limited-time free shipping promotion. If you already provide free shipping on orders above a certain level, reduce the brink or eliminate it entirely. The concept is to excite prospective buyers and turn window shoppers into paying customers.To be effective, you have to get out the word. Send it out in your own email marketing list or place it on Facebook and other social media. Do whatever is needed to reach your audience.
4. Offer free market shipping
Most carriers have a slow, yet low-cost shipping option, like USPS Parcel Post, which is cheaper than Priority Mail for a few shipments. To lose less money on free shipping, provide a slower delivery option at no cost. You’ll spend less when sending free orders, plus many customers will happily pay for faster shipping whenever they have a choice.
5. Use Fulfillment from Amazon (FBA) for products you market on Amazon
Options 1-4 are tactics that work for products that you sell on your own website. But there’s another way you are able to offer free delivery on products you market, plus take order fulfillment tasks off your shoulders. That is by selling products on Amazon using Fulfillment by Amazon (FBA) to handle your shipping.
If you already sell on the Amazon marketplace or are moving in that direction, FBA is worth serious thought. It’s the easiest way to supply free shipping on the Amazon market as most FBA products automatically qualify for Prime Free Shipping, which is something Amazon shoppers look for. Plus, being a part of the FBA program is a critical boost for Amazon sellers in different ways, including merchandise ranking and buy-box placement.
“In case your Amazon products aren’t FBA, you merely
are not relevant on Amazon. You get more sales traction, boost your merchandise up the Amazon search algorithm, and also have significantly more buy-box potential using FBA to your Amazon products”
— Chad Rubin, Amazon & Multichannel Seller, Founder, Crucial Vacuum, Believe Crucial & Co-founder, Skubana
So, we’ve covered how to supply free shipping using conditional elements in your program to better handle gains. Now we’ll have a look at why, and when, you might elect the no-holds-barred strategy: Unconditional free shipping.
When to Provide Unconditional Free Shipping
Conditional free transport has many positive aspects, but occasionally unconditional free shipping is the best choice. Selling high-margin items with high competition tops the list, however there are several other scenarios where it is reasonable, also. Here are 4 top motives that e commerce vendors opt for unconditional free transport:
1. All your competitors are doing it
If all of your competitors are doing it, then you certainly don’t have a lot of option. If you would like to claim some market share, you’ll probably should provide site-wide, unlimited free shipping. To create this job, you should have healthy profit margins and carefully manage your fulfillment and transport expenses.
2. You want to Stick out in the audience
If none of your competition is doing this, unconditional free transport might appear unnecessary or even counter-intuitive. But if none of your competitors provide site-wide, no-minimum free delivery, then doing so can make your website stand out. Zappos and L.L. Bean are just two firms that use this strategy . As you absorb all shipping costs, this tends to work best in the event that you sell goods that you sell and manufacture at a top retail store, or resell high-margin products like jewelry.
3. You sell high-margin products that are easy to send
If you are fortunate enough to combine healthy profit margins across all of your products with low transport costs, unconditional free shipping may be a simple fit. Little, pricey goods that send in small, lightweight boxes, such as watches, jewelry, collectibles, fashion accessories, cosmetics, and supplements, tend to fall into such a class.
— John Lawson, eBay Platinum Powerseller
4. You want to Decrease customer service problems and complaints
Want to cut down on customer calls and emails? Offer unconditional free delivery. It is amazing how offering free transport reduces both pre-sale and return-related questions. It appears customers feel more comfortable committing to a purchase if they know they are not paying for anything additional. And when they end up returning , they do not have to contact you regarding shipping fee refunds.
Clearly, there are many ways you can approach free delivery, both conditionally and unconditionally. However, is it right for your company? Can it drive sales your way? Might it be worth the hassle of changing your current tactics? If you’re asking these questions, then here are a few reasons that justify the move.
Reasons to Give Free Shipping
Free transport is a mainstay of important online shops, and shoppers now expect all ecommerce vendors, large and small, to offer you some form of free shipping. Unless you sell really distinctive, hard-to-find items, or possess a sought-after brand, you likely face competition on the industry. And that rivalry probably provides some type of free shipping.
If you are on the fence around supplying free transport, here are 4 things to place on your”pros” column:
1. It makes you aggressive
Offering free delivery immediately puts you in the”free shipping club” in shoppers’ minds, and that club comprises Amazon, Walmart, Wayfair, and other major sellers. If shoppers know upfront that you provide free delivery, they will give your website a chance rather than moving on to the major players.
2. Shoppers do not have to think
Following on reason #1, free shipping enables shoppers browse and add items to the cart with certainty. They do not need to tally shipping fees in their minds while purchasing or wonder if a surprise awaits them at checkout. The KISS rule of thumb applies here: Keep It Simple… Sweetheart!
3. It decreases shopping cart abandonment
Cart abandonment rates demonstrate that online shoppers don’t like surprises. At all. Preliminary studies reveal that, on average, 61% of shoppers abandon shopping carts due to high or sudden shipping fees. In fact, that is far and away the #1 reason shoppers give for backing from an online sale.
Resource: The Baymard Institute
4. It enhances your shopping search outcomes
Shopping marketplaces like Amazon, Google Shopping, and Bizrate, favor stores with free delivery. Users may check a box at the top to filter out sellers that charge for transport. Many marketplaces also prominently display free delivery in your own listings. If opponents charge for shipping, then getting free delivery on your listings steers shoppers your own way.
Source: Bizrate
If you are ready to make the transfer to free transport, it’s important to keep your shipping costs in-check and your profits up. Next, we will explore several ways to perform this.
Ways to Lower Your Shipping Costs
You always should keep a sharp eye on transport costs. Nonetheless, it’s particularly important to conserve every penny if you provide free shipping, especially on mid- and low-margin products. If you do not send every order at the lowest possible shipping rate, you are essentially leaking gains.
