Free Shipping Strategies
Free shipping is a great way to convince your customers to buy your products. For example, 78% of consumers pay for Amazon Prime just to get free two-day shipping. And at least 46% of online sellers claim that offering free shipping increased their profits. It is an important consideration when it comes to staying competitive in your business.
The problem is that free shipping isn't actually free for the seller and offering it as a marketing promotion can be costly, especially if you’re a small or mid-sized retailer. This is particularly true for companies selling products with a low price point and thin margins like infomercial products. If you sell online, its’ worth making sure you have considered the following shipping strategies to determine if this is something you can afford to offer.
If you’re shopping cart abandonment rate is higher than average, and the shipping and handling represents a high proportion of the total sale, you are likely sending customers to other websites to find low or free shipping on a similar product. Search #FreeShipping on Twitter or Instagram to get an idea of how many retailers are offering daily free shipping deals. This is the new normal.
Here are a few high level strategies you can implement to increase your ability to offer free shipping.
Increase Total Sale
- Minimum Order Amounts: Offering free shipping when a customer orders a minimum amount is a common tactic used by many online retailers, including Amazon.com. This method allows you to let the increased profit absorb the cost of shipping.
- Free Shipping for Certain Items: You can offer free shipping only on items where the profit margin is greater. This has the advantage of boosting the value of higher-priced items in the eyes of the customer.
- Member or Loyalty Programs: You can create fee-based member programs, or give “points” for purchases, that offer free shipping. These customers will more likely want to buy more items.
Reduce Shipping Costs
- Outsource Order Fulfillment to a reputable 3PL: This strategy is one of the quickest and simplest. Fulfillment Center Companies have the benefit of large shipping volumes from multiple retailers and should have sophisticated Transportation Management Software (TMS) that can determine the lowest cost method of shipment for each order’s unique characteristics. Contact Moulton Logistics 3PL services for a quote.
- Negotiate Better Rates with Small Parcel Carriers: Provide them with shipping history data including order dimensions, weight, origin address, and destination address. Shop multiple carriers because each has unique networks with ever-changing volumes so they are looking for your shipping characteristics to be a good fit for their needs as well.
- Use Zone Skipping Services: FedEx SmartPost, UPS Mail Innovations, DHL Ecommerce, UPS Surepost are the most common. There are some less known companies now in the market that are aggressive enough to offer even lower rates but these carriers only service very large size shippers, another reason Fulfillment Companies can offer shipping rates that are lower than what a single retailer will have access to.
- Don’t Ship Air if the Order can be Delivered using an Economy Service: If you request expedited air shipping service for an order the carrier can deliver via ground, you will still pay the rate for the expedited air delivery request. Verify that your transportation management software (TMS) is sophisticated enough to determine the closest fulfilment center with inventory, and the most economical service level needed to meet the delivery time required based on the order's final destination.
- Efficient Packaging: Make sure your warehouse has the appropriate size packaging for your products, and that there is a system in place to make sure they are consistent with the packaging selected. The small parcel carriers use dimensional (dim) charges on products that would have a high ratio of cubic volume to weight.