Free shipping is no longer an advantage but has become integral to a customer’s expectations. Statistics show that 73% of online shoppers claim that free shipping is a crucial factor when making a purchasing decision. As much as free shipping increases sales, absorbing costs can hinder profits without a proper plan in place. So, how can free shipping be offered without taking the financial blow?
This blog will outline the best practices to offer free shipping while attracting customers, increasing sales, and maintaining profit margins.
The Benefits of Free Shipping for Your Business
Free shipping impacts sales, customer retention, and overall competitive standing. Here’s how it can help your business grow:
- Reduced Cart Abandonment: Many customers abandon their carts when they notice shipping costs attached to their orders. Studies indicate that about half of online shoppers, or 48%, abandon their shopping carts due to excessive fees. Eliminating shipping charges can reduce abandonment rates and ensure people complete their purchases.
- Increases Average Order Value(AOV): Free shipping encourages customers to spend at least 30% more than they normally would. This can be accomplished with a minimum purchase threshold that increases the revenue per order.
- Competitive Edge: 85% of the general population prefers free shipping at the cost of fast delivery.
- Increases Customer Retention: This free delivery service increases customer retention rates by 96%, propelling existing customers to return to make purchases. This level of increased loyalty is usually attained through engagement strategies designed for new users. Consider investing in free shipping, as retaining existing customers is 5x cheaper than bringing in new clientele.
- Boosts Conversion Rates: Using the tagline “Free Shipping” at checkout compels users to make the purchase, thereby boosting conversion rates. A whopping 73% of consumers revealed that free shipping plays a pivotal role in their decision whether or not to finalise the checkout process.
- Strengthens Brand Trust: Free shipping makes brands appear more customer-friendly and, therefore, builds trust in them. Removing additional unwarranted fees motivates clients to remain loyal to the company and advocate the brand to others.
How to Make Free Shipping Affordable for Your Business
When it comes to promotions, free shipping is a double-edged sword. While it can increase sales and customer retention, failure to approach it right can compromise your profit margins.
- Setting A Minimum Free Shipping Order Value: Have your customers place bulk orders at their will. Some effective strategies are as follows:
- Set the free shipping limit to around 20% to 30% higher than the average order value.
- Use A/B testing methods to determine the best price.
- Include free shipping as an incentive at checkout to encourage customers to make bigger purchases.
- Change Product Prices to Absorb the Cost of Shipping: Set product prices to cover the cost of shipping instead of making a loss. Follow these practical approaches:
- Increase prices by 5% to 10%, but ensure they have lower competitors.
- Focus on changing only the prices of popular and highly priced items.
- Adjust the price to suggestive pricing (Changing from 500 to 499) so the increments are less visible.
- Only Offering Free Shipping On Selected Products: Narrow down the products to have more control rather than applying free shipping to all products to control costs. Check out these smart tactics:
- Consider free shipping on lightweight items or items with a high profit margin.
- Combine products to increase the total value of the order, thus reducing the profit margin on the shipping fees.
- Use free shipping to clear out stock that is not selling.
- Limit Free Shipping to Specific Locations: Provisions can be made for free shipping only in areas where logistics costs are less expensive. Some cost-saving measures are:
- Free shipping can be maintained within metro cities only, as they can be serviced at a lower cost.
- Cost-saving measures are more effective with the use of pin code-based free shipping.
- Free shipping within two hundred kilometers of the warehouse can be offered to try and reduce costs.
5. Collaborate with Low-Cost Logistics Suppliers: As mentioned before, logistics costs differ for different providers; however, after selecting one, savings can be obtained. These practices can help mitigate costs:
- Shiprocket Checkout and other ‘multi-carrier’ shipping providers allow easy cost comparison. The service that costs the least can be used, so make the right choice.
- Reduced volumetric weight of the packaging will assist in lowering the costs.
- Utilising a different courier company for shipment to various areas can be profitable.
