With retailers of all calibres entering the ring with free shipping options, it is near impossible to remain isolated from the melee and continue charging flat shipping rates. Free shipping, especially free 2 day shipping is a nudge in the right direction for most customers who are stuck indecisively at checkout. Well, that and the ease of checkout of course.
According to the Walker Sands report for 2018, free shipping has become a major deciding factor after Amazon set the standards high.
Image Source: Walker Sands
Retailers have been forced to climb aboard this bandwagon irrespective of the damage to their bottomline (what with soaring shipping prices and additional charges).
Contrary to what it may seem it, this certainly isn’t the end of the world. Here are three strategies that will help your ecommerce business offer free 2 day shipping without going broke.
1. Free shipping on orders above $X
This is one of the simplest ways to hold on to your profit margin and still offer customers free shipping. One, this encourages customers to choose high-value items. Two, they end up adding a few other items to their cart in order to qualify for free delivery. Adding personalized suggestions of lesser priced items that are related to the purchase during checkout can make it easy for customers to make up their minds about qualifying for the free shipping option. This also drastically minimizes cases of cart abandonment.
Adding the shipping cost to the product cost can be helpful in the case of items with a low-profit margin. On items like jewellery where the profit is mostly over 50%, it doesn’t put a dent in the retailer’s pocket when free shipping is provided.
Apple, for instance, offers free shipping on any order above $50 on all products except the customized Macs.
Image Source: Apple
Pros:
- The difference between product profit margin and shipping cost is usually negligible for most items
- Encourages customers to buy more
- Brings down cart abandonment
Cons:
- Results in losses when too many minimum value items are ordered in bulk
The following study by statista shows the actions taken by digital shoppers in the United States to qualify for free shipping as of February 2017
Image Source: Statista
Around 48% of customers add items to their cart with the sole intention of qualifying for free delivery, and 44% choose even the slowest shipping option if it’s free. Imagine the edge you can gain by offering free and fast shipping!
2. Got an exclusive membership?
Offering a customer loyalty program or exclusive membership is another strategy that can even out your free shipping option. When you offer free 2 day shipping across all products for an yearly or monthly membership, it ensures that customers do not go in search of competitor sites in the interim and are happy about the exclusive benefits availed through the membership.
With stores like Walmart and Target joining the ranks of Amazon in offering exclusive membership programs to qualify for free and fast shipping options, smaller retailers can see if the same works well among their target audience.
Image Source: Amazon
Pros:
- Customer retention will be at its peak
- New customers will be lured by the prospective benefits available to members
Cons:
- Non members may be persuaded to try other sites if the membership cost is too high
- The membership price must be calculated precisely in a data-based manner, otherwise losses cannot be controlled during the middle of the membership period.
3. Promo codes and free shipping offers never go out of style
When you’re trying to build an extensive customer base, you can provide limited period free shipping during the holiday season, or free shipping promo codes based on certain criteria like past purchases, referrals or social media advertising.
Some of the high-end retailers who have increased online sales over the last year by offering free shipping for limited periods include Macy’s, BestBuy, PetSmart, Rent the runway, Instacart, and Wholefoods. Deliv has enabled Shopify retailers like Nordstrom, the Outnet, Farfetch, Bloomingdales, Saks Fifth Avenue and net- a- porter to offer same day shipping at nominal prices. These stores do offer promotional vouchers for free shipping that would increase customer turnover.
Image Source: Macy’s
Pros:
- The exclusive treatment increases level of customer loyalty
- Word of mouth advertising and referrals would increase
- Site visitors during free shipping offer times can become recurring customers
Cons:
- When there are no offers on shipping, new customers rarely shop
- Cart abandonment can rise if shipping cost is totalled during checkout
In a highly competitive retail landscape, etailers and multichannel retailers alike need to up their game in order to stay ahead of competitors. If all your competitors are offering free shipping options, then you simply cannot afford to stamp a price too high at checkout for shipping costs. Try integrating the cost of shipping into the price of the object so that you need not compromise too much on shipping costs.
Free shipping does not necessarily mean fast shipping, but not delivering on the promise of the last mile can be a major setback for your business. Holding your shipping carrier accountable by constant monitoring of shipments and claiming refunds for service errors can help in demanding a superior delivery performance across the last mile.
The above strategies can be used to stay ahead of the curve and create a loyal customer base for your ecommerce website. Follow a (or create your own) shipping strategy that will suit the products you sell, the consumer base you target and will set you apart from the competition.
Deliver a superior last mile experience along with the free 2 day shipping and watch your profits grow. Here’s to winning the last mile!
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