However, don’t let the word ‘free’ fool you — there are cases where free shipping might cause you to lose more money than you’re gaining. Remember that you’ll have to cover the shipping cost, which may hurt your total revenue.
So what do you do? In this blog post, you’ll learn about the benefits of free shipping, what to consider before setting it up in your store, and the tactics that can turn losses into additional sales for your business.
The Benefits of Free Shipping
There’s a reason why offering free shipping is a gold standard in the eCommerce world. Here’s how free shipping influences the purchasing behavior of customers:
Free Shipping Boosts Your Sales and Average Order Value
Everybody loves to get free stuff, and free shipping is no different. According to statistics:
61% of customers are “somewhat likely” to cancel their order if it doesn’t come with free shipping
Orders with free shipping average around 30% higher in value
93% of customers are encouraged to buy more if free shipping is available
Increase Your Brand Loyalty
Your success in eCommerce depends on your ability to adapt.
Free shipping from brands is now an expectation for the modern customer. A recent survey proves that 8 out of 10 consumers prefer free shipping over getting their items faster.
By offering free shipping, you meet your customers’ needs and give them a reason to return for more.
Decrease Cart Abandonment
Put yourself in the shoes of the customer for a couple of seconds.
Let’s say that you find a product you like and add it to your cart, only to find out about the high shipping rates. What would you do? Chances are, you’d likely leave the cart.
That’s where free shipping comes in. By covering the shipping cost yourself, you’ll encourage customers to follow through and reduce cart abandonment.
What to Consider Before Offering Free Shipping
With that in mind, however, there are cases where free shipping isn’t the right fit for your business. Here are a couple of factors you need to consider before setting up free shipping on your store:
Your Supplier Offers Free Shipping
Whether or not you should offer free shipping also depends on your supplier.
If the supplier you choose offers free shipping, it’s ideal to offer free shipping to your customers. In this case, it won’t be fair to charge them for shipping costs.
However, if they don’t offer free shipping, it’s up to you to decide whether you want to cover the shipping costs or make your customers pay for them.
The Competition Is Offering Free Shipping
If competitors in your niche are offering free shipping as part of their strategy, then it’s best that you do the same.
You don’t want your store to be falling behind everyone else. However, even if the competition isn’t offering free shipping, it could still be a way to make your business stand out from the crowd.
Online customers value free shipping during their purchase. If they explore their options and see that you’re the only one who offers free shipping, they’re most likely to pick you.
Your Customer’s Location
Ask yourself: where are your customers located? Are you only shipping to the United States, or do you have customers overseas as well?
The customer’s location has a significant influence on your shipping costs. That’s why it might be better for your store to offer free shipping only to specific areas.
You’ve Calculated Your Profit Margins
First, you’ll have to do some math to determine if free shipping suits your store.
How free shipping will affect your margins depends on the type of product, where your customers are, and more factors. Keep in mind as well that you’re the one who’s going to have to cover the shipping costs.
Knowing the average order value and average margin on every order will determine if free shipping can work for your business. Does the average order cost you $10 to ship? If your average order margin is more significant than $10, you can cover the cost of shipping.
To compensate for the lost money, you’ll have to develop an effective strategy, which we’ll get into later. You can also keep your shipping expenses down by investing in the right software.
How to Offer Free Shipping Without Hurting Your Bottom Line
As you can see, there’s a lot of thinking that goes into offering free shipping. You can’t just set it up in your store and hope for the best. Thankfully, there are strategies you can use to offer free shipping without going broke. Here are a couple of tactics that should help you:
If competitors in your niche are offering free shipping as part of their strategy, then it’s best that you do the same
Increase the Price of Your Products
An excellent way to win back the money you’re losing to shipping is to increase the price of your products.
However, you also have to be careful when raising your item’s price — you want the price to cover shipping and marketing costs but not high enough that it scares away customers from buying from you.
Customers find free shipping offers twice as compelling as discounts, so consider that when considering a lower price versus a free shipping offer.
Offer Free Shipping for a Minimum Order Size
Another way to cover shipping costs is to offer free shipping when customers pay a specific order size. The extra cash should help you cover the rest of the shipping costs.
However, just like with increasing the price of your products, you need to have a strategy in mind. You can’t just throw a random number around — customers will catch on to your actions.
Let’s say that your average order cost is $22. To invite customers to pay more without feeling like they’re being tricked into buying more, you can offer free shipping for orders above $25.
