Free shipping still matters in ecommerce: 75% of consumers expect delivery to be free even on orders that are under $50. This means that not offering free shipping can cost you sales (dun, dun, dun). In fact, 63% of online shoppers say excessive shipping fees have caused them to cancel purchases in the past. Even though free shipping isn’t really “free”, what matters is that your customers perceive shipping as being free. Read on to learn some tricks and tips on how to offer free shipping and still make money.
75% of consumers expect delivery to be free even on orders that are under $50 … 63% of online shoppers say excessive shipping fees have caused them to cancel purchases in the past
Free shipping thresholds are your friend
Free shipping is obviously very important to many online shoppers, but you can use this expectation to your advantage. This is where a free shipping threshold comes into play. Think about the number of people who are willing to take some kind of action (like adding an additional item to your cart) to qualify for free shipping. When you determine your threshold for free shipping, it’s important to do so carefully, making sure it’s not too high or too low by utilizing your median order value (MOV) to calculate it. Ideally, this amount will be set just high enough above your MOV that it’s easy for your customer to add an extra item they had their eye on so they can hit that free shipping threshold.
You can work the free shipping threshold into the shopping experience by using reminders across your site that say, “you are $XX away from free shipping!” as customers go through the buying process. The idea is that you create a win-win situation for you and your customer. The order is large enough that you don’t lose money by not charging for shipping, and the customer gets an extra item or two that they’ve had their eye on (plus free shipping).
Use flat rate box sizes to your advantage
During 2020, UPS, USPS and FedEx have all continued to increase their shipping rates. It can be very difficult to determine what your shipping costs will be if you don’t use flat rate shipping, but flat rate shipping is not always the best choice for every business. Be sure to check out our guide to understanding flat rate shipping for more information on how to determine if it’s the right one for you.
Flat rate shipping can allow you to plan ahead for shipping costs, but there’s even more you can do to ensure that this method is profitable for you. You can improve your bottom line by incentivizing customers to add items to their orders that fit inside the flat rate shipping containers. Use the geometry of specific containers and the mix of items that fit in it in conjunction with the free shipping threshold you developed. You can do this by determining your average box size and looking at products that are commonly purchased together. Analyze the size of these items together to determine how much empty space you have, then adjust your offerings, upsells and free shipping thresholds to fill that space!
Outsource your fulfillment and shipping
Even after implementing all the advice above to save money, getting orders to your customers in just two days may not be doable by yourself. Outsourcing order fulfillment to a 3PL that already has a footprint across the country or globe can be a great way to save costs. When you outsource fulfillment, it allows you to focus on running your business instead of dealing with the intricate processes involved in getting orders to your customers on time. Additionally, it offers you the ability to scale quickly and easily and means you don’t have to invest in your own distribution centers, people and infrastructure, which can be very costly. The last huge advantage to outsourcing fulfillment is that 3PLs often get discounted shipping rates with carriers because they ship such high volumes. If you are struggling to keep shipping costs under control, this could be an excellent option for you. Plus, you get access to a variety of distribution and fulfillment experts to help you make the best business decisions possible. Learn more about insourcing vs. outsourcing fulfillment.
Remember that geography has a large effect on shipping costs
The location of your fulfillment center is also extremely important. Taking it back to the basics, the farther a package has to travel, the more expensive it will be. Having only one fulfillment center to service the entire United States is extremely inefficient and simply doesn’t work in today’s ecommerce-driven world. Customer expectations of fast and free shipping require you to have strategically placed fulfillment centers across the country. This allows you to reach all customers more efficiently and for less cost.
Learn how to offer free shipping and still make money
At ITS, we know a thing or two about earning a profit while offering free shipping. Our experienced team members, excellent shipping discounts and 1 million square feet of distribution space in the Western United States make us a great option for outsourcing your fulfillment. Give us a call today to see how we can help!