Free shipping. They’re two little words with big impact. For many consumers, it’s the deciding factor when making an online purchase. In fact, 86% of shoppers abandon their shopping cart due to shipping costs, and 93% claim that free shipping incentivizes them to add items to their carts.
Add two-day shipping to the mix and you’re golden. With over 200 million members, Amazon Prime has proven that instant gratification is becoming an expectation. Since Amazon can provide instant gratification at "no cost" to the customer, people buy things simply because they can. The appeal of saving money is very real, but even the illusion of savings is enough for shoppers to take action and hit that order button.
Still, in the absence of a time crunch, 88% of shoppers actually prefer free shipping over fast delivery.
Chances are your customers are coming to your business because it offers something unique or superior in quality. Yet, one of the biggest deterrents that consumers report about shopping online is shipping costs. The fact that over 40% of online shoppers research delivery fees highlights the importance of offering free shipping, not only to incentivize them to complete their order, but also to reach a larger demographic. If you can swing it, you’ll find that free shipping builds brand recognition, increases customer loyalty, and improves your conversion rate. But what about your bottom line? After all, eCommerce shipping accounts for a large portion of your business costs. However, as long as you’re careful not to kill your profit margins, free shipping can actually have a huge pay-off for your eCommerce business.
Looking for a way to make free shipping profitable? Here are seven.
1. Fulfill and ship with a 3PL partner
A third-party logistics (3PL) partner gives you access to discounted rates that you otherwise can’t get on your own. This is because their partnership with multiple carriers offers them volume discounts— so you get exclusive Canada shipping rates and pocket the difference. A 3PL partner can also handle your warehousing and eCommerce fulfillment, letting you spend more time focusing on growing your business and less time fulfilling orders.
2. Include shipping cost in product prices
This provides some compensation for the Canada shipping costs and works well for items that are unique or difficult to price shop across multiple stores. In this scenario, customers may be more willing to pay $25 for an item with free shipping than $20 plus $5 for shipping. Even if the higher price doesn’t fully cover the shipping cost, the difference may be offset by the additional orders you’ll get when you offer free shipping.
3. Set a minimum purchase value requirement
Shoppers will often do the most to ensure they meet the minimum order value that qualifies for free shipping. This approach typically increases average order values, raising your margins within certain product categories. Figure out your free shipping threshold and then incentivize your shopper with an in-cart upsell. It works.
4. Offer special free shipping deals on select items
Offer free Canada shipping on products that are a bit pricier, or products you want to sell more of. Include products whose shipping cost is low. This boosts your sales and compensates for shipping costs. On average, orders with free shipping are 30% higher in value.
5. Use only ground shipping
There are many ways to reduce your shipping costs, and one is to only offer free Canada shipping through your least expensive option. Ground shipping can cut your free shipping expenses by over 50%. If the majority of your orders ship domestically, ground Canada shipping is your most cost-effective option. Signing up with a shipping company also gives you access to competitive shipping rates.
6. Offer limited-time free shipping
Shoppers love sales and specials. Offer free Canada shipping on your products for a limited time— like during holidays or even for just 48 hours once a month. This draws new customers to your business and reminds existing ones to return to your store and take advantage of your limited-time offer, pushing them to purchase items they’ve been thinking about buying. They’ll be tempted to buy your product now because free shipping won't be there tomorrow.
7. Use Amazon FBA
Gain access to over 200 million customers by offering select products through Amazon Prime, and cut your costs with Fulfillment by Amazon. It’s not free for merchants, but the volume and efficiency your business will gain though Prime and FBA can offset your costs. While there are strict guidelines set by Amazon, this barrier is easy to overcome. eShipper’s Amazon services ensure that the process of expanding your eCommerce business to Amazon is a smooth one.
Whether it’s unconditional or restricted, consider free shipping for your business. Test it out and see how it works for you. The numbers will speak for themselves. If you need some help setting up your free shipping model, contact us and we'll have one of our business development team members get in touch. If you are interested in expanding to Amazon FBA consider Sequence to get you started.
