A couple of weeks ago, we brought to you an article that illustrated the practical benefits that free shipping can deliver to e-commerce retailers. In case you missed it, take a look at Is Free Shipping Really That Important When It Comes To E-Commerce Conversion Rates?
According to our research, 88% of shopping carts (representing more than $11 trillion worth of sales) are abandoned. And, for 36% of online shoppers, the main reason for this shopping cart abandonment is that the cost of shipping is simply too high. Another 64% of online shoppers cite free shipping as the most effective tool for driving online sales. And 73% of adults are more likely to shop via websites that offer free shipping.
All of these statistics (plus the others included in last week’s article), point to one thing: online shoppers are more likely to buy if shipping is free.
But, as an e-commerce retailer, how can you offer free shipping on all of your products without breaking the bank? How can you incorporate free shipping into your business model, and marketing approach, without eroding your own bottom line? It can be tricky. But, there are definitely ways to increase your shopper conversion rates by using free shipping as an incentive, without chipping away at your own profit margins. Here’s how to offer free shipping without breaking the bank.
How to Offer Free Shipping as an E-Commerce Retailer
1. Build it into the Price of Your Products
Without getting into the ethical considerations of this first tip, remember that while shipping should look like it’s free to your customers, it doesn’t actually have to be. You can get around the free shipping conundrum by including the cost of shipping in the total price of each item. It is easy enough to determine what the additional charge should be: simply weigh your items and plug in the weight on the Australia Post website for an estimated shipping cost. Be careful with this though, if a customer orders multiple items, they shouldn’t be slugged with multiple shipping costs (even if they are built into the cost of the item being ordered). Remember to be fair, above all else. If your individual product prices are too high, or too inflated, this will discourage your online shoppers just as much as shipping fees.
2. Adjust Your Shipping Rate
Another alternative is to reduce your stated shipping price, while increasing the product price. Customers just want to feel like they’re getting a bargain. So, if your shipping is just as expensive (or even more expensive) than the item they are purchasing, it’s likely to result in an abandoned shopping cart. So, if your product costs $10 and shipping is $9 (for a total cost of $19), then customers are probably unlikely to fork over their cash. Instead, list your product price as $15 and your shipping cost as $4 (so that the total is still $19). This deal represents more value for your customer, and is more likely to result in a sale.
3. Offer Free Shipping to VIP Members
Another way to offer free shipping, without the cost coming out of your profits, is through some sort of VIP Membership. In this scenario, you sell VIP Memberships to loyal, repeat customers for a small annual fee. Free shipping is then included as one of their membership benefits, along with any other rewards that you see fit to deliver. This way, their membership fee covers the cost of shipping on any orders placed throughout the year. Global online giant, Amazon uses this tactic quite successfully as part of its Amazon Prime membership, which includes free two-day shipping on more than 20 million eligible items.
4. Offer Free Shipping to Shoppers Who Abandon Their Shopping Cart
This tactic can be quite an effective way to close and convert customers who might otherwise abandon their sale. If your website and e-commerce platform is sophisticated enough (and configured properly), then you can request that shoppers set up an account (including an email address) when they first place items in their virtual shopping cart. Then, if a shopper abandons their cart, you can follow up with an automated email offering them free shipping on their abandoned shopping cart (that you have kindly saved for them). All they need to do is click on the link embedded in the email to finish their purchase. This is a clever way to follow-up with a customer, offering them real value in exchange for their hard earned cash.
5. Offer Free Shipping to Repeat Customers
An effective way to build customer loyalty, offering free shipping as an incentive to pre-existing customers can be a great way to close a deal. It is also a relatively simple marketing campaign to run. Simply email any customer a discount code to enter when they complete their next online purchase. Depending on what type of products you are selling, it can be more effective to give your customers time to appreciate your wares; wait a couple of weeks before sending them the promotional code.
6. Offer Free Shipping to Subscribers
Similar to the idea above, you can offer free shipping to your subscriber base (if you have a newsletter or a blog) or your Facebook fans, or Twitter followers, or any other audience that you might have. This particular type of promotion can be a particularly effective way to increase your sales during slower periods.
7. Offer Flat Rate Shipping or Minimum Order Value
If worst comes to worst, and you simply can’t figure out a way to offer free shipping without breaking the bank, then you may want to consider offering flat rate shipping, whereby the shipping cost is the same, regardless of what customers order. The best way to determine what this flat rate should be is work out the average shipping cost of all your orders over the last six weeks or so. That way, you know that your back pocket won’t be penalised too much. You may loose on a few orders, but you’ll win on others, and break even the majority of the time.
Alternatively, it may be worth your while offering free shipping on orders over a certain dollar amount. Again, it is worth determining your average order total over a six-week period. Once you know your average order, set the free shipping target slightly higher. This way, you know you won’t have to provide free shipping on the majority of your orders. And, best of all, it might even increase your average sale figure, with shoppers opting to add that extra t-shirt to their shopping cart so that they quality for free shipping.
While these options are not as encouraging to shoppers as 100% free shipping all of the time, they have been known to lead to larger overall orders, particularly from loyal, repeat customers.
Don’t forget to check out our article on the importance of offering free shipping: Is Free Shipping Really That Important When It Comes To E-Commerce Conversion Rates?
Sally Wood
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