Advice for startup success: How to offer free shipping without breaking the bank
For
a startup looking to scale quickly for acquisition, here are the pros and cons
of offering free shipping for your go-to-market strategy.
Free
shipping vs fee shipping
Of
course, rather like the proverbial free lunch, there’s no such thing as free
shipping. Shipping involves many costs from picking to packing to physical
transportation. Ultimately, somebody must foot the bill for getting products
from point A to point B.
Nonetheless,
the prospect of free shipping remains a powerful draw. Shoppers will go out of
their way to secure free shipping, even if it means spending a little extra on
their shopping cart.
The
research backs this up. According to the UPS Pulse of the Online Shopper™
survey, four out of every five shoppers say that shipping fees are an important
factor during their product search. Additionally, more than 50% of shoppers
surveyed abandoned their cart because the cost of shipping made the total
purchase more expensive than expected.
Whichever
way you cut it, that’s a lot of lost sales.
How
to offer free shipping
As
a startup, the business case for offering free shipping is compelling,
particularly when it comes to e-commerce transactions. However, free shipping
carries a business cost, and you need to manage for this cost as part of your
early-stage planning.
The
most obvious way to offer free shipping without breaking the bank is to price
it into your product. As marketers and psychologists alike have long known, how
you present pricing to shoppers has a marked impact on how they feel about
their purchase.
Take
the example of a product that costs $15 to manufacture, retails online at $25,
and carries an average shipping cost of $5 per item. If you start by giving the
total price of the product as $30 inclusive of shipping, the cost is clear in
the shopper's mind.
However,
if you list the same product as $25, only to add $5 for shipping at the point
of purchase, it’s easy to see why a shopper might reconsider their purchase,
even though the total purchase price is $30 in both scenarios.
That
doesn’t mean you should simply price shipping into your product and offer it
automatically across all purchases. There are different ways you can use free
shipping to nudge your customer into doing other things along the purchase
pathway. For example, consider these free shipping offerings:
·
As
a time-limited promotion. The urgency factor (“Get it now before it’s gone!”)
can encourage orders that may otherwise linger in carts for days or weeks
untouched.
·
If
your customer reaches a minimum order value. This is a way of getting shoppers
to add to their shopping cart.
·
As
part of tiered shipping options. If a customer requires express delivery, give
them the option to pay for it. At the same time, offer them free shipping if
they are happy to opt for a longer delivery window.
·
As
a perk of your customer loyalty program.
·
As
a one-off reward for subscribing to your company newsletter or other marketing
communications.
Whatever you do, don’t simply give
free shipping away without considering how it fits within your overall
strategy. Striking the balance between investing in customer experience while
managing overhead is a delicate operation but essential to get right.
The
case for fee shipping
Don’t
dismiss the option of fee shipping, where the customer pays separately for the
cost of transportation. Here are some situations in which fee shipping might
make sense:
·
For
higher-value goods where the cost of shipping is proportionally lower. In these
cases, paying for the shipping may feel like less of an issue for the customer.
(That said, if someone is paying $700 for a luxury item with a high mark-up
already built in, do you really want to risk losing that customer over
shipping?)
·
For
heavy or large goods where the cost of shipping is such that a shopper would
reasonably expect to incur some level of shipping cost.
·
For
international shipping, where the landed cost (the total cost of getting your
product to its final destination) is subject to a range of additional factors.
Finally,
remember that free vs fee shipping is not an either-or. It's entirely normal to
offer your customers a mix of free and fee shipping options. However you
approach it, price shipping into your total cost of doing business.
UPS
is here to help you execute your strategy
Whether
you want to offer shipping for free or for fee, the UPS extension for OpenCart gives you full control to
display your negotiated UPS rates, set flat shipping rates based on order
value, or offer free shipping. In addition, the UPS extension allows you to
print UPS labels within OpenCart, even in large batches.
How
well you ship reflects directly on your brand, which ultimately impacts your
bottom line - let UPS help. If you don’t have a UPS account, you can create one
in the UPS extension.*
*New UPS accounts may be eligible for discounted ecommerce rates (U.S.
only)
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