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12 Ways to Offer Free Shipping to your eCommerce Customers

Introduction

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• Free shipping is passed that stage where it was considered as a fad or a growing trend in the eCommerce industry.

• Free shipping today is considered as a hygiene factor and necessity for many businesses to remain competitive.

• Free shipping is a cost that businesses will have to incur. While businesses cannot completely avoid the costs, they can work smartly to minimize the costs to a great extent in the following ways

Nearly 50% of all online orders today include free

shipping (comScore)

In another survey, nearly 73% of online shoppers

noted unconditional free shipping as “critical” to a

purchase

1) Warehouse Popular Products with Fulfillment Provider

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• Businesses that maintain their own warehouse to stock products, usually tie up with fulfillment providers to pick packets for delivery from their warehouse.

• Fulfillment providers incorporate the costs associated with this additional step, of picking packets from the warehouse, in the price they quote.

• Businesses can reduce this cost by stocking their most popular products with the fulfillment provider; who can then directly ship those products from their warehouse.

Stocking products with fulfillment provider reduces the distance packages must travel thereby reducing the cost of those

shipments.

2) Offer Free Shipping at Specific Locations

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• Not all businesses can afford to offer free shipping to all their customers.

• Businesses can start by offering free shipping only for orders from specific locations (delivery locations) where they have their fulfillment centers or retail stores.

• Free shipping to retail stores (buy online pick up in store) is gaining a lot of popularity with retailers with physical stores. While customers benefit by saving on shipping charges, retailers benefit from the increased footfall, in the physical store, that can lead to in-store purchases.

Offer free shipping to specific locations and set a minimum threshold, to qualify for free shipping, for other locations.

3) Get the Packaging Right

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• With most shipping providers calculating the shipping costs based on the weight and dimension of the package, the right packaging can have a significant impact on your shipping costs.

• But, a word of caution – while it is important to optimize the packaging never compromise on the end customer experience; because bad packaging can damage products, etc.

• According to a survey by TrueShip, nearly 20% of returns are due to the product being damaged. According to another eCommerce Packaging Survey report, over half of the consumers were more likely to make another purchase from an online retailer when orders included premium packaging.

Optimize your packaging without compromising on the customer experience.

4) Link Free Shipping with Customer Loyalty

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• Only Loyal Customers – Offer free shipping only to your customers in your loyalty program as motivation for them to stay loyal to your business. According to an eCommerce customer survey, 31% of online shoppers join a loyalty program to qualify for free shipping.

• Paid Membership – Ask your customers to upgrade and join your paid membership program - charge them an annual fee in exchange for free shipping. A strategy very well adopted by Amazon.

• As Referral Reward – In a 2015 customer loyalty study, it was found that 31% of consumers are willing to recommend new customers to the brands who provide free shipping. Ask your customers to refer new customers and reward them by providing free shipping.

Linking Free shipping to Customer Loyalty is great way to make free shipping affordable while increasing the loyalty of your customers

5) Free Shipping for Orders above Minimum Threshold

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• In a study conducted by Red Door Interactive marketing agency, it is found that adding a free shipping threshold to NuFACE (an anti-aging skin care company) increased its orders by 90%.

• But the key to getting this right is setting the right threshold. Set it too high, and it will not increase the order volume and do more harm than good by drawing their attention to the fact that they are not getting free shipping. Set it too low, and it will impact your margins.

• Analyze the average order value data you already have and then decide the threshold. And when you do select a threshold and implement this, make sure that you have processes in place to inform your customers about this (popup message, banners, etc.).

Setting the minimum threshold is a very commonly used technique that compensates for the cost incurred in providing free shipping with the increase

in average order value.

6) Priority Shipping as a Paid Upgrade

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• An increasing number of customers today wish their product to be delivered in a day or two. Amazon has invested billions and continues to invest more, to make same-day and next-day delivery an option for lots of customers.

• Businesses can use this to their advantage by offering free shipping across the board but asking customers to pay a premium for priority handling (same-day or next-day delivery) or rush shipping – a freemium business model for shipping.

• From businesses perspective, this does not necessarily mean using pricier shipping options and can be achieved by reducing the handling time (order processing time). This way, a minority of customer will fund free shipping for the rest of customers.

Use Priority Shipping to your advantage by offering free shipping across the board but asking customers to pay a premium for priority handling locations.

7) Free Shipping as a Limited Period Offer

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• Businesses do not necessarily have to offer free shipping throughout the year.

• For most businesses, there are certain times in a year which account for the bulk of their annual sales – like the holiday season.

• Free shipping, during those times, can give you that competitive edge to do better.

Offer free shipping during the most important times of the year which account for the bulk of your annual sales – like the holiday

season.

8) Free Shipping on Selected Products

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• High Margin Products – High margin products provide businesses the cushion to absorb the cost of providing free shipping.

• Old Stock/ Over Stocked Products – Free shipping is known to increase sales for most products. You can clear that extra stock lying in your warehouse by offering free shipping on them – not only increasing sales but also depleting the excess inventory that you hold.

• Low Selling and Highly Competitive Products – Give your low selling, say out of season products, and highly competitive products the additional push it needs to increase sales.

• Others – You could consider offering free shipping on other products like products for which the shipping costs are low.

Offer free shipping on selected products like high margin products, old and over stocked products, low selling products, and more.

9) Free Shipping on All Products

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• In a Forrester survey, nearly 38% of consumers said that they have bought from a specific online retailer because of free shipping.

• Free shipping is necessarily evil for a number of businesses and offering free shipping on all products a mandate.

Offer free shipping on all products all year long.

10) Add Shipping Cost to the Product Price

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• A study conducted by BCG found that shoppers want free shipping more than they want lower prices for the product they are buying.

• One way to offer free shipping is to include the cost of shipping in the price of the product and offer free shipping.

• Businesses often use this technique to attract traffic to their website. But, it is important to keep in mind that this can negatively impact the trust which customers put in the brand.

Include the price of shipping in the cost of the product.

11) Free Shipping as a Marketing Tool

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• Nearly 60% of eCommerce companies find free shipping as their most successful marketing tool.

• Free shipping can be used as marketing and promotion tool in so many ways – offer it as a coupon, use it on social media, offer it as a limited period deal, free shipping on next purchase, free shipping on referral, etc.

• But, businesses using this must make sure that they do not over do this. It is very easy to lose focus of your product and its value proposition and give too much emphasis to the promotion, here free shipping.

Absorb a part of the cost of providing free shipping as a marketing expense.

12) Offer Free Shipping on Returns

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• Returns today play an important role in customer’s purchase decision. According to trueship.com, 79% of customers want free return shipping.

• In another survey, it was found that free returns can help drive higher eCommerce sales for big-ticket items – nearly three times as many consumers would purchase a product online costing more than $1,000 without seeing it first if returns were free.

Free returns can increase your conversion and sales by giving customers the confidence that they could return the product, at

no additional cost, if they do not like it.

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