Free shipping in e-commerce: how to avoid losses

According to research by ComScore, free shipping is one of the factors that most pleases customers in e-commerce and has already led more than 63% of consumers to add more items to their cart.

While it's obvious that consumers prefer online stores that offer this benefit, the question remains: how can this be provided without incurring losses?

Why offer free shipping in your online store?

The issue is simple: if an e-commerce site charges for shipping, the store risks losing the customer to one that offers more flexible shipping policies.

On the other hand, if the online store chooses to offer free shipping without proper planning, it puts its profit margin at risk.

Many studies point to free shipping as a key factor in the constant expansion of sales in e-commerce.

Although it often doesn't result in significant savings for the customer, conversion rates usually take a healthy leap when this option is displayed.

Why do sellers who offer free shipping get such great results? Here are some of the most cited reasons:

Consumers want to know the total price of their purchase as soon as possible. Forcing buyers to go through the entire checkout process before they can find out how much shipping costs is a source of irritation and frustration for many people.
"If you do something nice for me, I'm more inclined to do something nice for you..." and free shipping is a much-appreciated gesture. This common thought generates customer satisfaction and willingness to buy from the store.
The Baymard Institute puts the average cart abandonment rate at 68.8%. When shoppers were asked why they abandoned their cart during checkout, 40% cited extra costs (i.e., shipping fees).

It's undeniable that offering free shipping attracts consumers, but the question remains: how do you make this offer without losing money?

- How to prevent shopping cart abandonment in e-commerce

How to offer free shipping and still make a profit

To begin with, you should consider free shipping as a way to get a better return on investment.

The correct implementation of this benefit usually increases the conversion rate, the average order volume, customer retention, and profit.

The first thing to do is decide which offers you want to try.

Here are eight ideas on how to implement free shipping on your e-commerce site.

1. All in

A riskier strategy, some retailers choose to increase product prices to absorb the shipping cost, while others analyze profit margins and calculate the extra sales volume needed to offset the shipping costs incurred.

This option needs to be carefully evaluated, and perhaps offered only for a specific period of time.

Ideally, apply all in free shipping as a flash sale or special occasion promotions.

- How to calculate shipping costs in e-commerce

2. Minimum purchase amount

This is usually the most viable option. Customers who are close to reaching the order value for free shipping end up buying additional products to reach the required limit.

That contributes to significantly increasing the average order value and helps offset the shipping costs absorbed.

Ideally, you should set a minimum order value that is higher than your current average order value.

3. Flat rate shipping

This is not a free shipping offer, but it greatly alleviates buyer anxiety.

Those who know the shipping cost before adding items to their cart are more likely to place an order than those who don't know the total cost until they're ready to pay.

- Flat-rate shipping: advantages and disadvantages for e-commerce

4. Select locations

Given the sometimes exorbitant cost of shipping to more remote regions of the country, many e-commerce businesses offer free shipping only to capital cities or regions close to the distribution center..

Another possibility is to offer free delivery from the distribution center to a local point of sale.

5. For members only

Making this benefit available to loyal customers is a good way to value the consumer and increase loyalty to your brand.

You can create an affiliate program, for example, giving members one more reason to shop at your store.

– How to offer a customer loyalty program in e-commerce

6. Special offer

To shake things up, create a marketing campaign offering free shipping for purchases made during a specific event or date.

You can even make the offer exclusively to a VIP group of customers as a loyalty reward, or as an incentive for those who haven't placed an order in a while.

- How to build customer loyalty for your online store

7. Selected products

Some products are more advantageous for offering free delivery than others.

Consider shipping costs and profit margins, and then test free shipping for items that make financial sense.

This method can also be implemented as a way to increase sales of items that are "stuck" in inventory.

8. Free shipping for kits

Some retailers use the tactic of selling bundled products. For example, "Buy a hair dryer and a styling brush and get free shipping."

Others use the "buy one, get one free" offer to encourage the purchase of multiple items. Or they assemble pre-packaged kits with products that would cost more if sold separately.

Study a few options that make sense for your e-commerce business and choose two or three to test.

Finally, observe and compare the results obtained to decide which is the best solution for your business.

- 5 ideas for putting together product kits and boosting sales

Advantages of having a reliable delivery partner

free-shipping-app-delivery365

Online shoppers often make their purchase decisions based on shipping costs and delivery time.

Many retailers have already discovered that incorporating free shipping as part of their strategic plan means increased sales and revenue.

Remember that fast delivery is a fundamental aspect of any e-commerce operation and it has a direct impact on customer satisfaction, which in turn influences the sales volume.

Therefore, a good shipping service means more profit for your store and increases your ability to offer free shipping, generating even more revenue.

With the Delivery365 app you create your e-commerce store and gain access to tracking technology, your own shipping calculation system, online payment options, and a database of hundreds of registered delivery drivers.

– 7 Advantages of Order Tracking in E-commerce