It can be easy for some business owners to think that offering free shipping will ultimately have a negative impact on overall profits. Successful business owners, however, know from experience that free shipping is worth it in the long run. In many cases, business owners who have eliminated shipping costs for their buyers will tell you that when they did, they found that customers were willing to spend more money on their products. The same customers were also more likely to return for repeat business. According to a recent study, 43% of shoppers abandon their shopping carts because of unexpectedly high shipping charges.
So what are some free shipping options you might be able to use to entice your customers continue to buy from you, rather than your competition? There are several different options we would suggest.
The Minimum Order Requirement Model
One option is to offer free shipping on orders at or above a particular dollar amount. This works well, as it encourages customers to order more with each transaction. This can increase profits and decrease costs for the business owner. The decrease comes from the business owner’s ability to reduce packaging costs, ship multiple items at one time (thus, minimizing overall postage costs), and reduce labor costs related to preparing items for shipping. Many companies typically offer free shipping when buyers spend more than $50.00.American Apparel, Urban Outfitters, and Apple are all examples of companies who have put this free shipping offer in place for customers.
The United States Postal Service Flat Rate Shipping Options
This is an option that can sometimes be overlooked, but it can truly make a difference in profitability for businesses that want to offer free shipping. While not entirely free, Flat Rate options are still incredibly beneficial. Many businesses like using the options for heavier items or multiple item orders, since the rate doesn’t increase with the weight of the package. There’s also the added perk that the actual boxes used for these flat rate options come free from the USPS, which can help reduce costs associated with packaging materials.
This option also makes it easy to budget for shipping costs, as retailers can determine in advance how much shipping will be needed for each item sold. This allows savvy business owners to build all or part of the costs of “free” shipping into their product retail prices – capturing the benefits associated with free shipping without taking a full hit to profits.
The Select Item Shipping Option
Select item shipping is for business owners who want to offer free shipping on only a select handful of products. In many cases, business owners will use this option when they are launching a new product, running a new promotion, or trying to sell off inventory on a discontinued item. Finish Line is a great example of a company that uses this option. With trends in shoes changing each season, it’s a useful strategy for them to use in order to get rid of their shoe inventory from last season. This option can also be particularly useful for business owners who are interested in experimenting with free shipping, but aren’t yet ready to offer it across the board for every product they sell to consumers.
The Free Return Shipping Option
Zappos is famous for offering this free shipping option to their customers, but it’s a great option for small businesses too. Offering free return shipping to your customers can help prove to them that you are dedicated to customer service and overall satisfaction. Other companies that use this option include Apple, Nordstrom, ShoeDazzle, Dell, and many more. For small businesses interested in experimenting with this option, we recommend testing it out on the next new line of products you plan to sell to consumers. If you notice an increase in profit margins, or in customer retention, it might be worth it to begin offering free return shipping on all products.
The Free Shipping With Membership Option
As more consumers decide to shift their shopping to the web, this is an option that more businesses are starting to offer. In this option, buyers can receive free shipping on items if they have signed up for any kind of membership, subscription, or rewards program that a business has put in place for customers. Overstock is a good example of a company that currently offers this option to customers. For business owners who want to encourage customers to sign up to receive emails, or are trying to build customer loyalty, this is a great option to consider.
Regardless of which option you choose to use for your business, it’s easy to see how offering free shipping could be the best thing that has ever happened to your bottom line.
For more insight, check out our ecommerce tips and trends page.
Want to streamline your shipping process so you can get back to focusing on growing your business. Endicia’s shipping software saves you time and money and lets you ship like a pro. Learn more here.
About Jessica Foth:
As Product Marketing Manager for Endicia, Jessica Foth develops and drives business strategy for the shipping market. Her various responsibilities include market analysis, program development and implementation, demand generation, and messaging. Prior to her role in Product Marketing, Jessica managed the Endicia Marketing Services team to develop, execute, and measure marketing campaigns, events, and customer communications. Jessica has a B.A. in Journalism & Strategic Communication from the University of Minnesota.