5 Ways to Offer Free Shipping Without Losing Money
Free shipping is a great way to increase sales, but you need to avoid losing money in the process. Here are 5 ways to ship free and still make a profit.
It’s no secret that online shoppers love free shipping. So it stands to reason that shipping for free is a great way to increase your eCommerce sales.
However, the last thing you want to do is cut into your profit margins. After all, what’s the point of making more sales if you won’t also be making more money? Luckily, there are several creative strategies you can use to offset your fulfillment costs. Here are 5 ways to boost conversions and profits by offering free shipping without losing money.
Adjust Your Product Prices
Here’s the most obvious and well-known method to ship free at a profit. Just roll your fulfillment costs into the base price of your products.
For example, imagine you would typically charge $23 for an item, but it costs you $5 to ship it. Then just price the item at $28 with free shipping. This hides your delivery expenses while still making shoppers feel like they’re getting a deal.
It may seem like there’s no point in doing this (because shoppers are still paying the same price either way). But you might be surprised at how many more sales you make by deploying this strategy.
For starters, offering free shipping means your customer doesn’t have to do any math to figure out how much an item will cost them. In the above instance, they immediately know the cost is $28. Secondly, a wealth of shopping psychology data suggests that customers are far more likely to complete a purchase when no-cost shipping is offered.
Take this infographic, for instance. It shows that in a recent survey, 90% of shoppers named free shipping as their top incentive for buying online. Furthermore, the same infographic includes statistics stating that 88% of respondents to a survey said they would purchase an item online if they were offered free shipping.
Set Minimum Purchase Amounts for Free Shipping
Another way to ship free without losing money is to set minimum purchase limits on your free shipping promotion. With this approach, rather than shipping all items for free, you are only offering no-cost shipping when a customer spends a certain amount on their order.
You’ll want to base this amount on your fulfillment costs. In other words, do the math and set your minimum requirements at a number that makes shipping for free profitable to you. Sellers often choose a flat amount, such as $25, $50 or $100. VictoriasSecret.com, for example, is currently offering free shipping on all orders over $50 (with the use of a promotional code).
And, in addition to helping you tap into the shopping psychology surrounding free shipping, this method also encourages your shoppers to buy more from your store in order to get their total order cost to the free shipping threshold.
Only Ship Big-Ticket Items for Free
Next up, choose only certain items to ship for free. This technique involves only shipping items of a certain value for free. The reason this method is profitable is similar to the previous strategy, because you are only shipping items for free that cost enough to still leave you with a healthy profit margin.
For example, shipping a laptop charging cable for free might not be profitable for an electronics seller because the item’s cost isn’t high enough to offset fulfillment expenses. However, the item price for an actual laptop probably would be. So the seller could ship all laptops for free, while still charging shipping fees on cables and accessories (unless bundled in the same order with the laptop, which we’ll have more on in the next section).
Offer Smaller Products as “Add-On Only” Items
Speaking of laptop charging cables, you can ship for free at a profit by taking a page out of Amazon’s book and offer smaller products as “add-on only” items.
This is an especially useful technique if you’re an eCommerce seller who offers free shipping on all orders. When selling small items such as hair brushes or laptop charging cables, you could really lose money on any single-item orders for those products. However, by designating them as add-on only items, you are saying that only shoppers whose order amounts reach a set threshold can add those items to their cart. Similar to the previous two methods, this keeps your orders at a dollar amount that results in a good profit margin for you while still enabling your shoppers to receive free shipping.
Save Money Elsewhere
Finally, if you want to ship orders for free without losing money, look at cutting costs wherever possible. This starts with making sure you’re using the right courier(s) for your fulfillment in terms of quality, speed and value. But it also includes reducing expenses in other areas of your business.
Look at every aspect of your company from inventory acquisition to advertising costs and make sure you’re managing your budget effectively while still setting yourself up to grow and thrive.
For many eCommerce sellers, the best way to save (and make) more money is to shore up their customer service. In fact, we here at Replyco refer to poor customer service as the “silent killer of online sales.” That’s because online sellers often lose way more sales than they think by dropping the ball when it comes to support.
Luckily, Replyco can help. By centralizing the messaging from all of your marketplaces and platforms, you can dramatically reduce response times and thrill customers. You might even be able to reduce the need for more support staff and save money on payroll!