Here are 3 methods to make sure to pay the lowest possible rates on every order you send.
1. Use shipping rate comparison software
If you don’t use shipping rate comparison applications, you’re probably paying more than you need to on transport. It is that easy. Even sellers shipping identical packages, like subscription boxes, can save by comparing prices among carriers since some are cheaper than others to specific locations. And if you ship an assortment of package sizes and weights every day, shipping comparison software is essential. Some, such as ShippingEasy and Ordoro even offer completely free plans.
2. Work with a fulfillment company
Using an order fulfillment company to handle your inventory, packaging, and transport is beneficial in many ways, but especially so in regards to shipping savings. These businesses ship a lot of packages and get deep discounts from UPS, FedEx, as well as the US Postal Service. They pass these savings on to their clients. In fact, that’s a top reason that many tiny sellers use fulfillment services to send their orders.
Many sellers find their shipping savings covers a lot of their overall fulfillment expenses. So, for much more than you pay to ship orders , you can spare time otherwise spent shipping orders and concentrate on building your business. Another bonus is that your satisfaction partner is a transport expert. They can help you define the best conditions for a profitable free shipping program.
If you are interested in working with a fulfillment company, FedEx has their own fulfillment services firm, FedEx Supply Chain, that provides a complete e-commerce satisfaction solution for all sorts of small businesses. Whether you’re a start-up currently fulfilling your orders or an established small company seeking to expand into new markets, they have you covered. Receive a free consultation and see if the leader in global shipping is ideal for you.
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3. Use Fulfillment from Amazon (FBA) to get Amazon revenue
Should you sell on Amazon, allowing FBA handle your fulfillment is a no-brainer. First, FBA items qualify for Prime complimentary shipping, so there’s your free shipping taken care of. Concerning cost savings, Amazon’s FBA prices are rather low for Amazon sellers, especially those selling products up to 3-4 pounds. Additionally, using FBA supplies other sales-driving perks such as Prime-tagged listings and high rankings in search. And remember that it takes the job of sending requests your shoulders off.
If, after balancing the advantages and disadvantages against the costs, you conclude that free delivery is not right for your small business, you can still present shipping fees in a shopper-friendly way. Here’s how.
Competitive Ways to Charge for Shipping
Lack of free shipping isn’t a dealbreaker for many shoppers. However one thing is: Checkout surprises. Remember, the top reason for lost shopping carts is a shipping fee surprise . If you bill for shipping, it is critical that you’re transparent in your fees and methods. Be upfront with your shipping charges and obviously list your charges.
The simplest way about shipping fee sticker shock is, naturally, free delivery. However, if that’s not feasible, here are 3 ways to bill shipping charges in a shopper-friendly method.
1. Offer a flat-rate Delivery fee
Flat-rate shipping fees would be the next-best thing to free shipping for the following 2 reasons:
Flat-rate Delivery is 100% clear and easy to understand
Displaying something such as: $4.99 shipping on all orders on your website header lets buyers know what they’re getting into. It is easy for them to do the math and eliminates sticker shock . So long as you display the flat-rate delivery fee during your site, clients will be fulfilled and depart fewer shopping carts.
Flat-rate shipping can encourage bigger orders
If shipping costs the same to get a $5 purchase as it does a $50 purchase, shoppers frequently perceive the larger order as a better bargain. In reality, the Wall Street Journal noted that supplements retailer GNC changed to flat-rate shipping after research showed customers would spend more to create the shipping prices”worthwhile.”
However, there are some possible pitfalls to flat rate shipping. For starters, it may discourage smaller orders. Shoppers will probably not pay a $5 shipping price in an order under $5. But, you probably wouldn’t mind saying goodbye to those micro orders anyway, so that can be an upside.
Another drawback is you’ll likely need to pay a part of the shipping prices since flat-rates have to be reduced to make them attractive. At least they cover a number of your shipping expenses.
2. Charge actual shipping charges
If you can’t consume free shipping or a flat-rate fee, then there is nothing wrong with charging the actual cost to ship an order. But realize it’s not a great strategy for goods with a great deal of competition. This tactic is really best for hard-to-find goods or sought after brands that shoppers are willing to pay. Just be certain shipping charges are apparent every step of the way.
The simplest way to do this is with a shipping calculator, which most e commerce platforms supply. The upside is you don’t lose money on transport. But, you will likely see higher decreased cart rates compared to free or flat-rate delivery.
3. Combine low product costs with inflated shipping & handling fees
This is the”But Wait!” Tactic you see on TV infomercials. The item price is ridiculously low, but you pay an inflated shipping and handling fee. That fee essentially provides the benefit for the sale. It’s still widely used on TV, but it is not the best strategy for online sales since it still tacks on a high fee at the checkout stage. Research shopping cart abandonment indicates not many shoppers follow when large fees look in checkout, even if the item price is remarkably low.
The Bottom Line: Offering Free Shipping
Certainly, offering free shipping may be a fantastic marketing tool to drive earnings and reduce cart abandonment. However, before you slash your shipping charges and hope for the best, take a peek at different ways it is possible to offer free transport in a sustainable, rewarding way. Most small sellers combine conditional free transport with tight shipping price controls to create a program that works.
If free shipping does not match your benefit model, you can find additional shopper-friendly ways to charge a delivery fee. But however you approach this, being transparent on your shipping costs is as important as the amount you charge. If you bill for transport, post it prominently on your own website so shoppers do not encounter sticker shock on the checkout screen. Because if they do, research shows that the chances of their finishing the arrangement are slim.
Can you offer some sort of free shipping app on your site? If so, how do you approach it? Please share your success stories and advice from the comments below.
