Free shipping is an effective but sometimes costly sales tool. Is it possible for companies to offer free shipping and still make money?
Case studies show that free shipping increases sales, order volume, and conversion rate. Since 60% of shoppers prioritize free shipping and 81% research multiple websites before purchasing, this perk can be the determining factor between someone buying from you or your competitor.
Free shipping sounds great, but unfortunately it doesn’t come free for you. Rising shipping costs mean you can easily lose a lot of money. The challenge is how to offer free shipping in a way that is attractive without cutting your profitability. Retailers use five tried and tested shipping strategies to strike this balance:
- Free, but slower ground shipping
- Free shipping with minimum order amount
- Raised prices that include free shipping
- Free shipping with strings attached
- Fast shipping
While these strategies can be profitable, there is no one-size-fits-all approach. You will need to consider your costs, products, and customers. To help you evaluate these factors and select the best free shipping strategy, we surveyed 1,000 shoppers and put together 22 actionable tips.
Free shipping is great for customers, but it can be effective for businesses as well. You enjoy the benefits of larger sales, higher conversion, and better competitiveness while still achieving your bottom line.
However, don’t stop at one strategy alone – it’s important to continuously test these strategies and see which one yields the most margins. You’ll want to consider:
- Your products: Do you sell products that face a lot of competition and “price hunting”? What are your competitors offering.
- Your profit margins: How much profit do you make from your products? Free shipping for a product with low profit margin will differ from one with a high profit margin.
- Your shipping costs: How easy is it to ship your product? Heavier items are generally more costly to ship.
- Your target audience: What is the demographic of your audience? Are they male or female, young or old?
You may find that a combination of shipping methods work together to bring you the highest return while keeping customers happy. You can also combine your strategy with other initiatives, such as partnering with a 3PL.
By providing your customers with a desirable yet profitable perk, you set your business on the road to establishing valuable customer relationships. This means more profits for you in the long run.