6. Provide Complimentary Shipping at a Certain Sales Mark: While advertising, instead of giving complimentary shipping as a means to advertise, using it strategically tends to serve better. Some ways to enhance sales include:
- Simultaneously, free shipping is more effective while advertising on public holidays.
- Free shipping also to new customers increases the possibility of them making follow-up purchases.
7. Implement Free Shipping for Bulk Orders: Only apply free shipping to bulk orders to keep newly acquired customers loyal and assist with higher-value purchases.
- For B2B or wholesale orders, free shipping can be offered.
- To promote bulk shipping, different incentives can be set for different groups.
8. Balance Costs Redistribution Through Strategic Partnerships: Business collaboration involving logistics and marketing also helps balance shipping costs with expenses. Some shipping strategies are:
- Partnering with UPI and credit card companies to offer discounts on shipping services.
- Sponsorships paying for free shipping with logistics providers.
- Become a member of seller programs with subsidised shipping.
Free vs. Fast Shipping: Finding the Right Balance
Balancing free and fast shipping can optimise sales and customer satisfaction.
- Understanding Customer Preferences – Use survey tools and historical orders to pinpoint where free standard shipping (5-7 business days) and paid express shipping (1-2 business days) are most likely to be used.
- Use Tiered Shipping – Offer the following tiered options to customers:
- Standard free shipping (for items with long delivery times).
- Paid fast shipping (With delivery paid option, e.g., ₹99 for two-day delivery).
- Free Express shipping loyalty program memberships or Subscription-based.
- Use Free Shipping To Increase Sales – Offer free standard shipping to increase sale thresholds, free express shipping during campaigns, and free standard shipping for customers who frequently purchase from your store.
- Optimise Order Processing – Streamline order delivery by making automation investments, including using multiple warehouses and partnering with Shiprocket Checkout for cheaper delivery options.
- Dynamic Shipping Cost Adjustments – Disable free standard shipping to locations outside specific areas, charge for heavy items, switch to flat-rate express delivery, and enable charge-free express delivery for certain locations.
Is Free Shipping Right for Your Business?
Before introducing free shipping, it’s important to understand how it will impact your margins and customer expectations. To determine if free shipping is the right choice for your business, consider the following factors:
- Whether bulk orders or product bundles are offerable to offset the costs of shipping if an adjustment to the price is deemed necessary.
- Free shipping is ideal for digital items or high-profit margin products. However, it would not work for bulky, heavy items with low profit margins.
- Analyse customer demand through surveys and competitor research to see if free shipping could reduce cart abandonment rates and boost conversions.
- Test the impact of limited-time promotions or threshold-based free shipping offers before committing to a long-term strategy.
Make Free Shipping Easy with Shiprocket Checkout
Shiprocket Checkout makes offering free shipping profitable and hassle-free through automatic shipping, reduced returns, greater transparency, and low-cost options. Here’s how it will help your business:
- Transparent Delivery – Get estimated delivery times with real-time tracking for both standard and express shipping options.
- Cost-efficient Shipping – We offer cost-effective express shipping at a 30% discount via AI-based couriers. Delivery to over 24,000 pin codes across India, enables targeted free shipping offers in select regions.
- Reduced returns and RTO: Reliable couriers, address validation, and AI-automated fraud detection help lower RTO risks greatly.
- Effortless Integration: Easily integrate with platforms like Shopify to streamline order processing and fulfillment.
- All-in-one Dashboard: Manage orders, select couriers, and track packages seamlessly through an intuitive, user-friendly interface.
By enabling free shipping with Shiprocket Checkout, you can enhance the customer experience while saving on shipping costs.
Conclusion
Adhering to increased profits while providing free shipping must be done wisely to avoid customer dissatisfaction. Utilising reduced price ranges, cost-effective shipping, and minimum order requirements lowers expenses. With better logistics processes and fewer returns, free shipping doesn’t have to be a problem. You have the chance to grow your business by offering free shipping, which is more about providing value to customers than simply cutting costs.
With Shiprocket Checkout, you can access affordable shipping rates and faster order processing, making the checkout process smoother and more efficient.
