Consumers love free shipping.
They love it so much that they are willing to spend as much as 30% more at checkout if they know they won’t have to bear the bill for the shipping cost. As a consumer yourself, you know that getting something for free can influence your buying behavior. In fact:
- 63% of shoppers abandon their shopping cart due to the cost of shipping
- 88% of consumers say free shipping is the topmost incentive that drives them to shop more online.
- 93% of shoppers will add more items to their shopping cart to qualify for free shipping
With staggering stats like these, it’s clear that free shipping can have a significant impact on the customer’s purchasing behavior. It’s a surefire strategy for getting higher conversions. However, it can also kill your profit margin if you are not careful.
So, how do you make free shipping profitable? We will explore a few strategies you can employ to offer free shipping and maintain a decent profit margin.
1. Inject Shipping Costs in the Product’s Price
As a consumer, which one of these two options would you choose when purchasing a product online:
- Option 1: $30 + $5 shipping fee
- Option 2: $35 with free shipping
Rebel CEO, Bill D’Alessandro, ran this test for a skincare product. Even though they were both the equivalent of $35 in spend, the conversion for option 2 doubled that for option one—a clear indication that the keywords “free shipping” influenced more consumers to buy.
2. Find “One” Most Suitable Shipping Company
Yes, using the services of one shipping provider can help to reduce your shipping costs.
As a seller, you must know that partnering with many shipping companies will cost you more. But when you partner with one shipping company, you stand a better chance to get a discounted shipping price.
But how do you find the best shipping company for your business?
Shipping is often the first indication of service quality so you’ll want a carrier that won’t disappoint your customers. Look for a delivery company that takes the least time to process and deliver the shipments to customers.
Also, tracking is very important to the digital customer.
You should, therefore, consider tracking when choosing a delivery company. The best courier service providers use route planning solutions that give customers real-time updates of their deliveries and the estimated time of arrival (ETA).
3. Exclude Items from Free Shipping
Another great and effective way to make free shipping profitable is to offer free shipping above a set threshold. For example, offering free shipping on orders above $50. This makes customers want to buy goods worth $50 and above to save those extra pennies.
4. Implement Membership Plans
This approach entails providing free shipping to your loyal customers only.
To implement this strategy, you’ll need to have a system for identifying your loyal customers in place. Amazon, for instance, has implemented this strategy very well. Join their Prime Membership and get free, fast shipping for eligible purchases.
Basically, you charge your customers to join your membership program, which offers benefits such as free shipping, prompt support, etc. Those customers will want to buy more from you to take advantage of their membership and the benefits that come with it.
5. Leverage Ground Shipping
A recent Bizrate Insights survey revealed that 90% of consumers are willing to wait longer for a free shipment. Hence, using ground shipping for free delivery can be a profitable option.
Ground shipping allows more time for carriers to ship their packages. Moreover, it’s affordable and more environmentally friendly than air cargo. So, if your customers are willing to wait a little longer for free shipping, take the ground shipping route.