Experiment with proposed minimum order thresholds by testing them out in this formula:. For example, even a high-end eyewear shop sells cart-stuffers like lens cleaners and microfiber cloths. Providing free shipping on an order of low-margin items like these alone could easily put you in the red. So, another approach is to offer free shipping only on certain products.
This works on items that have a low shipping cost and high enough markup to maintain profitability after shipping fees are factored in. The HSN promotion below advertises free shipping on a host of specific product categories, hoping to attract shoppers looking for a new laptop, kitchen appliance, or beauty product. Another option is creating a limited-time free shipping offer. We know from writing product descriptions that creating a sense of urgency is an effective way to drive sales, and the same concept applies to discounts or promotions.
Give customers free shipping during a holiday or to commemorate a current event. If you already offer free shipping on orders above a certain amount, lower the minimum threshold or get rid of it altogether. The idea is to excite prospective buyers and turn window shoppers into paying customers.
Promotional events work through getting the word out—so create an eye-catching post for your social media accounts, send a digital flyer to your email marketing list, or invest in some online advertisements.
This free shipping promotional event is advertised using dazzling graphics and holiday-themed visuals. Source: Origami Owl. To lose less money on free shipping, offer an economical delivery option for free.
At checkout, allow customers to upgrade to faster delivery by tacking the cost of shipping onto their total. After entering an email and shipping address, customers are given the option to upgrade the delivery speed of their order. Source: Grande Cosmetics. A simple way to offer free shipping on your Amazon orders is to partner with Fulfillment By Amazon. Most FBA products automatically qualify for Prime shipping, which is both free and lightning-fast.
This benefit comes along with the convenience of outsourced fulfillment. Conditional free shipping is usually the best way for small businesses to get the promotional benefit without taking a detrimental loss. Customers love simplicity, and the all-inclusive amenity of unconditional free shipping can serve as a major sales driver. This especially applies in the age of Amazon and other juggernaut retailers , which manages to offer free shipping on over million items.
There are two main ways to do it:. The truth is that customers often prioritize access to free shipping over the standard price of an item. The perceived value of free shipping is often much greater than economical—or even discounted—pricing thanks to the nature of shoppers and humans in general to irrationally value free things.
Similarly, the perceived value of an item itself is highly influenced by how much it costs. Adjust your pricing storewide based on average order value, average number of items per order, and average shipping cost. Then advertise the enticing convenience of always-free shipping on every order. To make this model work, you must have high profit margins and closely control your fulfillment and shipping costs. Small, pricey goods that ship in manageable, lightweight boxes—such as jewelry, watches, collectibles, fashion accessories, cosmetics, and supplements—tend to fall into this category.
There are two types of free shipping you can offer: conditional or unconditional. Conditional free shipping sets conditions for your customers to be eligible. Unconditional free shipping means the customer can receive free delivery on every order. The products or order value does not matter. Someone has to pay the costs. This is possible by either raising product prices sitewide to factor in the logistics costs, or for the retailer to absorb the cost from their margins.
But if you do this, you may risk struggling to compete with your competitors price-wise. The alternative is to use profit margins to cover the cost of the shipping. However, if you offer free delivery without factoring the shipping cost into every single product, you could face huge shipping costs that — depending on what you sell — could completely wipe out your profit, even causing you a loss.
This is a decision you as a retailer will need to make. Access all the aspects mentioned in this article profit margins, competition, brand image, cost of logistic services, etc to judge whether you can offer free shipping unconditionally. Of course, the more you ship, the cheaper your shipping will cost. As larger companies ship more packages, the cost of delivery is cheaper for them. This gives them the advantage to offer free delivery to their customers, making it harder for smaller businesses to compete.
For most companies, it might not be possible to offer unconditional free shipping. Probably the most common solution, set a minimum spend threshold for your customer to receive free shipping. This is a simple way to avoid losing money on smaller transactions. As mentioned, customers are willing to pay more if it means they can get free delivery.
If you choose this strategy, note that some customers may spend more with the intent to return some items just so they can get free delivery, especially if you also offer free returns. For this strategy to be cost-effective, you must ensure the minimum amount is greater than what a customer would usually spend.
This helps offset the logistics costs of free shipping. But if you make the threshold too high, customers will most likely not spend more money. Make sure to round up for a more standard value e. Offering a limited-time promotion for free delivery can help turn window shoppers into paying customers. It provides a quick increase in sales, with existing customers coming returning to take advantage of the free shipping. To make this promotion work, both new visitors and existing customers need to be aware of the promotion.
Target past customers with email marketing to increase their incentives to return to your store and place an order. Ensure you advertise with social media and website banners to get the word out to new visitors.
They need to be aware of the limited timeframe to get free shipping to be encouraged to place an order. Clearly state on the product pages for items that shipping is NOT free why the customer has to pay for shipping. For example, if the product is heavy or an awkward size. Some retailers choose to offer free shipping and other benefits as a promotion to their loyal customers.
This incentivises them to keep returning to buy from the store. This is a clever strategy if you want to maximise longer-term gains of free delivery and increase the lifetime value of your customers.
Subscription services are also rising in popularity. This option is also most likely only relevant for your most loyal customers. You may recognise this concept from the famous Amazon Prime.
A subscription service is again a great incentive to maximise the value of your existing customers. This will ensure you limit the loss of money on the logistics costs. Most carriers will have a slower, low-cost shipping option which is much cheaper. This tells us that consumers want free shipping so much that they are willing to buy more just to get the incentive.
Now, onto how to market your offer effectively so you can capitalize on this shopper behavior. The video also shows how to engage a shopper with a promotion once they reach the given threshold. When it comes to the holidays, shoppers are looking for the best deal possible. This exposes retailers to a massive increase in cart abandonment rates. Since we know that the top reasons for cart abandonment generally have to do with price and shipping costs, we can meet our shopper needs by offering free shipping to abandoning shoppers on the cart and checkout pages.
Note: If you plan on setting up free shipping offers with limitations, you will have to customize your promo codes or your checkout process within your cart platform to accurately apply discounts. This is the same as your pop-ups and promotions. You can implement display rules based on time, date, cart value, past order history, product specifics, geo-location, and much more. Now that you have perfected how to offer free shipping to your customer, how will you ensure the order will make it to its destination on time?
Many factors, including sales channels not being synced, improperly managed inventory, overselling, and fulfillment mistakes can be detrimental to a business.
Prepare for the influx of sales by doing the following:. Forecast sales: Planning ahead through forecasting is an important step to ensuring you have the proper amount of inventory for the holidays. Calculate Safety Stock: Calculate the minimum safety stock items sold per day x days it takes for new inventory to arrive for your bestselling inventory, so you always have a buffer on hand.
Automate: Take the hassle out of managing your inventory this holiday season through automation. By using an inventory management software or shipping automation system, you can have more time to focus on other, important operations of your business. Free shipping is an enticing offer for customers and has proven results for businesses. This holiday season use one of these ideas for offering free shipping and watch the sales roll in.
How to make free shipping budget-friendly Offering free shipping throughout the holidays can be difficult for small businesses. Here are some different methods for you to try out: Hide the Shipping Cost in Price: Factor in the cost, or at least some of the cost, of shipping in the price of the item.
Free shipping threshold promotions As discussed earlier, you can make free shipping work for your business by setting up restrictions.
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