Here’s an example from skincare company Frank Body, that offers free shipping for orders above $20:
Create a Membership Program for Free Shipping
An option that’s gaining in popularity is setting up membership programs. To qualify for free shipping, customers must sign up and pay a yearly or monthly fee.
A great example of this in action is Barnes & Noble. On top of getting free shipping when customers sign up for their membership program, they also get exclusive perks and bonuses.
Offer Multiple Shipping Options at Checkout
Giving customers more than one option will increase their perceived value. When you display rates, include the estimated delivery date. Customers will be able to select a faster option (and choose to pay for shipping themselves) versus selecting the standard, slowest, and low-cost option for your business.
Your Shipping Rates are As Low as Possible
No doubt, getting access to cheaper rates makes offering free shipping easier. The problem is that small and mid-sized businesses can’t access the same discounts as their bigger competitors – or Amazon. A lot of platforms promise better rates, but what they’re really offering is a discount below retail (what you would get at the USPS or UPS store). Any business can access better than retail by setting up a business shipping account.
More tools are available, however, and that’s where a company like Essential Hub can help. We leverage our network of software partners to get customers the best rate and program for their particular needs, and our experts craft a custom shipping profile to leverage the strengths of each carrier. Check out some of our shipping tips, and if you’d like to learn more about how we can help, fill out the contact form below.
Wrapping Things Up
Whether or not you can offer free shipping depends on various factors. These include the type of product you’re shipping, your customer’s location, and what others are doing in your industry.
When free shipping is done correctly, you can boost sales and create loyal customers. It’s all about having the right strategy to make it work.
Keep Your Costs at a Minimum with a Great Shipping Program
Shipping is more than just low rates. An excellent shipping program gets you the best rates for the service you need for each and every shipment. Essential Hub helps our customers with strategy, software, and rates so their business can win more customers and grow!
Introduction
Delivery is one of the most critical steps for customers trying to purchase your products. How are you handling it?
It’s what can determine whether a customer will buy from you again or not. A poor delivery not only makes you lose customers but gives a big hit to your brand’s reputation as well.
It’s also where you’ll need to assess your shipping costs. You want to ensure your item arrives at your customer’s doorstep without losing too much money on shipping.
So, to help you out, here are our top 11 tactics you can use to boost your shipping strategy and delight customers:
1. Offer Free Shipping Without Hurting Your Profit Margins
Free shipping is an effective way to boost sales. 93% of customers are likelier to buy if free shipping is available.
The issue with free shipping is that it isn’t exactly “free” — you’ll have to cover shipping costs, making you lose money. Shipping can also get expensive if you’re sending items overseas.
Here are the two main ways you can offer free shipping without breaking the bank:
● Increase the product price: Raising the price of the costs of your items will help you squeeze in cash to pay for shipping.
● Offer free shipping for minimum orders: For example, you can provide free shipping for orders above $20.
2. Make Your Order and Returns Policy Clear
Your store needs a concise order policy that sets clear expectations between you and your customers.
Online shoppers want access to all relevant information about shipping. They need to know your shipping cost, where you ship to, and when they can expect the item to arrive.
Here are some questions that your shipping policy should cover:
● Which countries do you ship to, and which do you not?
● What shipping method do you use?
● Do customers get access to shipping tracking information?
● Can customers pick up your item at a physical location?
● What is the procedure and deadline for refunds?
Are you using Shopify? Learn more about setting up your order and returns policy on Shopify here.
3. Flat Rate Shipping
Flat rate shipping consists of offering a single rate for shipping an item, regardless of weight or size.
It means that the value or size of products doesn’t get taken into account. For many eCommerce brands, this simplifies the shipping process and encourages buyers to spend more.
For example, for each order, you could charge a flat rate of $5.
Setting up a flat rate is a good strategy if you’re starting out and don’t know how much your shipping costs will be. However, you can still offer different rates based on how fast the customer wants to receive the item.
4. Table Rate Shipping
Table rate shipping, on the other hand, is the opposite of flat rates. It consists of determining shipping costs based on various criteria.
These factors include product size, weight, shipping destination, and value. Here’s an example of what it could be like if you charge shipping based on weight:
Product Weight
Shipping Price
1 — 5 LBS
$3
5 — 10 LBS
$6
10 — 15 LBS
$12
15 — 20 LBS
$24
5. Use Email Marketing During Delivery
Once the item gets shipped out, it’s an excellent time to engage customers via email.
