10 Strategies to Offer Free Shipping for Online Businesses
Published on August 23, 2023
Do you believe in the power of free shipping? Hmm, let’s put it like this. Try placing yourself in the shoes of your customers.
What would you rather buy? A $20 product where you have to pay an extra $5 for its shipping fee? Or a $25 product offering free shipping?
I know, I know. It’s exactly the same! But would you believe that 90% of online customers will choose free shipping?
Yup, that’s right! And there’s also a study saying that 60% of online shoppers abandon their carts due to extra costs.
Now, this is bad news for e-commerce businesses like yours, right?
Cart abandonment often equates to poor user experience or a broken sales funnel. Two things you’d never want your business to encounter!
But, is it really possible to offer free shipping without breaking the bank? Can your business effectively reduce your shipping expenses while doing it? And finally, is it worth it?
Yes, yes, and yes!
In this guide, we will walk you through the 10 best strategies to offer free shipping and how to reduce your shipping expenses.
So, are you ready to start winning the shipping game? Let’s go!
1. Offer Free Shipping on Everything
Let’s begin with the easiest and most practical way to make your customers happy — free shipping on everything!
It’s actually simple. And statistics back this claim! 73% of online shoppers are more likely to buy a product if it offers free shipping.
Now you might be wondering, is this strategy really applicable to all businesses?
Quick answer? No. But it depends on your profit margins or the type of products you ship.
For instance, if your business ships lighter items such as those that fit into smaller envelopes, then this strategy will work!
Carriers like Purolator offer lower shipping rates if you use their shipping envelopes for your products. What a great money-saving tip, right?
2. Have a Minimum Spend Threshold
Another brilliant strategy is to offer free shipping once customers reach a minimum spend threshold.
Now, this strategy allows your business to hit two birds with one stone.
How? By covering your shipping costs and at the same time encouraging customers to buy more products. A win-win situation indeed!
Forbes even said that 52% of online shoppers add more items to their cart to qualify for free shipping. Making this strategy even more reliable.
But wait, there’s more! We have something special to share with you and it’ll definitely help you master this strategy.
When we were starting our online store, we stumbled upon a dilemma — how do we offer free shipping without burning a hole in our pockets?
So we tried our best to come up with a strategy until we discovered our very-own highly scientific formula!
Here’s how it goes:
- Simply divide the total revenue by the number of orders to get the average order value (AOV). For instance, if your revenue is $1000 from 100 orders, the AOV is $10.
- Set a threshold above the AOV. When we applied this, our AOV was $70. So, we set our threshold at $80, meaning customers who purchased more than this got free shipping.
- Review product combinations. Before setting the threshold, we examined the mix of products most customers bought. This ensured we had enough buffer to cover the shipping costs.
So if you’re asking — how’d it go? I’d say impressively well!
Our average order value now stands at a whopping $100+ per order. Yet, we've kept our promise, still offering free shipping for orders over $80.
3. Only Make It Applicable for Select Items
Offering free shipping only on specific categories or particular items is actually a very common strategy in the industry.
This strategy is usually employed during promotional campaigns or when you’re planning to boost sales for a certain product category.
Choosing the right products and discovering the perfect price threshold makes this strategy even more effective. How? By keeping your customers engaged to return for more!
4. Conduct Seasonal Free Shipping Offers
You have to admit, there’s absolutely magic in the air during festive seasons and grand sale events!
End-of-Year activities, Black Friday, and the Holiday Season are the perfect opportunities to sprinkle some of that magic onto your sales. But, how exactly do you do that?
Simple. By introducing free shipping specials! Shoppers are already in the mood to splurge during special occasions like these. So better make the most out of it!
In fact, a study revealed that 53% of merchants ramped up their free shipping offers during the holiday season compared to other periods.
5. Do the “Amazon Prime” Approach
Amazon, one of the largest retailers in the world, found a remarkable way to offer free shipping. How? By establishing a membership club called Amazon Prime.
Basically, members have to pay an annual subscription so they can enjoy free shipping all year round together with other coupons and discounts!
But there’s a trick that Amazon used to make all of these work — fast shipping. For example, I ordered a product that is set to be delivered on November 12th. Guess what? I already received it by the end of October!
What’s even more interesting is that they discovered that Amazon Prime members order much more products compared to non-members. Giving Amazon more recurring income.
So if your business has the right product and a strong customer base, then consider borrowing a page from Amazon’s playbook!
