Free shipping may be free to your customers — but not to you!
FreeShipping has a lot of Benefits:
- Free shipping really responds to customer expectations.
- Free shipping easy to explain to customers.
- Free Shipping Boosts Average Order Value.
- Free shipping has a positive effect on conversion rates for customers.
If you offer free shipping, it’s very important to understand its impact on your profit margins line. You’ll still need to pay the carrier and you’ll have to make sure you’re making enough on each order to cover the associated shipping costs.
The most effective approach to free shipping is to only offer it for orders where you know you’re making enough on the sale to cover shipping and still make a profit.
Here are some simple steps to follow when designing a free shipping policy for your business:
- Calculate how much you need to sell to recoup the cost of shipping.
- Decide on a minimum purchase threshold. When free shipping offers include a minimum purchase threshold — like $25, $50, or $100 — some shoppers will add items to their carts.
- Limit free shipping offers. Seasonal sales and new product releases are excellent opportunities to drive sales and adding free shipping as a bonus can boost sales.
- Consider offering free shipping on certain items. You can choose to offer free shipping only on items where the profit margins line up or on products you want to sell more of.
- Offer free shipping as a benefit for membership, subscriptions. Membership and subscription programs are a great way to get repeat customers.
- Use the OrderAdmin platform for calculate the optimal package size. The dimensional weight shipping fees, reducing package size can reduce shipping costs.
- Use the OrderAdmin Delivery manager to discover the best rates of carrier for each shipment. Check shipping rates in real-time for nearby destinations and for for cross-country deliveries, take which cost less.
Here are some statistics from companies that have successfully implementing a free shipping strategy:
- According to research published by CNBC, offering free shipping on returns (a policy offered by Zappos) boosted sales by 357%.
- Red Door saw a 90% increase in sales after establishing a minimum purchase threshold – free shipping on orders over 75%.
- Research from Marketing Land revealed that 9 out of 10 customers were more likely to do their shopping online when offered free shipping. Of those, about 30% made weekly purchases.
- According to David Bell of Wharton University of Pennsylvania, customers find a free shipping offer with an average savings of $6.99 to be more appealing than a product discount worth $10.
As you can see, there are many ways to work free shipping into your business plan. It may take some work to find the right tactic, but it is definitely worth implementing.