A good tactic is to send email updates to your customers once the item ships. You can also feature sales and promotions for other products that could interest them.
Check out this perfect example fromTheDollar Shave Club. Each time a customer buys from their store, they receive an order confirmation email with the shipping date and items they can buy before the product ships:
It is especially important to maintain communication with customers throughout the order and delivery process. Many customers will visit your website once to order a product but open your email confirmation to click on tracking several times.
6. Offer Same Day Delivery
Offering same-day delivery can make you stand out from other stores and win extra sales. 61% of customers are willing to pay a few extra bucks to get their products shipped the same day.
Now, why does same-day delivery work so well?
Because of modern technology, our attention span and patience are progressively reducing. We are used to getting things fast, and customers expect the same with their orders.
Same-day delivery is a great way to boost customer satisfaction and brand loyalty. Best Buy, for example, rolled out same-day delivery in 2015:
When offering same-day delivery, you need to measure how it’s impacting your sales. There are a ton of startups out there offering same-day delivery services. A simple Google Search will reveal some in your area.
7. Show Customers How Close They Are to Free Shipping
One way to encourage customers to buy more is to show how close they are to getting free shipping. By knowing how much they need to qualify, they’re more likely to add a couple of extra items to the cart.
A great app that helps you do this is Free Shipping Bar. As customers add more to their cart, the Free Shipping Bar will show them progressive messages on how much they have left before they get free shipping.
8. Get Insurance for your Items
If you’re selling an expensive or fragile item, you want to ensure you get insurance to protect it in case issues arise.
Insurance is handy if your product gets lost, stolen, or broken during shipping. When something goes wrong, you’ll need to prove the item’s value, and the insurer will pay you back the total amount.
While insurance is helpful, remember that you might have to raise your shipping rates to cover it. Logistical services such as USPS, UPS, and DHL only offer free insurance on items up to $100.
You can add insurance automatically through your carrier contracts (they include it in your cost), or you can offer it to your customers at checkout using a product like Route.
9. Give Customers Tracking Information
One way to improve the buyer experience is by giving customers tracking information on their orders. It’ll help you avoid repetitive questions like “where is my package?”.
With tracking information, you’ll reduce complaints and drive better customer satisfaction. To track packages efficiently, you can use Shopify apps such as Tracktor.
10. Create An Incredible Unboxing Experience
Your goal as an online store should always be to stand out from the crowd. One excellent way to do this is to make opening your packages memorable every time.
A memorable unboxing experience increases brand awareness and loyalty. Customers are much more likely to refer your product to their friends once they’ve received it. Making your brand stand out makes you much more likely to be talked about by your new brand-evangelists!
Here are some ideas of how you can do this:
● Make your packaging material branded or unique. Whatever you use as filler to protect the contents can be colorful and wow your customer.
● Provide a custom thank you. A simple note with the customer’s name, even hand-written and signed, goes a long way to improving customer retention.
● Give a free sample. Do you have other products that make sense to give away? These can act like a simple gift showing off your additional products.
● Include discount codes or special offers. Give them a reason to revisit your website!
● Add branded stickers inside and out.
● Focus on creating epic packaging, like this from nuts.com:
Notice how they’re not afraid to showcase their personality on their packaging: “Nuts! Nuts! Nuts!”, “We’re all nuts!” etc. It’s a great way to spice up the delivery process.
11. Invest in Shipping Software
There are a lot of tasks that go into shipping tactics: fulfilling orders, managing returns, getting tracking information, etc. It can feel quite overwhelming at times, especially if you’re starting out.
That’s why it’s best to get shipping software that cuts the work in half. At EHub, we connect all of your eCommerce operations in one place. The platform comes with:
● The best discounts on shipping
● eCommerce integrations for all your channels
● Insurance for every delivery
● Order tracking
Make sure you’re getting the most out of your shipping software. With technology, you can simplify your packing and label printing processes to get packages out the door as fast and accurately as possible – with the desired carrier service at the best price.
Wrapping Things Up
Managing your delivery effectively is vital to retain customers and make them come back to your store. Now, it’s up to you to test one of these tactics and see what works best for your business! To learn more about how Essential Hub’s solutions can boost your store’s shipping strategy, contact us below and find out how we can turn shipping into one of your most significant assets.
UPS and FedEx love to advertise their low carrier charges, hoping to draw in business from e-commerce companies who are none the wiser about a range of additional surcharges and accessorial fees.
