Including free shipping as part of your e-commerce shipping strategy this holiday season can potentially increase your sales. It’s also the best way to keep up with the online giants. For perspective, in Q3 of 2016, Amazon spent $1.74 billion on free shipping. It’s probably no surprise that free shipping draws in customers and is the main reason users love Amazon Prime. Prime members also spend double what other shoppers do, especially during the holidays.
So, if you want to cash in on the holiday peaks, your shipping strategy should include free shipping on your flagship products. This certainly adds to your expenses and careful analysis is warranted prior to picking up the shipping tab but here we’ll go into why it might be worth it.
It goes without saying that offering free shipping is one of your most powerful tools as an e-commerce business. Check out what your competitors are (or aren’t) offering to ship for free and consider how you can target your marketing campaigns to draw customers away from your competitors. This turns free shipping from a cost to a competitive advantage, helping you earn more new business.
Let’s look at some ways you can use free shipping to sell more this holiday season.
Reduce Shopping Cart Abandonment
With the right shipping software, you can use free shipping as a strategy to reduce shopping cart abandonment. When a customer has a cart full of products but has decided to exit without checking out, you can send them a targeted offer for free shipping over a certain order total.
SaleCycle estimates the average shopping cart abandonment rate at 75.6 percent and the study by Baymard last year estimates 61 percent abandon due added costs (linked above, see chart below). High or unexpected shipping costs are the biggest reason customers bail, so free shipping can solve a lot for you right from the get-go. With so many would-be customers refusing to close the deal due to shipping costs, it’s important to know how much free shipping cuts into your bottom line and weighing that against the business you’d gain by offering it.
Suggested reading: How to choose the right shipping software
So, if you want a nice slice of the holiday shopping pie, a shipping solution like ShippingEasy provides the rates you need to make offering customers free shipping more affordable.
Use Free Shipping to Increase Your Key Performance Indicators
Gross Merchandise Value (GMV), Order Volume (OV) and Average Order Value (AOV) are typical measures that tell you how profitable each transaction is for your e-commerce store. Using these measures, you can set up threshold-based free shipping—free shipping based on the value of a customer’s cart or the number of items in a cart. Many customers are willing to add an item or two in order to qualify for free shipping, and you can use the above values to set your thresholds.
A good strategy for making a threshold-based strategy work is to first decide which of the KPIs above you would prefer to increase. If you want to move/reduce inventory, you can use OV as your threshold and base free shipping on the number of items in the cart. If you’d prefer to see more dollars per customer, use the AOV as your threshold. It’s worth testing these strategies, possibly against each other, to see which gets you the most return. Results can certainly vary by customer base, industry, and products.
The best part, though? It works. In a case study, VWO features cosmetics brand NuFace and their experiment to offer NuFace shoppers free shipping above a minimum order total. Order volumes exploded and the average value per order went up by 90 percent, according to the article.
Offering Free Holiday Shipping Can Save You Money
There’s an upside to the expenses associated with offering free shipping. It can increase your shipping volume in the long run, meaning more inventory moved, and more new and returning customers.
Robust shipping software like ShippingEasy calculates the best shipping method with the cheapest rates, so you can offer free shipping and increase your sales. Data from ComScore indicates up to 83 percent of shoppers are fine with waiting a couple of days if they can save money on a free shipping offer. As noted above, free shipping also reduces cart abandonment rates, meaning more conversions.
Fast and free shipping is becoming an expectation from customers, and it is something your e-commerce business can certainly participate in. You just need to find ways to make it work for you.
Give ShippingEasy a test drive to see how easy it can be to offer free shipping. Click the button below to start your 30-day FREE trial!