Tuesday, June 19, 2018

How To Offer Free Shipping Without Losing Money

You have amazing products, you know exactly how to package and ship your products, and you have steady sales from loyal customers. But even loyal customers keep their eyes out for better deals across the internet. The cost of shipping can make a huge impact on if a customer ultimately buys from you or not.

Unexpected shipping costs are the number one reason why shopping carts get abandoned during a transaction. You may not be able to offer free shipping all the time, but using free shipping as a promotion is a great way to get a spike in sales.

Your goal is to not only get more sales, but to show customers why they should stick around and shop with you in the future. Take these steps to update your website so it’s looking its best before you run your successful free shipping promotion.

Is Free Shipping A Real Thing?

Of course, no shipping service is going to ship your products for free, so when offering a free shipping promotion you’re going to have to absorb the costs.

The first thing you need to do is to calculate if a free shipping promotion will work for your company. The sad truth is it may not. Some companies simply will not be able to offer free shipping to customers without it negatively impacting their profit margins. If you’re considering offering free shipping as a promotion, you may want to reconsider if:

·        You sell large and heavy products, which are much more expensive to ship.
·        Most of your orders are shipped internationally, or to Alaska and Hawaii.
·        You have a low profit margin on many of your products.

For the rest of you, free shipping will likely help to boost your sales because you aren’t forced to absorb extremely high shipping costs. Here are some of the ways you can run your free shipping promotion without losing money.

1.      Set A Minimum Order Requirement

Setting a minimum order for customers to receive free shipping is an excellent way to boost sales, get customers to browse more of your products, and reduces the risk of you losing money during a free shipping promotion. Think about your average order size. The goal is to have customers spend more than that to get the free shipping. Your minimum threshold should be 10% to 15% higher than the average order on your website.

2.      Offer Free Shipping To The 48 Contiguous States

An easy way to avoid absorbing high shipping costs is to only offer the promotion to residents of the 48 contiguous states. You must make sure that his caveat is extremely clear. Don’t simply put it in the fine print, because this could lead to angry customers if they get to the end of the purchase and discover they have to pay shipping.

3.      Increase The Prices On Your Products

This could be a risky move depending on how many loyal customers you have. We don’t recommend increasing your prices by the full shipping cost, but adding a dollar or two to the product price can help to offset the cost of you covering the shipping.

4.      Adjust Your Return Policy

This is something you can add to the fine print of your free shipping offer. When customers return items that you’ve offered free shipping on, you’re taking a big financial hit since you paid to package and ship the product to the customer. State that items returned during the free shipping promotion are subject to a “restocking” fee equal to the amount it cost to ship the customer the product.

5.       Offer Free Shipping On Select Items

If you’re worried that free shipping isn’t feasible for everything on your website, consider offering free shipping on specific product categories that already give you a higher profit margin. By offering free shipping for specific types of products you can guarantee that you can absorb the shipping costs while still making a profit.

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