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.

‍

In this blog, you will learn why should ecommerce brands offer free shipping, benefits of providing free shipping to customers, how can ecommerce brands cover the cost of free shipping, is free shipping right for you, and how ecommerce brands offer free shipping in 10 ways.

‍

Why should ecommerce brands 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.

‍

‍

Based on the above studies, we can conclude that free shipping is becoming a standard service that customers expect from online stores. When ecommerce brands don't offer free shipping, shopping cart abandonment rate increases.

‍

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 ecommerce 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 can ecommerce brands cover the cost of free shipping?

‍

The most crucial factor in providing free shipping is the cost during ecommerce order fulfilment. 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 shipping cost.

• Improve customer lifetime value (CLTV)
  ‍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 by improving CTLV. 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 multiple warehouse locations to store inventory closer to your customers. This allows you to reduce shipping costs and achieve lightning-fast shipping speed.

‍

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 in ecommerce logistics:

‍

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.

‍

‍

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

‍

‍

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

‍

4. 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.

‍

‍

5. 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.

‍

‍

6. 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 ecommerce sales.

‍

‍

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

‍

‍

8. 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.

‍

‍

9. 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.

‍

‍

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.

‍

How Eshopbox can help ecommerce brands to offer free shipping

‍

You can save on shipping costs by outsourcing your fulfilment services to a 3PL provider. 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 a strong shipping strategy. 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.