Customers today would rather not pay for shipping. For some reason, it has become a trend in the online shopping industry.
There was also a time when shipping was not free, but the item is almost free. It was a strategy where the seller pushed down the price of the product but charged the product cost on the shipping. Today, this strategy rarely works, as consumers already know that this is just a scam.
Free shipping is a much more believable offer, and you can benefit from this if you do it right.
As an online seller, this may be a difficult thing to offer.
First, your products must be priced to compete against the others who are selling the same products as you do. If you increase your product prices to be able to offer free shipping, customers may buy from somewhere else.
So what should you do?
Why offer it free anyway?
The word FREE is a powerful word. There is nobody in this world who will not take something for free, even if he does not need it.
Free ice cream free quotation, free phone case, you name it, and people will take it. Information today is free. Even tutorials are free.
So why not expect free shipping, right?
Shipping is a cost that online shoppers will try to avoid if they can, especially if the products you are offering can be found in a brick-and-mortar store.
Besides, many big sites offer free shipping such as AliExpress and Amazon. If you do not do the same, chances are that the customers would rather find a similar product in Amazon than buying from your store.
To give you some statistics on free shipping, see some of the numbers below from INVESP.
- 90% of customers say that free shipping is one of the most important things that affect buying decisions
- Orders with free shipping have 30% more value than those that have paid shipping
- 93% of consumers are more likely to make a purchase if shipping is free
- 61% of consumers are likely to abandon their cart if free shipping is not offered
- 93% of customers take action if free shipping is offered; these actions include adding items to the cart, or registering for an email subscription to get free shipping
As you can see, free shipping is a driver of sales. People are likely to buy more products if they do not have to pay the extra burden of shipping costs. The most probable reason behind this is that they feel like they have the losing end of the stick if they have to pay for it.
To begin with, they have to wait for the product. Secondly, they have not even seen and touched the product. Third, they feel that it is not their obligation to pay the shipment of a product. After all, they already paid for the product itself, and they think that the seller must bear the financial responsibility of shipping.
Here, we will be taking a look at how you can offer free shipping so you can boost your sales. And by doing so, we will make sure that you do not lose money.
But take note, your profits can be lower by using some methods. But what you have to remember is that you may earn lower profits per product, yet you are earning bigger because of the volume of products you are selling.
The 2 Types of Free Shipping
No matter which website you go to, there are only two types of free shipping options. The first one is conditional, and the second one is unconditional.
Conditional shipping refers to free shipping where a customer has to meet some conditions. Here are some examples:
- The delivery area must be local
- Must spend at least $100
- Must have a coupon
- Must register for an email subscription
- Must register for an account
There are many possible conditions to get free shipping. It is up to you to create these conditions, but make sure that these conditions are easy. Also, if you will set conditions, you must only use conditions that will also benefit you.
For example, there is a benefit in taking a customer’s email address. You can send your marketing emails to these customers, and then you can convince them to make new purchases.
The second type is unconditional. In this free shipping offer, you are not asking your customers to meet anything. It is free for any item, no matter how big or small the amount is.
Usually, unconditional free shipping is offered if you are selling expensive products. The typical technique used by sellers in unconditional free shipping is that they already added the shipment cost to the retail price of the product.
This is an effective approach only if you are selling a unique item. And when we say unique, consumers cannot find your products anywhere else.
This way, you are in control of the supply, and you are in control of your pricing.
The Benefits of Offering Free Shipping
To a consumer’s eyes, free shipping is gold. Not only will he get an item he likes to own, but he will also not pay for delivery.
In case the shipped product is broken, he will not spend double on shipping. Normally, consumers will pay for shipping for returning a bad product.
- They pay the shipping for the product to arrive at their house
- They pay for shipping the broken product back to the seller
If you remove the first shipping cost, consumers are more likely to take the risk of receiving the bad product. This is not to say that you will be shipping a low-quality product. It’s just that you are removing the fear of the customer of having to spend twice on shipping.
If you are a seller, here are some benefits to offering free shipping.
- Boost sales – free shipping is a great attraction for buyers. A simple banner on your online store saying that free shipping is offered will boost your sales.
- More profit – while it is true that some of your profits will go to paying the shipping, you still have the potential to earn more money than charging for shipping. The way this works is by volume. A profit of $5 after all the costs multiplied by 100 sales a month is still $500. Compare this to ten sales a month where you have a profit of $10 each, and you only get $100 for profit.
- Repeat customers – since you are offering free shipping, your customers are likely to go back to your store, share your store on their social media, and you can expect them to come back and buy more.
- Stay in competition – now, you can compete with big names like Alibaba, AliExpress, and even Amazon. All of these companies offer free shipping. And with you offering the same, there is no reason you for your customers not to choose you.
Ways to Offer Free Shipping
It does not really matter whether you offer conditional or unconditional free shipping. What matters is that it is free.
Below are some techniques you can use to offer free shipping options in your store.
Think of the Box
Shipping companies typically charge the same rate per box regardless of the content or weight. Some shipping companies also offer plastic bags as a packaging material, and these are called pouches. For as long as you can fit the items in the box or pouch, the shipment cost is the same.
What can you do to offer free shipping?
