Are you using Free or Discounted Shipping to Increase Conversions? If not, you definitely should be!
There’s this nagging question that online store owners often ask themselves: Should I offer free or discounted shipping to customers?
It’s an age-old question that might be as ancient as online stores themselves, but one that’s also easy to answer with another question: When shopping online, do you prefer to buy from eCommerce websites that give you free or discounted shipping, or from online stores that require you to pay for the shipping costs yourself?
It’s a no-brainer, right? Try to put yourself in the customer’s shoes. When you do so, of course, you’ll choose the free shipping option every time. We understand why online business owners are somewhat wary about giving free or discounted shipping: the costs might eat up into the profit margin. But really, if handled properly, there is nothing to worry about. With some planning, you can make free or discounted shipping work to increase conversions and make it profitable for your business.
Here are a few reasons why offering free or discounted shipping will benefit your online store:
1) Free or discounted shipping helps retain customers.
As an online store owner, you should always be aiming to get more repeat customers. A pool of loyal customers often means repeat purchases for your business. And free or discounted shipping is one of the best ways to pull in more repeat customers. Here’s an interesting fact: a free shipping offer that saves a customer 6.99 dollars is—believe it or not—actually more appealing to many online shoppers than a discount that slashes the purchase price by 10 dollars.
2) Free or discounted shipping encourages online shoppers to buy more.
In a Compete Online Shopper survey, 93% of the respondents surveyed said that free shipping encouraged them to buy more online. This is not surprising: the number one reason that online shoppers gave when asked why they weren’t satisfied with their buying experience is high shipping costs.
3) Shoppers will add more to their shopping cart to qualify for free shipping.
When you set an average order for customers to qualify for free shipping or discounted postages, shoppers will add more items to their shopping cart, according to a 2015 case study by ComScore and UPS. In fact, a whopping 52 percent of US shoppers have decided to add more items to their cart before checkout so they can take advantage of free shipping.
4) When you give free or discounted shipping, your customers feel valued.
When you offer free or discounted shipping in your online store, you are essentially telling your customers that you value them enough to give them this incentive. A Market Research study found out that 96% of shoppers are more likely to buy from an online store if it offers free shipping.
5) Free shipping on your best-selling products will increase sales even more.
Your best-selling products not only increase your margins, they are also a great source of word-of-mouth marketing. And if you haven’t yet offered free shipping for these items, do so immediately, and you can expect more customers to not only buy more from your website but also refer your best-selling items to friends or family.
Are you worried that offering free or discounted shipping will kill your profit margins? Here are some tips to help you manage your shipping expenses:
1) You can choose to limit your free-shipping options.
Here’s a good example: if your warehouse is in, say, Oregon, you can offer free shipping within the state. But what about far-flung areas? You might want to decide to increase the free-shipping threshold, for instance. While you can give a low minimum-purchase requirement to neighboring areas, it is understandable if you have to increase that for relatively long-distance deliveries. Free shipping, of course, can be on a case-to-case basis.
2) You can minimize your product’s packaging.
This is a simple and practical solution to reduce your shipping costs. In this world of shipping fees based on dimensional weight, the only answer to save on exorbitant shipping costs is to get rid of bulky and heavy packaging for your products.
3) Choose carriers and delivery services wisely.
Do your research, and try to find out the best combo of carriers and delivery services for your online store’s shipments. For example, you might discover that Federal Express or United Parcel Service is a better choice for cross-country deliveries, while a regular Regional Rate box from the United States Postal Service is enough for nearby deliveries.
4) Utilize fulfillment services.
Packaging warehouses are a great choice if you want to save on shipping costs. You can choose to store your best-selling products with fulfillment providers, especially if the location of the warehouses can reduce the distance or close the gap of the delivery destination, thereby helping you save on the cost of shipping.
5) Offer free shipping only for those items whose shipping cost is low.
This is also another good idea to help you save on shipping costs. You don’t have to offer free shipping for all products; choose only those products that you know has low shipping costs. You can choose to add a free-shipping guarantee only to those products that are small or those that are relatively low-weight. A variation of this is to offer free shipping only for items whose shipping cost is low and then offer discounted shipping to all the rest of your products. It’s a win-win solution for everyone.
When running an online store, you should keep in mind that free shipping is simply a cost of business, a necessary expense. Let’s put it this way: when you step inside a brick-and-mortar retail store, do you expect to pay an entrance fee? Of course not. Keep in mind the reasons we’ve mentioned in this post on how free or discounted shipping can increase your website’s conversions. Follow the tips on how you can minimize shipping costs. But perhaps the best action you can take for your online store is to change your mind-set: instead of thinking about free shipping as an extra expense, try to think of it as part of your overhead or your marketing expense.
Inspired by her love of travel, Susan is a passionate supporter of eCommerce software and the idea that people should own their own internet business (so they can work from anywhere in the world). Though she currently resides in California, she is often found blogging from random beaches and teaching her kindergartner the delightful difference between ‘hola’ and ‘ciao’.
With a strong past in product evaluation, educational content, and eCommerce sales, Susan is serious about helping online merchants succeed in their goals. She loves meeting other independent business owners on the road and hopes to run into you one day… maybe in the hammock next to her!