While offering free shipping can boost sales, it can also be expensive. Can businesses really afford to give out free shipping?
The quick answer is “yes,” but it can be a challenge to get it right. It’s for this reason that it’s worthwhile to review the potential benefits of offering free shipping to customers of your online store. Providing free delivery has been shown to boost revenue, order volume, and conversion rate in a number of separate studies. Given that 88 percent of consumers would rather not pay for shipping and 81 percent of consumers look at several websites before making a purchase, offering free shipping could be the deciding factor for many customers.
Adjust Your Product Prices
This is the most common and straightforward strategy for making money on free shipping. Expenses related to shipping and handling can be absorbed by raising the price of the products themselves.
Consider charging $20 for an item that actually costs you only $5 to ship. Then you can easily sell it for $25, plus shipping is free. This makes it seem like they are getting a great price while still covering your delivery costs.
It can appear that there’s no value in trying to (because shoppers are still paying the same price either way). However, if you try this tactic, you might be astonished by the increase in sales.
Set Minimum Purchase Amounts For Free Shipping
Setting minimum purchase requirements for a free delivery promotion is another strategy to avoid financial losses. In this method, free shipping is only provided if the customer’s total order value exceeds a specified threshold, rather than being provided for any and all purchases.
This sum should reflect the actual price tag you’re paying to fulfill orders at your favored fulfillment center. That is to say, you should do the math and determine what the minimum order size would be for you to break even on offering free shipping.
The allure of free delivery could be used to increase sales, and this strategy can help you do just that by encouraging customers to spend more on your site in order to qualify for free shipping.
Only Offer Free Shipping On Big Ticket Items
Limit the free shipping offer to specific products. This strategy entails providing free shipping for purchases over a certain threshold in value. Much like the first way, this one works because it allows you to save money by only offering free delivery on products that still provide a sufficient profit margin.
Have ‘Add On Only’ Items
If you’re an online merchant and you give free delivery on all orders, this strategy will be especially helpful to you. Single-item orders of minor products like USB drives or stationery can be a huge money loser. But if you label them as “add-on only,” then only customers whose orders meet a certain minimum value can add them to their cart. Like the other two approaches, this one also ensures that your customers always get free shipping, but only when their orders reach a certain minimum threshold.
Save Money On Fulfillment
If you can save money on your fulfillment center costs, free shipping becomes a lot more affordable, and when you get it right, you’ll make more sales to make up for any lost revenue.
This is why it pays to shop around and ensure you are happy with the price and service your fulfillment center offers. Contact Global Warehouse Solutions today to find out more about how we can help you with your fulfillment needs.