How to Offer Free Shipping without Going Broke – Practical Ecommerce - eComEmpireStore + Brought to You By: Robert Villapane Ramos

How to Offer Free Shipping without Going Broke – Practical Ecommerce

Offering free shipping with online orders has always attracted customers. Most shoppers have come to expect it. Unfortunately, free shipping can be expensive.Enterprise sellers use scale, warehouse distribution, and logistical prowess to solve the economics. But small and mid-sized businesses are often left with a hard question: Is there a way to offer customers free […]



Offering free shipping with online orders has always attracted customers. Most shoppers have come to expect it. Unfortunately, free shipping can be expensive.
Enterprise sellers use scale, warehouse distribution, and logistical prowess to solve the economics. But small and mid-sized businesses are often left with a hard question: Is there a way to offer customers free shipping without going broke?
The answer is yes.
Consumers have come to expect free shipping for any online purchase. Merchants who don’t offer it are at a disadvantage.
Let’s put this in perspective. In the early days of ecommerce, free shipping was unheard of. Businesses didn’t have to worry about it because consumers didn’t expect it. But then things changed.
In 2002, Amazon introduced Free Super Saver Shipping for orders above $99. A few months later the minimum threshold had dropped to $49 and then to $25.
Super Saver Shipping laid the foundation for nearly ubiquitous free shipping with Amazon Prime. This didn’t happen immediately. It took a decade, but as online shopping became more popular, consumers began to expect free shipping on all orders.
In early 2011, Zappos and L.L.Bean upped the ante for retailers when they began offering no-strings-attached free shipping for all online orders.
In the past year alone, surveys from Retail Dive, Shopify, Walker Sands, and many others have reported various statistics about consumers’ preference for free shipping.
All conclude that roughly half of online shoppers research shipping prices (at least occasionally), two-thirds abandon shopping carts if shipping is too expensive, and 100% prefer not to pay any shipping amount.
Hence, businesses of all sizes should offer free shipping on many if not most orders to remain competitive.
So yes, it is possible to offer free shipping on ecommerce orders without going broke. One could argue that free shipping is simply the cost of doing business online.
So how do we offer customers free shipping without going broke?
Don’t fret. You don’t necessarily have to offer free shipping on every item to meet shopper expectations. Customers know that some items are too heavy or too large to ship for free.
For example, Rogue Fitness, which makes and sells weightlifting gear, offers free shipping on “select items.” Buy a Rogue t-shirt, and it ships free. Buy a pair of 88-pound kettlebells, and there is a shipping charge.
Consider your margins. Profit margins are an important consideration when it comes to the type and level of shipping you can offer your customers. Your margins likely vary by product.
Also, look past the margin for individual orders. Some ecommerce businesses are very successful with relatively low profit from individual orders but a high repeat customer rate.
Consider your products. Think about the size and weight of your products. Larger, heavier items are more expensive to ship, which is why many retailers have certain restrictions with their free shipping offers.
The same is true for light but large items since most carriers use some form of dimensional weight calculation that considers the size of the package and its weight.
Consider your orders. A common goal among sellers is to offer free shipping with certain purchase thresholds. For example, a merchant with an average order value of $50 could test free shipping on orders that are a bit higher, such as $60.
Consider your customers. Where are your customers located? Do you ship internationally and to customers in Alaska and Hawaii? If so, you’ll have to absorb more costs to these locations, which is why many retailers exclude from free shipping all areas outside the contiguous United States.
Here are 10 commonly-used ways to offer customers free shipping.
To find the best free-shipping offer for your business, test various approaches to determine which is most effective.
Evaluate the products you sell, the average order size, the competition, and the shipping costs.
Remember, too, that free shipping is not always profitable. In some cases, it may be necessary to offer free shipping as a loss leader to attract customers and build market share. In others, free shipping directly increases profits. The key is to understand the economics of your business.
In short, offering free shipping attracts customers but make sure you’re not losing money overall in the process.
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