Amazon has changed the business game in many shapes and forms. But one of the most impactful things they’ve done is offer free (and fast) shipping. Like it or not, they’ve redefined the expectations of online shoppers. And whether you run a small niche shop or a large 8- or 9-figure online store, these expectations become your responsibility too.
Why free shipping gives ecomm businesses a huge advantage
#FeatureByShipbob: In this article, we will discuss why free shipping benefits ecomm businesses.
The Benefits of Offering Free Shipping
- Attracts More Customers. One of the biggest benefits of offering free shipping is that it attracts more customers to your business. In fact, studies have shown that customers are more likely to make a purchase when free shipping is offered, even if the cost of the product is the same as competitors. This is because customers perceive free shipping as a discount or added value, and it can sway their decision to choose your business over others.
- Increases Conversion Rates. In addition to attracting more customers, offering free shipping can also improve conversion rates. (Your conversion rate refers to the percentage of visitors on your website who actually follow through with making a purchase.) When customers see that free shipping is offered, they are more likely to complete their purchase and become a customer. This means that businesses can see an increase in their overall sales and revenue by simply offering free shipping.
- Boosts Customer Loyalty. Another benefit of offering free shipping is that it can help businesses build customer loyalty. Customers who receive free shipping are more likely to return to your business for future purchases. This is because they feel appreciated and valued as a customer, and they associate your business with a positive shopping experience. In turn, this can lead to repeat business and word-of-mouth referrals.
How to Strategically Offer Free Shipping
Amazon's Prime program, which offers free two-day shipping on millions of items for an annual fee, has set a new standard for what customers expect from online retailers. Many customers now expect fast and free shipping as a baseline, and may even be willing to pay a premium for it.
Other retailers have responded to Amazon's dominance in this area by offering their own free shipping programs, often with minimum order thresholds or other restrictions. This has created a new normal in the industry, where free shipping is no longer seen as a luxury or special promotion, but rather an expected part of the online shopping experience.
As a result, smaller e-commerce businesses may feel pressure to offer free shipping in order to compete with larger players like Amazon. However, there are practical ways to do so without losing the shirt off your back. Here are a few ideas:
- Carry products that are inexpensive to ship
One of the best ways to make free shipping more practical is to carry products that are inexpensive to ship in the first place. Digital products, household and beauty products, small electronics, clothing accessories, and athletic/training accessories (like foam rubber balls) are all examples of products that are relatively lightweight and inexpensive to ship.
- Set a minimum order threshold
Another way to offer free shipping without incurring too much expense is to set a minimum order threshold. For example, customers may need to spend a certain amount (such as $50 or $100) in order to qualify for free shipping. This ensures that businesses are not losing money on small orders.
- Use flat-rate shipping
Flat-rate shipping can also be a practical option for businesses that want to offer free shipping. With flat-rate shipping, businesses charge a set fee (such as $5 or $10) for shipping, regardless of the size or weight of the order. This ensures that businesses are covering their shipping costs while still offering a discount to customers.
- Offer a membership program
Why not take a page out of the Amazon playbook and offer a membership program for free shipping? Amazon charges $14.99 per month for free shipping (in addition to some other perks). They know that not every customer is going to incur $14.99 worth of shipping costs every month, so they actually come out profitable in some cases. And the ones that do are inclined to order more than they normally would otherwise (resulting in greater profits).
You might not be able to charge that much per month, but even a $4.99 monthly membership program can help alleviate some of the expenses associated with shipping costs.
Don’t Get Left Behind
If you’re still charging excessive prices for shipping, you’re missing out on sales and hurting your customer loyalty. Whatever you do, find a way to offer free or heavily discounted shipping. It’s the only way to remain competitive in the ecommerce space for years to come.
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