3 Minute Read

Fast AND free shipping has become an expectation for most shoppers and it is something your eCommerce business can take advantage of to drive sales during the holiday season. We all know that free shipping is never truly free; someone has to foot the bill – and more often than not, it’s the retailer. With that said, you need to find ways to make it work with your business model.

Drive Higher Average Order Value (AOV)

Setting order thresholds is nothing new with free shipping. Blanket “free shipping” can cause more problems than it solves, so introducing a free shipping threshold during the holidays is a great way to prevent shipping and fulfillment costs from cutting too far into your margins. Fulfillment plays a key role in site conversion, with 65% of consumers looking for the free shipping minimum on-site before they even add products to the cart.

Many retailers set their threshold as the value that tips the order from loss to profit. A better approach is to take your catalog’s AOV and set your threshold about 5-15 % above it. The key is to not simply make money — but make more money than you are today by driving up AOV. This approach lets you avoid revenue loss on smaller transactions, while still being able to deliver free shipping alongside your competitors.

Offer Free Shipping For A Limited-Time

If you have a high engagement rate on your website but a low conversion rate, that may mean consumers need a nudge to make a purchase. Especially during the holiday season, increasing buyer urgency with a free shipping promotion will excite prospective buyers and turn window shoppers into paying customers. It’s a great way to drive sales. An example of a time-sensitive incentive might be “Order by December 12th for Free Shipping.” These incentives help give your buyers a semblance of control while managing their expectations. They are also a powerful marketing tool for your social media channels to enhance your value proposition and upsell your customers. Creating a dedicated promo code for free shipping is one of the easiest ways to offer this special.

Leverage Opportunities Where Shipping Is Cheaper

Consider offering free shipping in geographies that are close to distribution centers, which tend to be cheaper to ship from. With this approach, you can maximize conversion rates to help offset the revenue lost in locations where you can’t afford to ship for free. Similarly, you can limit free shipping to areas where you’ve been able to negotiate more competitive shipping rates. Another idea is to offer free shipping on items that are small and light which are typically less expensive to ship.

Offer Multiple Delivery Options

It’s extremely difficult for merchants to achieve the optimal balance between free and fast with just a flat-rate shipping option. While some will be happy with the speed as long as it’s free, others may find it too slow for their needs and may choose to shop elsewhere.

Giving customers more control over their delivery options comes with several benefits to retailers, most significantly, managing customer expectations. Offering one or more expedited shipping options in addition to free shipping is a great way to address all of your customer’s needs and provide the most flexibility.

Turn Free Shipping Into A Paid Loyalty Reward

It’s no secret that customers love loyalty programs – especially the ones that give useful loyalty benefits. A loyalty program brings the promise of continued business, eases the burden of shipping costs, and converts a one-time buyer into a recurring customer.

Given the love that customers have for shipping programs like Amazon Prime, it’s not surprising that so many are willing to pay for it. 64% of program members say they would be willing to pay to get benefits including expedited free shipping. And, after subscribing to a paid loyalty program, 62% of consumers are likely to spend more with that brand.

While a membership fee may increase purchase frequency for some, other consumers may not be willing to pay upfront to enjoy perks. An alternative is to set up a tiered system that provides more rewards with more purchases. About 63% of consumers say offering faster delivery influences them to sign up for a retail loyalty program.

Ramp up your loyalty programs to increase sales and offset the costs of free shipping. Don’t lose focus on your prospects, though. Realize that your new customers are hopefully going to be the ones participating in your loyalty program next year.

TL;DR

The consumer appetite for free shipping makes it a powerful promotional tactic during the holiday season. Testing different options is key to finding the most profitable free shipping strategy for your business. Research your competition, comparison shop just as your customers will and be creative. In the online shopping world where  customers have so many options, the right free shipping strategy can mean the difference between a sale and a lost customer.

 

Ready to discover how to implement methods like this into your own eCommerce business strategy - during the holiday season or ANY time of the year?

Smart Solutions has 15 years of eCommerce expertise and is ready to become your strategic partner. Let us know how we can help. We’re ready for you.

 

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