Free Delivery Marketing : Why Offer Free Shipping?
Free shipping refers to a shipping service provided by a company or retailer that does not charge customers any additional fees for shipping their products. This means that the cost of shipping is included in the price of the product, and customers do not have to pay any extra fees to have their items delivered to their doorsteps. Some companies and retailers may offer free shipping as a promotional offer or as a benefit for customers who spend a certain amount of money on their website or store.
Free Shipping types
There are two types of free shipping as a marketing strategy: conditional and unconditional. In the following sections, we’ll look at what each free shipping model stands for and how to implement it in your online store.
Conditional Free Shipping
Conditional free shipping refers to a shipping offer that is only available under certain conditions or requirements. For example, a retailer may offer free shipping on orders over a certain amount, or to customers who live within a certain geographic region. Another example is a promotion that offers free delivery on a specific product or product category. These types of shipping offers are typically used as a marketing tool to encourage customers to make a purchase or to spend a certain amount of money.
How to Set Up Conditional Free Shipping Offers in Your Store
1. Product-Specific Shipping
Promotion or offer where specific items or products on a website or store can be shipped to the customer at no cost. This means that the customer does not have to pay any additional fees for shipping when purchasing these designated products. This type of offer is typically used to encourage customers to make a purchase or to promote certain products.
2. Free shipping during certain occasions
It is a promotional offer where a retailer or online store offers free delivery on purchases made during specific dates or seasons. This could include holidays such as Christmas or Black Friday, or during specific months such as November or December. These promotions are often used to encourage customers to make purchases during these times, and can be a great way for shoppers to save money on their orders.
3. Set a basic threshold levels
In order to offer free shipping without negatively impacting your profit margin, it is important to set a minimum threshold for orders. This threshold should be calculated by taking into consideration the average cost of shipping, the store’s gross profit margin, and the average order value. To determine this threshold, you can use the following formula:
(Average Shipping Cost / Gross Profit Margin) + Average Order Value.
For example, if your store has an average order value of $50, an average shipping cost of $7.50, and a gross profit margin of 30%, the minimum threshold for free shipping would be $75. This means that customers must spend at least $75 in order to qualify for free shipping.
4. Subscription-Based Shipping
Subscription-based shipping is a service where customers can sign up for regular deliveries of products or goods on a recurring basis. This can include items such as groceries, household essentials, clothing, or personal care products. The customer typically pays a monthly or annual fee for the service and can customize their delivery schedule and products. Subscription-based shipping is often used for convenience and to save time by eliminating the need for frequent trips to the store.
Unconditional free shipping
Unconditional free shipping refers to a shipping policy where a company or retailer offers free delivery on all orders, regardless of the order value or the shipping destination. This means that the customer does not have to meet any specific requirements or conditions in order to qualify for free shipping. It is a way for companies to attract customers by offering a convenient and cost-effective way to receive their purchases.
How to Set Up Conditional Free Shipping Offers in Your Store
1. Deduct shipping charges from your revenues
To deduct shipping charges from your revenues, you will need to subtract the cost of shipping from your total revenue amount. This can be done by subtracting the cost of shipping from your total sales revenue. For example, if your total sales revenue is $10,000 and the cost of shipping is $500, your revenue after deducting shipping charges would be $9,500. It is important to keep accurate records of your shipping costs and revenues to ensure that you are accurately accounting for these expenses and revenues in your financial statements.
2. Include shipping charges in the product price
This approach can be beneficial for customers as it eliminates the surprise of additional shipping costs at checkout. It also makes the pricing more transparent and can simplify the buying process. However, it may also make products appear more expensive, which could deter some customers. It’s important to consider the potential impact on sales and customer satisfaction when deciding whether or not to include shipping charges in the product price.
Why should you offer Free Shipping?
- Increased Sales : Offering free shipping can be a powerful incentive for customers to make a purchase, as it removes the added cost of shipping from their final purchase price. This can lead to an increase in sales, particularly for businesses that sell products that are not easily found in brick-and-mortar stores.
- Improved Customer Satisfaction : Customers appreciate free shipping as it saves them money and makes their shopping experience more convenient. This can lead to increased customer satisfaction and loyalty, which can result in repeat business and positive word-of-mouth recommendations.
- Enhanced Brand Awareness & Loyalty : Offering free shipping can also be a way to differentiate your business from competitors and increase brand awareness. Free shipping increases customer loyalty while also improving brand loyalty. Customers become loyal to your brand and return to your store on a regular basis, avoiding competitors who charge high shipping costs.
- competitive advantage over competitors : No business is exempt to competition. Whether you’re a large or small company, you’re competing for customer attention and money with other brands in your industry. To gain a larger market share, provide your target audience with something that other businesses do not or are hesitant to provide. One example is free shipping. Businesses are hesitant to offer free shipping to their customers because they do not understand how to correctly calculate shipping costs and avoid them eating into their profits. Also, other businesses in your niche may already provide free shipping.
- Reduces Cart Abandonment : The most common reason for shopping cart abandonment is high shipping costs. It also makes sense. When customers look for a product, they do not consider the shipping cost. When the price on the payment page is significantly higher than what they saw on the product page or expected, they reluctantly abandon their cart. Consider how happy a customer would be if the product price remained constant throughout.
Conclusion
Countless buyers expect free delivery, and it would be fantastic if you could provide it. You are not required to begin with an unconditional free shipping model, which requires you to sell every item with a free shipping tag. Begin with the conditional free shipping model with Vispan Solutions to encourage customers to take advantage of your shipping offer.