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10 ways to offer free shipping on your online store

Versha Kamwal
November 3, 2020
7
mins read

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The ecommerce era has given rise to a never-ending series of conveniences. It has enabled customers to get what they want anywhere, anytime. In the quest of acquiring, the power of the word, “free” cannot be disregarded. For ecommerce brands, free shipping has become the strongest marketing tool that attracts and persuades online shoppers—anything less is a disservice to them.

Why should you offer free shipping?

According to a study by Walker Sands, 88% of customers consider free shipping as the top incentive that would encourage them to shop online more often. Moreover, 86% of the shoppers abandon their carts due to the cost of shipping.

Reasons for shopping cart abandonment
Reasons for shopping cart abandonment

Based on the above studies, we can conclude that free shipping is becoming a standard service that customers expect from online stores.

Benefits of providing free shipping

Free shipping offers an array of advantages to a business in a short-run as well as long-run:

  • Boosts sales: A simple banner of free shipping serves as a great attraction for buyers
  • Increases revenue: It’s true that some part of your profit margin will be utilised to pay the shipping but by providing free shipping, you'll attract more customers and hence, it will increase your profits
  • Improves customer loyalty: Customers are more likely to come back to your store when you offer free shipping
  • Helps to stay competitive: All the major ecommerce brands offer free shipping, you can stay in the competition by doing the same

How to cover the cost of free shipping?

The most crucial factor in providing free shipping is the cost. If you’re selling high-margin products, offering free shipping might be feasible for you. And if you aren’t, there are several ways to implement free shipping while still being profitable:

  • Increase the product price
    As shipping on an inexpensive product costs more than the product itself, you can include the price of shipping into the product price. It creates the illusion of free shipping while covering all the expenses. You can calculate the average shipping cost per order and include the amount in your product price.
  • Increase average order value (AOV)
    By offering product bundles or setting a minimum spend threshold, you can increase AOV and cover the cost of shipping. You can provide product kits—pre-built kits and custom combos, upsells and memberships to attract customers and ultimately, reduce the average fulfilment cost.
  • Improve customer lifetime value (CLV)
    The cost of acquiring new customers is 5X than retaining an existing customer. You can recover the cost of getting a sale by encouraging more sales from existing customers. You can introduce loyalty programs and subscriptions to induce more purchases and cover shipping costs.
  • Distribute your inventory
    You can strategically split your inventory across different fulfilment centres to store inventory closer to your customers. This allows you to reduce shipping costs and deliver orders faster.

Is free shipping right for you?

Free shipping doesn’t always suit an online store. In some cases, flat-rate shipping makes more sense. If you’re doubtful, you can always test it through a limited-time free shipping promotion. You can either choose specific products or locations to monitor the response. It’s better to test it in a short-run than committing to a long-term strategy.

Monitor the results and analyse if shipping thresholds are met, AOV has increased and if customers are making purchases repeatedly.

10 ways to incorporate free shipping on your online store

The following are the commonly-used ways to offer shipping to your customers:

  1. Free shipping on all orders
    You can offer free shipping on all orders, regardless of the items included or the order value. Its the best way to attract your customers and make an everlasting connection with them.

Meraki offers Free shipping on all orders
Meraki, an apparel brand that boasts sustainable clothing with free shipping on all orders

  1. Free shipping with minimum threshold
    You can set a minimum order value threshold to increase average order value (AOV) and reduce risk.

Shipping with minimum threshold
Mango is a premium clothing brand that offers free shipping above a minimum threshold

  1. Free shipping on certain products
    You can offer free shipping on high-margin products and charge shipping fee for lower-margin items.

Amazon provides free shipping on high-margin products
Amazon provides free shipping on high-margin products

Amazon charges delivery fee on low-margin products
Amazon charges delivery fee on low-margin products

  1. Free shipping to certain locations
    You can offer free shipping only to those buyer locations which are near to your warehouse, and charge shipping fee to other buyer locations based on the shipping expense.

free shipping to certain locations
Graeters ships its ice cream free to certain locations

  1. Free Shipping at certain times of the year
    You can choose to offer free shipping periodically, rather than all year round. When the competition is aggressive and customers' expectations for free shipping are the most, offer free shipping. For example, Diwali, Christmas, Valentine’s Day, and more.

Disney offers free shipping specifically on Christmas
Disney offers free shipping specifically on Christmas

  1. Incorporate shipping fee in product price
    Okay, so it isn’t really free shipping. Nevertheless, you can still attract more customers by promoting the 'free shipping' offer. It can drive more traffic and boost your sales.

Including shipping cost in product price
Including shipping cost in product price

  1. Free shipping on membership
    You can introduce a fee-based membership program and as a benefit, offer free shipping on some or all items.

Asos offers free shipping as a benefits of signing up for their Premier Delivery membership
Asos offers free shipping as a benefits of signing up for their Premier Delivery membership

  1. Free shipping in customer loyalty program
    You can provide extra incentive to encourage repeat purchases by offering free shipping as a benefit of a rewards program. It also increases the lifetime value of your customers.

Men's Wearhouse provides free shipping as a loyalty program benefit
Men's Wearhouse provides free shipping as a loyalty program benefit

  1. Free shipping for returns
    Free shipping on returns entices online shoppers more than you may realise. Typically, in ecommerce where return rates are high, customers expect free return shipping rather than shipping the products at their own expense.

MVMT offers free shipping on returns to its customers
MVMT offers free shipping on returns to its customers

10. Flat rate shipping
However, this isn’t free shipping but it will encourage larger orders. To the contrary, it can discourage customers who want to buy small items or quantities.

Flat rate shipping
JC Crew offers flat rate shipping around the world

How Eshopbox can help you to offer free shipping

You can save on shipping costs by outsourcing your fulfilment services to a 3PL. A tech-enabled 3PL like Eshopbox, helps you deliver an Amazon-like post-order experience to delight your customers.

  • Powerful merchandising techniques
    Eshopbox's substantial expertise in handling product kitting and bundling can help you increase the AOV. It will enable you to cover the cost of free shipping with operational efficiency.
  • Distributed inventory
    You can leverage Eshopbox's network of fulfilment centres to optimally split your inventory across the country to store it close to your customers. It will unlock two benefits simultaneously, one—reduced shipping cost and order transit time.
  • Discounted shipping rates
    Eshopbox's amicable background and pre-built integrations, and negotiated discounted rates with courier companies will help you to minimise shipping expenses. Moreover, Eshopbox's high order volume at a daily level cuts down the shipping costs further.

Bottom line

As ecommerce is evolving, free shipping is becoming an integral part of online retail. To keep up with the competition, you must offer free shipping—based on which shipping strategy aligns with your business. It will not only remove a barrier for your online shoppers but also drives customer loyalty. Once you’ve evaluated shipping and the most suitable way to offer it, consider the role of a 3PL in finding the right balance of increasing conversions and keeping the shipping costs down.

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