What you can do is to sell items in bulk. This is great if you are selling kitchenware, utensil, rags, frames, and other things that people can use by the bulk. If you are selling canned goods, preserved fruits, nuts, and things like that, you can offer free shipping if they buy in bulk.
The other thing you can do is to determine how much it will cost to ship the box. In our example, it is $5. Now, there are some customers who do not want to buy in bulk as they do not need that much.
If the shipping cost is $5, you should be able to charge that from your customer. If a pack of organic nuts is $10 with profit, charge $15 per pack with free shipping. However, you should also offer a lower price, like $45 for five packs with free shipping included.
You need to play with your pricing and set decoy choices. In this example, the total cost of five packs if bought separately is $75.
But if bought in bulk, the customer will only pay $45, which gives him $30 on savings.
Set the Minimum Order Amount
To be able to do this, you should also know how many you can fit in a box. In many cases, your product will not fit in just one kind or dimension of a parcel.
Let us use two types of boxes.
- 6 x 3 x 3 inches – with a shipping cost of $5
- 10 x 6 x 6 inches – with a shipping cost of $10
To be able to offer this kind of free shipping, you must rely on the second box just to be sure that you can fit the customer’s orders in one shipment.
First, determine how much profit you are earning per product in terms of percentage. This is why you should always mark-up your prices by percentage and not by fix amounts.
A good markup value is 40% of the capital.
Here are some examples of products with 40% markup:
- Product A – capital of $40; must be sold at $56
- Product B – capital of $20; must be sold at $28
- Product C – capital of $30; must be sold at $42
No matter what products the customers buy, you know that your markup is 40%. To be able to offer free shipping that will cost your pocket $10, a customer must pay for a group of items that will cover the cost of $10.
If your minimum order value is $100, 40% of that is $40. That is your profit. Your capital is $60. From $40, you can remove $10 for shipping, and you still have a profit of $30.
If you are selling small things like hairpins, small stress balls, and similar items, you cannot use the percentage as a markup approach. If your capital for one hairpin is $0.50, the profit is only $0.20.
This profit, of course, cannot be used to pay for $10 of shipping. In a case like this, you are better off offering free shipping if you sell in bulk.
Free Shipping as a Bonus
You could offer free shipping as a bonus or incentive if a customer did something for you. For example, you can only offer free shipping if the customer subscribes to your email list.
To be able to do this, there is no other way but to charge the shipping rate per product. Just imagine if 100% of your customers signed up for your email list. You will lose money fast on shipping costs if it is not baked on the total retail price.
This, however, works only once. Next time, consumers will no longer have a free shipping option. What you can do is to offer this to first-time customers, and then send them a code on their email.
To be able to do this, you need an auto-responder tool that will auto-send an email to new customers containing a free shipping code.
You cannot do this and offer unconditional free shipping at the same time. Customers will not opt in to sign up for your email list if they see a huge banner on your site for free shipping on all items. It just does not make sense, so choose only unconditional free shipping or free shipping as a bonus.
Free on Selected Items Only
If you are trying to fast track the sale of some items, you can offer free shipping for them so you can quickly dispose of or sell them.
For example, you may still have a dozen packages of nuts that will expire three months from now. You can offer free shipping for these items, earn less profit, but not lose money should they reach their expiration date.
You can also use free shipping for selected items if you have expensive good that will give you more profit, like smartphones and laptops.
There are many plugins for you to do this. These shipping plugins allow you to set your own shipping strategy, including free shipping on selected items.
What you need to do to be able to offer this is to go your platforms app store, and look for a shipping app that can help you do this.
Choose Free or Fast
This is a good strategy if you want to make money on fast shipping, and also make money on free shipping. This is also the power of choice.
If you give your customers the power to choose, they are more likely to make a purchase and complete the sale. In free shipping, you will naturally use the economy shipping option, which can take weeks.
In fast shipping, also called expedited, the customer now has to pay for that price, and you can even charge more than the actual shipping cost.
If the expedited shipping costs 15, you can charge $20. This is not cheating. You are asking your customers to pay extra because you are putting their order on priority. What this means is that you also have to spend money on gasoline to take the parcel to the post office or courier.
How to offer Free Shipping on Your Store
No matter how good the offer is, no one will know it if you do not tell them. You need to get the maximum value from this offer in all the ways you can.
Most online stores have sliders. Make sure that you have one slider that has the words FREE SHIPPING in bold. Add a link for a customer to click to get more details.
Put the FREE SHIPPING banner in all your ads, on your social media like Facebook or Instagram, and others. You should also add the FREE SHIPPING terms and conditions on each product page.
This more times a person sees FREE SHIPPING, the more it will stay in his mind. And as you keep on showing this, the more likely a person will see its perceived value. And then he will not want to miss out on the opportunity to get products without paying a penny for shipment.
Free shipping is a trend that will stay. In our world today, almost everything is free. You need to be on top of your competition, and you can do this by offering the value of free shipping to your customers.
Remember, there are two types of free shipping: conditional and unconditional. As a seller, you cannot use both. You must choose only one.
There is no right and wrong choice between the two. It all depends on the product you are selling and where you are selling them. For example, you cannot offer unconditional free shipping for products that cost lesser than the shipping cost, like candies or canned goods.
Also, make sure you do the calculations correctly, so you do not lose money. As the saying goes: calculate twice, ship once.