Just as e-commerce evolves, so do its shoppers. Online shoppers span across generations, interests and buying habits. Though we all tend to browse for products a little differently, there’s something just about all online buyers look for when shopping – free shipping. In fact, they almost demand it. One comScore report found the following data regarding free shipping for e-commerce orders:
– 81% of consumers would rate free shipping as a top priority
– 93% of shoppers would take some type of action (add more items to their cart, search online for promo codes, etc.) to qualify for free shipping
– 58% would add items to their cart to qualify for free shipping
– 83% are willing to wait two extra days for delivery, if the item would ship for free
A separate report by comScore found that Free Shipping Day 2012 helped increase sales the final week before Christmas by 16% compared to the previous year. That was a boost kicked off from a single day promotion. Imagine what your profit margins would look like if you offered free shipping all the time.
Great stats aside, a small business doesn’t have the budget that an enterprise might, and therefore may not be able to offer free shipping year round. Free shipping is too great an opportunity to pass up, and even small businesses can partake in it. Here are five ways a small e-commerce business can offer free shipping without breaking the bank.
Offer free shipping during holidays
Allowing free shipping during the holidays is a great alternative to offering it all the time, and won’t cost you beyond what you’re able to spend. Orders will be higher during this season, which will help eat the cost of shipping goods for free. Another option is to offer free shipping during a specific holiday. One-day sales and free shipping incentives are popular on Valentine’s Day, New Year’s Eve/Day, Memorial Day and the Fourth of July.
Set a minimum cart value
Target does it. There’s no reason you can’t, too. Determine the minimum order value a buyer must purchase in order to qualify for free shipping, and offer it under those conditions. A case study found that when one company added a minimum shopping cart threshold to earn free shipping, orders increased by 90%. Moreover, the average order value also increased by 7.32%. Pull together some numbers to help determine a minimum order value that would work for your business. You need to know:
– Total Orders Received
– Average Order Value
– Average Profit Margin
– Shipping Fees per Order
– Shipping Costs per Order
Once you have these variables, plug them into this calculator, which will tell you your shopping profit. You can then find your minimum shopping cart threshold for free shipping with the following equation:
[(Minimum Cart Value – Average Order Value) x Gross Profit Margin] – Shipping Cost = Minimum Order Value
Plug and play with different estimated Minimum Cart Values to find an order value that works for you.
Offer it to email subscribers
Extending free shipping to customers on your distribution list is essentially creating long-term profits. Subscribers will be the first to be notified of new products, sales, offers and marketing efforts. These customers are already your biggest source of revenue. E-commerce businesses that have 40% of their customers making repeat purchases generate nearly 50% more revenue than other sellers with only 10% of their customers returning. By offering free shipping to your most loyal buyers, you’re encouraging them to make new purchases and shop from you long-term.
Free shipping for returns
More and more online businesses are implementing free returns as part of their return policy. Zappos offers free, unconditional returns for all products (in addition to free shipping). Offering free returns works for small businesses for two reasons: 1) you will pay for return postage only sparingly, and 2) free returns create buyer trust and encourage shoppers to follow through with a purchase…which they likely won’t return, anyways. Researchers found that businesses that offered free shipping on returns saw sales increase by up to 357%. Even if you have to bite the bullet and pay for a few returns, you’ll more than make up that cost with better profits.
Make it available for certain products
If you don’t have room in your budget to offer free shipping on all your products, try making it available for just a few. Have any product you need to move in order to make room for new inventory? Offer to ship it for free. In industry speak, this is called order-level shipping. Offer free shipping on best sellers, sale items, or products that will be popular during a given event. If you’re an online florist, you could offer free shipping on red roses in the days leading up to Valentine’s Day. Or, if you ordered some new stock and want to test its popularity, advertise it with a free-shipping guarantee. You’ll incentivize people to buy it. If it does well, you’ll feel safe ordering a large quantity from your supplier.
Free shipping positively impacts profit margins and customer relations. It is increasingly becoming the norm across e-commerce industries, and shoppers are growing to expect it. Offer free shipping in a modified way that makes sense for your business, and you can reap the benefits too.
Ecomdash is an award-winning multichannel inventory software for e-commerce retailers. It offers an end-to-end e-commerce solution to complete workflow, including inventory and sales order management, product listing, dropshipping and fulfillment management, reporting and more.