eCommerce Shipping

Weaponizing Free Shipping

by Guest Post

Weaponizing Free Shipping

This guest post is brought to you by our friends at Shippo

Shipping plays an important role in the online shopping experience. From the moment a customer starts browsing your store to when the mailman actually delivers their package, shipping (and shipping costs) are on both the customer’s mind and the seller’s mind. But customer expectations about shipping have changed. Many customers now expect free expedited shipping, but we know that shipping is not actually free. The ability to offer fast and cheap shipping has now become a differentiator and a competitive advantage for online businesses.

According to published data, shipping costs account for 12.5% of Amazon’s costs, but make up an astounding 35% of an SMB’s cost.

So what can you do to win the customer’s business without completely eroding your margins due to shipping. Here are some options to weaponize free shipping.

Make free shipping contingent

Research shows that 93% of shopper take action to qualify for free shipping and the leading action is adding items to cart. (UPS 2014)

Minimum Purchase: Only offer free shipping with a minimum purchase. One way to calculate the threshold is to take your current average order value and set the threshold slightly above, forcing the customer to add at least 1 more item to the cart. This way you can take advantage of the Free Shipping promotion power, but only for your best buyers. Just be careful not to set the threshold too high. If your average order value is $30, don’t set free shipping at $100.

Category/Brand Purchases: Offer free shipping with a purchase of a specific category or brand of items, ex: Free shipping with purchase of a mug, or free shipping on Nike shoes.

Free Shipping At Certain Times: You don’t have to offer free shipping year around. For example, to boost sales during the summer, offer free shipping for a week during August.

Pick an affordable shipping method

Fifty percent of consumers will choose a slower transit time to qualify for free shipping and 83% of buyers are willing to wait an additional 2 or more days to get free shipping. (UPS 2014)

The key is to be transparent about the transit times for the shipping options so the consumer can make a decision that’s best for them. It’s fine to offer ground shipping as the free option, as long as the estimated delivery time is clearly presented.

Track the impact of your strategy

Key metrics to track are:

  • Conversion Rate: are more visitors converting into buyers with the free shipping offer than before?
  • Average Order Value: how many additional items are people adding to the orders with free shipping?
  • Margin per Order: how much margin is the cost of free shipping eating up?

Evaluating these three data points will help you evaluate the success of your free shipping approach.

The main point here is for you to get creative. Evaluate all aspects of your business and shipping strategy to fully take advantage of offering free shipping to grow your business.

Mikhail Ledvich is the Head of Marketing at Shippo, the shipping dashboard and API that connects you to multiple carriers to print labels, track packages, and more! You can use Shippo to lower the cost of shipping by diversify your carrier selection and rate shop to find different services that fits your needs. You can connect with directly with Shippo through their API or from Shopify, WooCommerce, Magento, BigCommerce, or many other platforms.

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