How to Effectively Offer Free Shipping

10/17/2013 — Leah Palnik

If you've ever done any online shopping, you're probably familiar with those two little magical words — —free shipping!' As a consumer, it's great — who doesn't love free? But as a small business trying to find your place in the wide world of e-commerce, it can be a little intimidating. As free shipping becomes more common, many customers are now coming to expect it; creating a wide range of costs and benefits for retailers. However, many retailers have experienced benefits, including increases in sales and customer retention, that outweigh the costs.

There are several ways you can offer free shipping to your customers without sacrificing profits. Here are some options to consider:

• Provide free shipping at a minimum order price. Try providing free shipping at a minimum price point that's above your average order size. If you offer free shipping on orders over $50 for example, a customer who has $49.99 or less in their shopping cart is likely to purchase an additional item to reach that benchmark for the deal.
• Offer free shipping on orders for a limited time. With the holidays fast approaching, customers are looking for the best deals. Providing a short window of time for free shipping could be just the right trigger for a sale.
• Target your best customers. Instead of presenting the masses with free shipping, target a select group of customers you can email to increase lifetime value.
• Create a flat shipping rate. Customers like knowing what costs to expect when shopping online. There's nothing worse than filling up your shopping cart, expecting to pay a certain price, and getting slammed with higher-than-expected shipping costs at checkout.
• Use a one-time fee. Shipping clubs with an annual fee can be a great way to entice customers and drive customer loyalty. A good example of this is Amazon Prime. Customers pay an annual fee to shop on Amazon.com and receive unlimited free two-day shipping.
• Offer free shipping on special products. You can offer free shipping on products with higher profit margins, on products where you have excess inventory, or any special item you're looking to promote.
• Reduce your overall shipping costs. Work with your freight carriers or a 3PL (like PartnerShip) to ensure you are saving as much as possible on your shipping. Any additional savings you can garner will ensure you're overall profit margin is not negatively impacted by any free shipping promotions or offers.

Once you've decided how you want to offer free shipping to your customers, it's important to promote it. Use email marketing to announce it to your customers and advertise it on your website so when your customers are shopping, they can't miss it. Also, be sure to be very transparent about how to receive free shipping if you're not offering it on everything outright. If the customer has to complete an action (i.e. order at least $50, sign up for a shipping club, etc.), make it clear in the beginning what that action is.

Once you've implemented your free shipping strategy, make sure to measure it. Take a look at the costs including increased IT expenses, customer service issues, and your shipping expenses. If these costs outweigh the benefits (increased revenue and an increased customer lifetime value) you should re-evaluate. You may need to experiment with your tactics to find the one the works best for you.  

Through a PartnerShip association shipping program, you can save on select FedEx^® services for small package shipping and with LTL freight carriers for large shipments — savings that can be used to fund a free shipping offer to your customers. Want to learn how another business used free shipping to improve their bottom line? Click here to read a case study featuring a PartnerShip customer that used its PartnerShip savings to implement a free shipping strategy. To find out how PartnerShip can help you save on your shipping costs, click on button below for a free, no-obligation shipping analysis.