Free shipping can become your competitive advantage.
Most businesses focus the majority of their resources on driving customers to their website. But when the buyers get to the checkout, how do you make sure that they don’t just abandon their cart? How do you incentivize customers to buy more and buy now?
Research shows that free shipping is the #1 concern for customers when it comes to checking out, and great shipping experience can wow customers in real-life. But in this day and age of free and fast shipping, how do you compete with the likes of Amazon without completely eating away your margins?
Here are three things to consider when using free shipping for your business.
Customers don’t always need free shipping, they need options
According to Shippo’s State of E-commerce Shipping survey, 41% of shoppers say that they are willing to wait up to 4-7 days for a delivery. But others might need the item for an event tomorrow. Give customers the option to choose the shipping they need.
The key is to be transparent about transit times of all the shipping options so the customers can select the one that best fits their need.
According to the same survey, 86% of people said that if their shipment is later than initially quoted, they will be hesitant to order from the business again. So making sure that expectations are set correctly at the very beginning is very important.
If you’re going to offer free shipping, use it to incentivize an action
Research shows that 93 percent of shoppers will take action to qualify for free shipping, and the most frequently taken action is adding items to a cart to meet shipping requirements. You can capitalize on this by incentivizing shipping minimums in several ways:
Increase average order value
Only offer free shipping with a minimum purchase value. Determine your threshold by calculating your current average order value and setting the free shipping minimum slightly above it. This will drive the customer to add at least one more item to the cart in order to qualify.
Just be careful not to set your threshold too high. If your average order value is $20 and you set your free shipping minimum at $200, you’re not offering enough savings to counteract the increased spend by the customer.
Free shipping as a promotion
You don’t have to offer free shipping year round nor do you have to offer it for all items. Free shipping can provide a welcome boost in sales. Whether it be for the holidays or for clearing out old inventory, a limited time span provides an incentive for customers to buy now.
Also don’t forget that you can just offer ground services for free shipping. According to research, 50% of shoppers will choose a slower transit time to qualify for free shipping, and 83% of them are willing to wait an additional two or more days to get free shipping.
Measure the impact that shipping has on your business
It’s important to measure the impact of any changes you make to determine the success of individual approaches. Shipping can make a huge difference in your revenue stream and customer retention, so track results accordingly. Key metrics to track:
- Conversion rate: Are more visitors converting into buyers with more shipping options at checkout, or during a free shipping promotion?Conversion rate: Are more visitors converting into buyers with more shipping options at checkout, or during a free shipping promotion?
- Average order value: What was the previous average order value? How much has the average order value increased since implementing a free shipping offer?Average order value: What was the previous average order value? How much has the average order value increased since implementing a free shipping offer?
- Margin per order: How much is the cost of free shipping eating up? Is the extra sales making up for the cost of free shipping?
Evaluating these three data points will help you determine the success of your free shipping approach.
You should never be offering free shipping just because your competitors are. Utilize it to your advantage and get creative. You can use services like Shippo to leverage shipping across your entire business not only to drive sales, but also to alleviate customer support, prevent fraud, and add to the customer experience as they unpackage their shipment. Use shipping to improve your business across the board this holiday season.
Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.