Quick Guide to Offer Free Shipping (+ Maintaining Profit Margin)
Finally, decided to buy that one product I was eyeing for a while now. With thrill added it to the cart, hit that checkout button. And there it is, one that makes the eye roll; shipping charge!
Next?
Press ctrl+w & wait for the site to have a free shipping scheme.
A lot of you can relate, right?
Access to click & collect technology, anytime-anything-anywhere delivery & of course, Amazon Prime. Buy in-store, get it delivered at your door-steps or maybe buy online & pick-up in store.
All these factors contributing to make the shopping experience more centralized has somehow lifted the customer expectations. One such expectation is free shipping.
As a store owner, free shipping is a great way to reassure customers towards your brand. Moreover, it’s quoted by ShipStaion:
Customers overwhelmingly prefer slower, free shipping when purchasing for themselves, but they are 76% more likely to pay for express shipping when buying gifts.
So, in a world of ‘You get what you pay‘, free shipping is more of a default slower option. Whereas, when customers pay for the delivery, they expect it to be super soon. Thus, making it a premium option, just like what Amazon is doing with its prime membership.
Nevertheless, it is proved that pulling out shipping costs can help you reduce abandoned cart rates. Moreover, having various shipping options also influence conversion rates.
Offering Free Shipping
Free shipping comes with a cost. So, if you aren’t aware enough, it can also kill your profit margins.
Let’s look into the four ways you can incorporate free shipping in your eCommerce store.
Injecting Shipping Cost in the Product’s Price
Buying a product for $10 with an extra shipping cost of $2 looks like a lot whereas, buying a product for $12 with free shipping always seems to be a good deal.
Large online marketplaces such as Amazon and eBay have started pushing their sellers to include shipping costs in the purchase price. A smart way to save your customers from the fear of shipping cost & on the other hand, saving your profit margin.
Offering Free Shipping above a set threshold
Another great & effective way is to provide free shipping above a set order amount. For example, providing no shipping charges on orders above $20. This makes customers to at least buy something of worth $20 to save those extra pennies.
This is a widely used technique and is doing absolutely well in the market. What’s great is that this is just another way to pump up your store’s average order value.
Implementing Membership Plans
Provide free shipping to your loyal customers.
Amazon is one such marketplace that’s implementing the technique very well. Join their Prime Membership and get free, two-day shipping.
You charge your customers to join your one-year membership program. In the program, you offer them free shipping & other facilities. Psychologically, those customers will somehow be bound to make multiple purchases from your website since they have the membership & want to utilize it as much as possible.
Ultimately revving up your sales rate, average order value, and repeat customer rate!
Bonus Point: Use the left-digit effect
The left-digit effect is most commonly practiced these days. It’s more of a psychological trick. If you don’t know, let’s see what it actually is:
You might have seen everything priced $39.99, $29.99, or $19.99? More specifically, all the product prices ending with “.99”. This is called charm pricing.
Charm pricing is most effective when the left digit changes. A one-cent difference between $3.80 and $3.79 won’t matter. However, a one-cent difference between $3.00 and $2.99 will make a huge difference.
Our brains encode numbers so quickly and identify it’s weight even before reading. So, using this technique for your store’s product price & shipping cost can help you with the conversion rate.
Check out Gumroad’s sales:
Over to you!
Implement the following techniques to your online store & run A/B testing to see which makes the most output. Drop your views in the comment section below!
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Until next time. 👋