Whether you’re drop shipping or fulfilling orders on your own, there’s one thing you can be certain of — online shoppers despise shipping fees. In fact, they hate it so much that 86% of them would rather ditch their shopping cart than have to pay even five dollars for shipping fees. It is certainly uncomfortable to know this as an online merchant. On one hand, nothing in this world is free, shipping included, and on the other, customers unrepentantly believe it should be.
This does not come as a surprise. Amazon’s growing domination over the online retail market has altered the customer’s outlook and set entirely new standards. Free two-day shipping is now the new standard, and small online retailers can’t escape this reality.
The most obvious question is: if shipping isn’t really free (in reality, couriers have been slowly increasing their rates over time), how can you offer free shipping to your customers?
Before we start explaining the numerous tactics at your disposal, let’s begin by exploring why you should consider offering free shipping, as well as some of the pros and cons of doing it.
How do you know if offering free shipping to your customers is the right thing for your business? If you’re a small online vendor selling inexpensive products, offering unrestricted free shipping can quickly devour all of your profits. So, you must try different shipping methods and free shipping tactics. Maybe you try bundling your products to increase your average order or use more efficient packaging. The “free shipping with minimum purchase” method is also an option you should consider. Whatever you choose to do, however, do not underestimate “the power of free.”
The most influential and alluring marketing term in any retail business is the word “free”. Giving your customers something for free affects their purchasing behavior on a deeply psychological level. When Amazon introduced their free shipping plan in Europe, the number of orders substantially increased everywhere but in France. Instead of free shipping, Amazon.fr mistakenly set the shipping charge to 10 cents — just enough to completely pause the expected increase in sales. The idea of losing numerous $20-$200 orders because of a 10 cent shipping fee is absurd. However, it really is not a surprise as it has been known for quite a while that people can be very irrational with how they spend their money. It has become abundantly clear that “free shipping” is seen as inexplicably more valuable than “shipping only 10 cents.”
According to the stats:
- 88% of online shoppers said free shipping is the top incentive to drive more purchases,
- 86% of online shoppers stated that the cost of shipping is their main reason for cart abandonment, and
- 58% of shoppers said that they would add more items to their cart in order to qualify for free shipping.
Customers find it difficult to tolerate an extra fee for something as essential and necessary as shipping, even though they may subconsciously understand that one way or the other, they’re still the ones paying for it.
Not all free shipping policies are created equal. Every online retail vendor is different, and before promoting your online stores “free shipping policy” to your customers, you first need to determine the precise shipping strategy for your business model.
There are two types of free shipping you can offer: (a) unconditional – your free shipping policy applies to every product in your online store regardless of its price; and (b) conditional – your customers need to meet specific criteria (such as minimum purchase, provide their contact info, live in a particular location or purchase select items) in order to be eligible for your free shipping.
Choosing between the two depends on multiple factors: profit margins, the purchasing behavior of your intended consumer audience, the total shipping costs, the delivery destination, your competitor’s offers and more. Since know your business the best, choosing the right practice is completely up to you.
Unconditional free shipping
There are a lot of advantages to offering unconditional free shipping on all of your products. However, if you offer free shipping to your customers, you’ll need to absorb the shipping costs one way or another. Simply put, instead of selling a $25 pair of shoes and charging a $5 shipping fee, you should sell the same pair of shoes for $30 and offer “free shipping.” This way you get all of the benefits of offering something of value for “free” to your customers, and the increased price of the shoes gives them a higher perceived value. However, if your average order value is low, you may quickly find yourself in a situation where the cost of shipping alone is higher than the price of the product you’re trying to sell. In order to alleviate this effect, you need to innovate and maximize your shipping efficiency.
Conditional free shipping
Although it has many benefits, unconditional free shipping isn’t always the most suitable shipping model. If you’re selling heavy or bulky items, absorbing the very high costs of shipping might not be the smartest idea. On the other hand, if you specialize in small, low-margin goods and aim for high volume, offering free shipping – even at very low costs per item – might put you in the red. For this reason, it may be best to set limits on your shipping and use different strategies to maintain or even increase your profitability while keeping your customers happy and returning. You could chose to set a minimum order amount, offer free shipping on only select items, or leave it up to the customer to decide if they want fast shipping, or free economy shipping.
Best Ways to Communicate Free Shipping to Your Customers
Let’s be honest – you’re offering free shipping because you enjoy it. Nobody enjoys paying for shipping, especially not smaller online merchants. You’re doing this because it will result in more customers and it will increase your average order value. But this won’t just happen suddenly. You must refine your marketing strategy and milk the “free shipping policy” for all its worth.
Promote your free shipping policy in a way that guarantees maximum visibility. Customers like to see that there are no hidden shipping fees at checkout as soon as they visit your online store. If you offer international shipping or you offer two-day shipping then make it obvious. Your shipping policy should be on your landing page, in your header, next to the shopping cart on your product pages, in your email promotions, and anywhere else you can.
Finally, optimizing your shipping process shouldn’t be that difficult. You must be professional about it while also trying make things more complicated than they need to be. Free shipping is a dominant promotional tool that has been proven to increase customer satisfaction, boost conversion rates, and decrease cart abandonment. Test different approaches expansively, and eventually, you will figure out what works best for your business and for your customers!