Customers love free shipping, but businesses have a love-hate relationship with it. On one hand, free shipping attracts customers who might not have otherwise bought something online, but on the other, the cost of shipping isn’t free for the business, and you make less profit per sale if you have to pay for shipping. Still, the amount of business brought in by free shipping makes it worthwhile if you try out methods that will make the offer less time-consuming and pricey for your business.
Invest in Shipping Software
Purchase comprehensive shipping software not only to easily print postage and labels, but also to save time and money. Software for businesses provides an easy way to keep track of how much you’re spending on shipping, so the free shipping promotion doesn’t get out of hand and you’re not wasting work time to chart the data yourselves. If you start by offering free shipping for a limited time, you can use data from your software at the end of the period to determine whether or not your business made enough profit to justify absorbing the cost of postage and packing materials.
Research the Best Rates
Rely on the software to conveniently research both the costs of shipping internationally and the cheapest way to send your packages domestically. If you’re clear upfront about how many days it takes for your packages to arrive, your business will save a lot by making your free shipping first class instead of priority. Domestically, first class mail takes between two and four days to arrive, whereas priority takes one to three days; the difference is negligible when you consider the savings. There are first class options for international mail, too, although the shipment will take longer depending on the country.
Your software will also be able to compare USPS rates versus the rates of competitors such as UPS and FedEx. Print postage and arrange pickup from any major carrier, and switch between carriers with ease.
Establish a Minimum Purchase Amount
A mistake a number of businesses new to free shipping make is to offer free shipping with any purchase. Yes, more customers will buy things, but they won’t think anything of buying a $5 item one month and waiting to buy a $2 item the next month, and your company will have to absorb the cost of shipping for both, which is likely to be more each time than the cost of the items themselves.
Put a minimum order requirement on your free shipping offer, anywhere between $25 and $50. Any less and you might not make a profit, any more and your offer may not attract buyers unwilling to spend that much at once. Customers will order everything they need in one order and may even order something they didn’t initially intend to buy, just to cross that free shipping threshold.
Offer Limited Time Offers
If you find you can’t afford to offer free shipping year-round, make it a limited time promotion. Time your free shipping promotion with Black Friday or Cyber Monday because it’s the busiest online shopping season of the year, and your competitors are likely to offer free shipping, too. You might even offer free shipping with no minimum order just for a day during this season.
You can also experiment with limited time offers throughout the year to celebrate a different holiday or drive up orders for a short time. Use your software to track the effectiveness of each offer to find the times when free shipping offers the maximum profit.
Make Free Shipping Unlimited With Membership
Follow the model of a successful online company like Amazon and offer unlimited, no-minimum-order free shipping only to customers who pay an annual flat fee of somewhere between $75 and $100. Some customers will take advantage of the offer and potentially cost you more than they make, but most will likely cost you less in shipping in a year than they pay in membership fees. Their fees will help offset your costs for the other customers’ shipping.
Forbes indicates 61 percent of customers will cancel orders if they discover they don’t get free shipping at checkout, and almost 50 percent of online orders do include the deal. Looking into ways to offer free shipping without taking a steep cut in profits has the potential to lead to more sales for your business. Find a way for free shipping to take up less of your time and budget, and you’ll gain an edge over your rivals still reluctant to experiment with the deal.
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