6. Reward Loyalty
Did you know? One golden rule in business is to always reward your top customers’ loyalty.
Why? Because it’s more expensive to acquire new customers than retain the ones you already have!
And what better way to reward your loyal customers than by giving them the privilege of free shipping, right?
To make it even better, here’s research indicating that free shipping can amplify the repeated sales of a business by a staggering 45%!
See? It’s crystal clear that rewarding loyalty doesn’t just keep customers happy — it's also a very smart business move.
7. Include Shipping Costs in the Product Price
Ah, this one always sparks a debate from different businesses. But if you think about it hard enough, it actually makes a lot of sense!
Let’s say that your product isn’t very competitive. That it only has a few competitors in the market and that price comparison websites don’t focus on your product much. Don’t you think offering free shipping might help?
Let me ask you this. Have you ever decided to buy a gadget online but upon checking out, a lot of additional costs suddenly show up?
Absolutely upsetting! Right? This causes a lot of friction for buyers which usually leads to cart abandonment.
So to eliminate this friction, simply include the shipping costs to your product price. Hence, offering free shipping!
8. Only Free Returns
Have you ever heard about “The Little Dog Technique?”
No? Well, it goes like this — imagine yourself walking into a pet store with your kids. Then, you see a very cute little dog that your whole family absolutely falls in love with.
Of course, you as a parent are a bit reluctant to take the little dog home, right?
But then the pet shop owner says “Look, take the dog home. Then tomorrow, if you regret your decision, bring it back to me.”
What are the chances that the little dog will return to the pet shop? Almost impossible!
This is what Zappos mastered back in 1999. It’s an online shoe company that introduced free returns to all its customers.
Their strategy? Allow customers to order shoes, try them on, and keep what they loved. Returning the rest for no cost at all.
The result? Increased customer confidence and a boost in sales. Simply because most customers ended up keeping all the products!
9. Flat Rate Shipping
Another strategy would be to offer uniform shipping rates no matter the number of items your customers order. Or in other words, flat-rate shipping!
This approach encourages online shoppers to buy more products. Hence, effectively increasing your sales.
How? Well, let’s say that it only costs $10 to ship any product. Then I better buy and order as much as I want, right?
10. Location-Based Free Shipping
Finally, try offering location-based free shipping. Now this may be an unconventional method, but it can be a game-changer if you play your cards right!
International shipping is known to be much more expensive compared to local shipping. So to encourage your local customers, try to offer free shipping only within your region or country.
Now, How Do You Reduce Your Shipping Costs?
- Negotiate Rates First: Never settle for the first price. Always discuss and try to get the best rate for your business.
- Join a Buying Group: Consider being part of the Buster Fetcher Shipping Club! Members of our buying group are often surprised because of all the amazing discounts they receive. Indeed a lot better than directly dealing with couriers like Purolator.
- Package Smartly: Here’s a pro tip — did you know that leaving just a 2 to 4 cm space around your product in its packaging adds about 6 to 10% more to your shipping costs? Yup, so wrap your packages efficiently!
- Minimize Those Surcharges: Always look for ways to reduce any additional charges. Hey, you won’t believe how much our customers saved just because of the analysis report we created for their Canada Post accounts!
- Claim Refunds for Your Late-Delivered Packages: Now, this is pretty much the best way to lower your shipping costs. Did you know that Buster Fetcher had customers who were able to refund 57% of all their shipping fees in just one month? Yes, you read that right. 57% in one month!
Offering Free Shipping While Cutting Costs: Takeaway
So there you have it! With strategic planning, data-driven insights, and a pinch of creativity, offering free shipping to your customers can absolutely do wonders for your business.
What’s even greater is that you can also enjoy considerable savings on shipping costs while doing so!
Surprisingly, a lot of companies nowadays actually want to keep paying more for their shipping fees. But hey, since you’re reading this, I believe you aren’t one of them!
So if you want to lower your shipping expenses and get all the refunds you can have, don’t hesitate to contact us at busterfetcher.com or simply dial 1-844-311-3088.
Remember, with Buster Fetcher, if we can't secure you your savings, you won't owe us a dime. Reach out today!
References:
- How Free Shipping Influence Online Buying Decisions
- Shipping Made Simple: Why Free Shipping is a Must-Have for Online Retailers
- Survey: 64 Percent Say Free Shipping is the Most Effective Promotion
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