Your e-commerce business needs full transparency to minimize shipping expenses. That’s why we’ve compiled this list you need to know about:
For example, research shows that 23,223 of the 41,702 ZIP Codes in the US are being impacted by Delivery Area Surcharges. It equates to over 55% of the country, while 25% of the US population is affected.
This can translate to thousands of dollars in extra fees, which is why you’ll need to pay attention to the small print and not the seductive prices offered by the likes of UPS and FedEx as they aim to get your business in the door.
Accessorial fees are a significant part of the business model for most carriers, so the United States Postal Service (USPS) is often the most economical option if you send packages frequently.
Here are five dirty secrets about accessorial fees and why USPS could solve your eCommerce shipping needs.
1. UPS: A 4.9% Overall Increase in Price for 2020
2020 has been a challenging year for businesses, but there’s been no respite if e-commerce is your model for making money.
UPS announced an average rate increase of 4.9%, effective in December 2019.
FedEx has also recently increased its fees and went a step further by “implementing a temporary surcharge on all FedEx and TNT international parcel and freight shipments beginning April 6” in response to the COVID-19 crisis.
It’s worth remembering that there will always be discrepancies depending on the circumstances of your business, so you could end up paying much more than you’re used to.
They may cite margins and higher costs as reasons for increased fees each year, but there are also numerous surcharges to consider first.
2. Hiding Accessorial Fees
UPS and FedEx make a point of making accessorial fees challenging to understand, and they keep them hidden away in the small print.
Eating up the costs is an accepted part of doing business, but you don’t necessarily have to pay for a service that tacks on more charges than your average budget airline.
Most importantly, you’ll need to work out any additional costs as soon as possible, and they add up more quickly than you might expect.
3. Residential Delivery Surcharges
Residential delivery surcharges are often the most egregious example of accessorial fees.
Let’s say you need to ship a small package to a residential address, as many e-commerce businesses do daily, to multiple homes. As well as the advertised price, a $4.40 ‘residential delivery surcharge’ will be tacked on by FedEx, eating into profit margins that sit at roughly 40% for the best-run companies.
For eCommerce businesses, most packages will likely be sent to residential addresses, while B2B deliveries come with their own set of separate surcharges.
The USPS Flat Rate is an excellent option if you’d prefer to pay a simple set fee with no extra surcharges. Prices start at $7.50, and they have discounted rates for business customers.
4. The Cost of Handling Weight
Everything from package weight to fuel consumption is becoming more expensive for e-commerce businesses that rely on shipping services to get their products to customers.
The UPS Additional Handling – Weight charge is now applied from 50lb rather than 70lb and comes in at $24 per instance. It’ll start to add up quickly if you’re sending heavier items regularly and can eat into your profit margins if you’re not careful.
UPS has also introduced four additional new surcharges for 2020;
● C.O.D
● Signature Required
● Additional Handling
● Peak Additional Handling
Alternatively, the USPS Flat Rate will allow you to ship packages up to 70lb to any state at the same price, which is ideal for smaller, heavier items.
5. USPS – Cubic Pricing and Potential Savings
USPS Cubic Pricing is possibly the best kept secret of all if you’re hoping to lower shipping costs.
High-volume customers can access discounted rates, while it works by calculating the length, width, and height of your package. They offer five tiers depending on the overall cubic size, and it often works out to be cheaper than FedEx, UPS, or even USPS Priority Mail.
For example, a Tier 3 (8” x 6” x 8”) package shipped to Zone 6 would incur a delivery charge of $22.47 if you’re using Priority Mail Commercial Base rates. It drops to just $10.98 with USPS Cubic Pricing, working out as a saving of 51%.
In an ideal world, competition between UPS and FedEx would lead to lower prices and improved services. Instead, they have a stranglehold on much of the market, and they’re not necessarily the most economical choice when you factor in the multiple accessorial fees that are inevitably attached.
As mentioned, you won’t have to deal with residential delivery fees with the USPS, and their flat rates are easy to understand. A competitive shipping program should utilize the advantages of each carrier’s strengths and minimize their weaknesses. You should not be using a single carrier, even if you’re only shipping one product.
Ensure your software can handle multiple carriers to maximize your savings on every shipment you send out the door. The best part is you don’t have to do this alone. With a partner like Essential Hub, you get a competitive shipping program tailored to your needs. Find out how today!
