Discovering how to offer free shipping without losing money is one of the greatest challenges in the eCommerce industry. Free shipping gives customers the perception of saving money (whether true or false) and empowers them to make a purchase.
If you haven't figured out a way to offer free shipping on your online store without losing money, these 6 infallible strategies will help you balance out the costs so that businesses like yours can offer free shipping without any fear.
But first of all, why should you offer free shipping?
Why Offering Free Shipping is a Bold but Logical Move 🪤
Some of the advantages of offering free shipping for eCommerce are:
How to Offer Free Shipping Without Losing Money 🤔
Strategy 1: Increase the price of your items online to support the shipping cost
One easy way to offer free shipping is to include the shipping costs in the price of the products. You won't need to implement complicated logic, and for the consumer, the psychological impact of free shipping is much greater than a price difference of a few euros in the products.
The best approach to implementing this type of strategy is to compare what would be your new prices with your competitors' prices to ensure that the difference isn't too significant.
Strategy 2: Establish a minimum value per order to qualify for free shipping
This technique will help ensure that the orders are still profitable for you while you increase your AOV with a minimum order value threshold for free shipping to apply.
The key to establishing a higher minimum value per order is to set a value that is easily met with one or a few of your products. For this, you can study typical product combinations and set a standard around the value most customers spend.
Customers will feel tempted to add more products to the cart to reach the minimum value required for free shipping, so this is a great opportunity to implement cross-selling and upselling strategies.
Strategy 3: Use free shipping as a tool to gain customer loyalty
Free shipping can also be offered as a reward for repeat customers. In this way, you will only be supporting the shipping costs for loyal customers — those that you should pay special attention to because of their high repurchase rate.
But free shipping can also help you gain customer loyalty in times of special events by offering free shipping during special periods like Valentine's Day or Christmas. Doing so means that next year, they'll remember your free shipping deal and will be more likely to purchase from you again.
Strategy 4: Free shipping, yes, but only for some products
Free shipping can also be applied only partially by carefully studying which items have a higher profit margin.
Online stores can highlight only some items in their catalog to maximize the potential benefits or use this technique to sell out-of-season items before they become obsolete.
The possibilities are endless, but the philosophy should remain the same: Use free shipping to promote those products that are most profitable.
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Strategy 5: Free shipping for first-time buyers (acquisition cost)
Many companies are starting to see shipping costs as the new acquisition cost.
Accept that, sometimes, instead of paying for a PPC campaign, you'll support the shipping costs for a customer.
The great advantage of this strategy is that you pay once they are already your customers, not potential customers.
However, even if you start thinking of shipping costs as an acquisition cost, you'll still need to put this information out there.
How can first-time buyers benefit from free shipping if they don't even know you offer it? Send newsletters, optimize your SEM campaigns, promote it on social media, etc.
Enable this strategy only for first-time buyers to ensure maximum customer acquisition
Strategy 6: Reduce shipping rates
If you are willing to bear the shipping costs, partially or completely, then reducing shipping costs is a must-do.
Renegotiate your contract and shipping rates by providing current sales numbers or creating a sales forecast that reflects how free shipping will affect your company.
Once the courier acknowledges your size, how much they will benefit from working with you, and how your company will grow, it will be easier to obtain reduced rates.
All Outvio users can add their courier contracts and rates for both domestic and international couriers. Simply register, and connect your online shop and couriers to start shipping
Last Considerations 💭
Make sure free shipping is profitable. Try out different eCommerce shipping strategies and evaluate which ones bring the most value to your customers while also being sustainable for your business in the long run.
Choose a consistent strategy. While it's not unusual to experiment with different eCommerce shipping strategies, constantly changing your shipping policy will confuse your customers.
For this reason, if you don't plan on offering free shipping long-term, don't let your customers get too used to having this option. Their reaction should you start charging for shipping that was previously free can do more harm than good.
Lastly, beware that free shipping can discredit your store's reputation. Not all products or businesses benefit from free shipping.
In some sectors, like luxury items or furniture, free shipping can be detrimental to your business for various reasons: the online shop may need to absorb very high delivery costs, or it may not be seen as sufficiently exclusive, something you definitely want to convey for high-end products.
Everything doesn't have to be free, but it's worth a try ✨
Free shipping works; there's no doubt about it. But it isn't the only factor behind a purchase.
If, in order to offer free shipping, you'll need to neglect other areas of your business, you may want to wait until your eCommerce business has the financial resources to successfully implement one or more of these strategies.
